Annual Report 2017 - mtu.de

1 Annual Report 2017 MTU Aero Engines Annual Report 2017 Worldwide. 24 share informationShare performance and dividends over the past 5 years20132014201520162017 Year-end quoted Annual performance4%1%25%22%36%Dividend per MTU share dataNumber of shares52 million shares of no-par stockType of shareRegistered sharesEquity capital 52 millionWKN / ISIN /stock exchange symbolA0D9PT / DE000A0D9PT0 / MTXT rading segmentPrime StandardStock-market segment MDAXS elected consolidated financial information and key figures with year-on-year comparisonSelected consolidated financial information and key figures at a glanceChange 2017-2016in million (unless stated otherwise)20172016in %Revenues and earningsRevenues5, , to the commercial engine business 1)2, , to the military engine business 1) to the commercial maintenance business 1)

2 2, , before interest and tax (EBIT) after earningsEarnings before interest and tax (EBIT adjusted) margin in % sheetTotal assets6, , , , ratio in % financial flowCash flow from operating flow from investing activities cash flow from financing activities <-100 Number of employees at year endCommercial and military engine business5,5995, maintenance business3,2472, number of employees8,8468, indicatorsEarnings per share in Undiluted earnings per earnings per per share in 2) yield in % dividend 2) common stock at Dec. 31 (million shares) ) Before consolidation2) Proposal to the Annual General Meeting for 2017 based on an expected volume of million dividend-entitled shares. Prior year: Resolution by the Annual General Meeting for the financial consolidated financial information and key figuresU3 MTU share informationU4 Selected consolidated financial information and key figures with year-on-year comparison6 The Executive Board9 To our shareholders10 Letter to our shareholders12 The MTU share21 Corporate governance22 Corporate governance report22 Declaration of conformity32 Management compensation Report (part of the combined management Report )48 Report of the Supervisory Board52 The Supervisory Board59 Combined management report60 The enterprise MTU71 Business environment112 MTU AG (disclosures in accordance with the German Commercial Code (HGB)

3 118 Forecasts122 Risk and opportunity report140 The internal control and risk management system in relation to the group accounting process 142 Disclosures in connection with the takeover directive148 Other disclosures155 Consolidated financial statement156 Consolidated income statement157 Consolidated statement of comprehensive income158 Consolidated balance sheet160 Consolidated statement of changes in equity161 Consolidated cash flow statement162 Reporting by operating segment (part of the notes to the consolidated financial statements)190 Notes to the consolidated financial statements259 Other information260 Glossary of engine terms262 Overview of engines263 Index264 List of charts and illustrations266 Financial calendar / ContactsTable of contents365 days. 24 hours. 14 locations. 1 engages in the development, manufacturing, marketing and maintenance of commercial and military aircraft and helicopter engines, as well as industrial gas turbines.

4 The company is dedicated to providing its customers with top-quality, high-tech products and customized services, 24 hours a day, 365 days a year. With 14 locations worldwide, MTU ensures close proximity to its customers. Its objective: to actively shape the future of year s Annual Report provides 12 interesting insights into the world of MTU its locations, products and 24 SeaRichmondNorway: A global task force:the industrial gas turbine experts from MTU Main-tenance, page 16 Canada: Starters, pumps, sensors, valves: MTU s accessories experts know all there is to know about accessory maintenance page 150 AmsterdamNetherlands: Based in the Nether-lands, serving customers worldwide: engine leas-ing and asset manage-ment at MTU, page 28 MunichRocky HillLudwigsfeldeGermany:Top management in dialog: Executive Board meeting at MTU Aero Engines headquarters in Munich, page 4 USA: True partners in MTU s global network: MTU Aero Engines North America and its engineer-ing experts, page 136 Germany.

5 MTU Maintenance Berlin-Brandenburg: the world s leading inde-pendent MRO provider for the CF34 program, page 108 The 24-hour clock sequence relates to Central European Time (CET).Development, production, works around the clock to serve customers across the 24 24 LumpurGermany: Giant in the test cell: ground testing of the Boeing 777 GE90 Growth engine at MTU Maintenance Hannover, page 54 Malaysia: Blade experts from Asia: ASSB joint venture pools the expertise of two strong partners, page 166 Rzesz wZhuhaiMunichPoland: The star of Poland s Avi-ation Valley: MTU Aero Engines Polska, page 80 China: Number one in China and a major player in Asia: MTU Maintenance Zhuhai, page 186 Germany:World-beating manu-facturing technology: final assembly of the PW1100G-JM engine for the A320neo in Munich, page 254 SevilleSpain: A military transporter comes together.

6 Final assembly of the A400M in Seville, page 4414 locations worldwideThrough its subsidiaries and joint ventures, MTU has a strong presence in all key markets and regions worldwide. MTU has 14 locations in Germany, Poland, the Netherlands, France, China, Malaysia, the USA and 24 management in dialog: Executive Board meeting at MTU Aero Engines headquarters in MunichThe members of the Executive Board regularly discuss important measures and events in their respective areas of responsi-bility (from left: Michael Schrey gg, Reiner Winkler, Dr. Rainer Martens).Top management in dialog: Executive Board meeting at MTU Aero Engines headquarters in MunichMunichGermanyMTU Aero Engines has its headquarters in Munich. The location is the oldest and largest in the MTU Executive Board determines the direction of MTU s future development.

7 It makes important decisions and aligns the company s strategic focus with the objective of creating sustainable added value. MTU was managed by three Executive Board members in 2017: Chief Executive Officer Reiner Winkler, Chief Program Officer Michael Schrey gg and Chief Operating Officer Dr. Rainer Martens. From 2018, there will be four Executive Board members at the company s helm. Reiner Winkler continues in the post of Chief Executive Officer, Peter Kameritsch assumes re-sponsibility for Finance and Information Technology, Michael Schrey gg remains Chief Program Officer and Lars Wagner succeeds Dr. Rainer Martens as Chief Operating Officer. The latter laid down his mandate at the end of 2017 at his own Winkler / Chief Executive Officer (CEO)Reiner Winkler assumed the position of Chief Executive Officer and Chief Financial Officer at MTU Aero Engines AG in January 2014, including responsibility for Accounting, Financial Con-trolling, Strategy, Legal Affairs, Corporate Communications and Human Resources.

8 Winkler has been CFO since May 2005. A graduate in business administration, on joining MTU in 2001 he was in charge of the Finance, Human Resources and Information Technology divisions. Previously, Winkler was managing director finance and controlling at TEMIC Telefunken micro-electronic GmbH. He also held management posts with Daimler-Benz AG and Siemens AG. Michael Schrey gg / Chief Program OfficerAs a member of the Executive Board, Michael Schrey gg assumed responsibility for MTU s com-mercial and military OEM programs, including production and spare parts business, and infor-mation technology in July 2013. At the beginning of 2015, the Marketing and Sales business of MTU Maintenance was integrated into the programs division. The graduate in mechanical engineering joined MTU in 1990. During his professional career, he headed various commercial and military engine programs before assuming overall responsibility for the company s defense programs from Rainer Martens / Chief Operating Officer (COO)As Chief Operating Officer (COO), Dr.

9 Rainer Martens was a member of the Executive Board at MTU Aero Engines from April 2006. He oversaw development and technology, production and production development, assembly, quality control and procurement, as well as MTU s locations five years as head of MTU s manufacturing center for turbine blades, he was a production manager at the Airbus plant in Bremen. Holder of a doctorate in mechanical engineering, he also held various management positions at the Airbus plant in Varel and was managing director of CIM-Fabrik Hannover resigned from MTU s Executive Board from December 31, 2017 at his own request. New from January 1, 2018:Peter Kameritsch / Chief Financial Officer and Chief Information Officer (CFO/CIO)Effective January 2018, Peter Kameritsch has been appointed as a member of MTU s Executive Board with responsibility for Finance and Information Technology.

10 Kameritsch has a university background with degrees in physics and business administration and joined MTU in 1999. He has worked in various management positions in finance, investor relations and corporate strat-egy at various MTU locations. Before his appointment to the Executive Board, Kameritsch held the position of Senior Vice President, Wagner / Chief Operating Officer (COO)Effective January 2018, Lars Wagner has been appointed as a member of MTU s Executive Board with responsibility for the company s operational management. In his role, he oversees the ar-eas of technology and engineering, procurement, production, assembly, corporate quality and production development. Wagner has a university background with a degree in mechanical en-gineering and an MBA. He was named MTU s Executive Vice President, OEM Operations in July 2015, having previously held a number of management positions with Airbus, including interna-tional assignments, most recently in Winkler (born 1961) Chief Executive Officer (CEO), appointed term to September 30, 2019 Michael Schrey gg (born 1966) Chief Program Officer, appointed term to June 30, 2021 Peter Kameritsch (born 1969) Chief Financial Officer and Chief Information Officer, appointed term from January 1, 2018 to December 31, 2020 Lars Wagner (born 1975) Chief Operating Officer, appointed term from January 1, 2018 to December 31, 2020Dr.