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Lufthansa Technik Stable As Margins Tighten

Adjusted earnings before interest and tax down 1.8% year on year.

Lufthansa Technik (LHT) had a relatively stable performance in the first half of the year despite a slight deterioration in its profit margin.

The MRO provider posted adjusted earnings before interest and tax (EBIT) of €218 million, 1.8% lower than H1 2017.

On the back of more business from its parent group’s airlines, LHT’s revenue rose 3.6% for the first half to €2.85 billion ($2.9 billion).

For comparison, the combined revenue of Lufthansa airline businesses was roughly €22 billion, although within the entire group only Swiss and the core Lufthansa German Airlines posted a higher EBIT.

Like the airlines, LHT faces higher costs, notably a 5% rise in its wage bill and 2.6% more for materials and services.

This forced down its EBIT margin from 8.1% to 7.6%.

Nonetheless, new business continues to flow, and third-party customers accounted for 65% of LHT revenue in the first half.

The company gained 11 new customers in that period with new contracts that included: a 10-year deal to service components for nine Asiana Boeing 777-200ERs; a five-year overhaul deal for the same airline’s A380s; and component supply contract for Eastar Jet’s 737 fleet.

Looking ahead LHT expects full-year EBIT to be similar to last year, although it is confident that in the longer term its investments in digitization, 3D printing and artificial intelligence will help boost growth.

Mastering new aircraft and engine technologies as well as modern manufacturing methods such as additive manufacturing will be essential for success in the MRO market,” the company stated.

“Lufthansa Technik considers itself to be in a good position here, thanks to its ongoing technological developments.”

 

TAGS: Europe
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