UPDATE 2-MTU sees flat profits as new engine investments weigh

Tue Feb 18, 2014 7:08am EST
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* Q4 sales 963.6 mln eur vs Reuters poll avg 940 mln

* Q4 adj EBIT 106.8 mln eur vs Reuters poll avg 105 mln

* New engine business to grow faster than spare parts

* Shares rise 1.8 pct, among top midcap gainers

By Victoria Bryan

MUNICH, Feb 18 (Reuters) - Delivering costly new engines to meet a boom in orders for passenger jets will keep profits flat at MTU Aero Engines this year, before its more lucrative spare parts business benefits later this decade, it said on Tuesday.

The German firm, which supplies planemakers Boeing, Airbus and Bombardier, makes bigger profit margins from selling spare parts than supplying new engines, in which it has to invest more money, and saw its operating margin fall by 1 percentage point to 10.1 percent in 2013.

"We're investing now because this means good business for us in the future," board member Michael Schreyoegg said, adding it can take eight to ten years for investment in a new engine programme to pay off.

Revenue in the firm's new engine business will grow by around 10 percent this year in dollar terms, while the spare parts business will rise only by a mid single-digit percentage, it forecast.   Continued...