MAC por reserva (multiplexaci´ on)

Opportunities presented by changes in the operating environment

Entrepreneurial activities in general, not least in view of the variety of business transactions involving partnerships and consortia especially in the U.S., give rise to risks and opportunities that can influence economic development. In order to identify major risks and opportunities in advance and successfully control them, MTU has a risk management system (RMS) in place. Risk management forms an integral part of all the group’s decision-making and business processes, helping to ensure the company’s sustainable success in the future.

MTU’s systematic, forward-looking investment in basic research and innovative engine technologies designed to lower fuel consumption and emissions, reduce noise and cut costs serves to strengthen the company’s position as a leader in innovation and technology. This, in turn, generates opportunities for MTU to expand its position within risk- and revenue-sharing partnerships and to participate in lucrative new engine programs.

In the military sector, the company has established a reputation with customers as a skilled partner capable of offering wide-ranging system know-how in the areas of product development, production and maintenance, thus opening up further opportunities to develop new engine technologies and refine existing ones.

Order backlog for Airbus and Boeing series production by region (orders for 6,200 aircraft in total, source: Airclaims’ CASE)

Europe 22 %

Asia-Pacific region 34 % Africa 3 % Middle East 16 % North America 19 %

Latin America 6 %

[ ] _{Future-oriented investments}

strenthen MTU’s leadership position in technology and innovation

Opportunities presented by the company‘s business performance

In the financial year 2009, the strength of the euro inhibited the growth of MTU’s revenues. An improve- ment in the exchange rate parity between the euro and the U.S. dollar would lead to a modest improve- ment in MTU‘s earnings situation. If energy prices were to stabilize or even retreat to a lower level, and if commodity prices were to fall, this would have a positive effect on MTU‘s cost structure and hence on its future business results.

Even in the present austere economic climate, MTU has identified opportunities that will enable the company to expand its business.

Other opportunities

Other opportunities are listed in the SWOT analysis presented as part of the risk report (see Section 6.4. SWOT analysis). For information on how identified opportunities can be exploited and how associated risks can be avoided, see Section 6. of this group management report (Risk report).

MTU forms part of risk- and revenue-sharing partnerships with the world’s top engine manufacturers and is the largest independent provider of maintenance services for commercial aircraft. The company is therefore inevitably exposed to all changes taking place in the global air transportation sector. Neverthe- less, thanks to a business model with activities covering the entire lifecycle of commercial and military engines, MTU is well positioned to claim a substantial share of the market even in difficult times. It is difficult to assess the possible effects of the global financial and economic crisis. The statements below are based on the knowledge available at the beginning of 2010 and possess a significantly higher degree of uncertainty than forecasts made in previous years.

No change in controlling indicators

EBIT adjusted and free cash flow constitute the two tried-and-tested performance indicators by which MTU controls and measures its success as a corporation, both today and in future. These indicators direct MTU‘s focus towards growth and the generation of cash. The first of these performance indicators concentrates on growth, the goal being to generate sufficient revenues to ensure growth in profits. The primary indicator of the company‘s ability to transform higher revenues into higher profits is the adjusted EBIT margin, which is measured and reported for each operating segment. The company’s targets in terms of these performance indicators are described in Section 5.4.1. (Outlook for 2010) and Section 5.4.2. (Outlook for 2011).

Planned changes in business policy

The company does not intend to make any fundamental changes to its business policy in the years ahead.

New products and services

As early as the financial year 2008, MTU joined several new engine programs that will account for a predominant share of revenues in the decades to come. The company estimates the market volume of these programs to be worth a total of approximately € 25 billion over their entire projected lifetime. The effects of the global financial and economic crisis in their myriad forms were what shaped the 5.4. Future deve-

lopment of MTU

[ ] _{EBIT adjusted and free}

cash flow constitute the financial indicators of corporate management

Although the U.S. dollar exchange rate could possibly be weaker this year, the company expects re- venues to remain at levels similar to those in 2009. The company’s outlook for the financial year 2011 is presented in Section 5.4.2. (Outlook for 2011). Both MTU’s risk- and revenue-sharing agreements with leading engine makers and its strong presence in its home market will serve to keep the regional distribution of the company’s revenue unchanged, and it plans to achieve over 80 % of its total revenues in its traditional markets of North America and Europe. Consequently, MTU does not expect to see any major changes in its future sales markets in subsequent financial years. More details on this subject can be found in Section 1.1. (Business activities and markets) of this group management report, while more information on the geographical areas in which MTU operates is provided in the notes to the consolida- ted financial statements, in the part dealing with segment reporting.

Revenues by operating segment

The revenue forecasts for the commercial and military engine business (OEM) and the commercial maintenance business in the financial year 2010 are based on the following assumptions:

Compared with the financial year 2009, MTU expects revenues from the volume production of com- mercial engines and from spare parts sales to remain stable. This assumption is underpinned by the rollout of the GEnx engine for the Boeing 787 and 747-8 aircraft, rising revenues from the GP7000 program for the Airbus A380, combined with declining revenues from older programs and in the busi- ness jet sector. Identified risks relate particularly to the possibility of further delays in the Boeing 787 and 747-8 aircraft programs and of more extensions to the delivery schedule for the Airbus A380. In 2010, the military side of the OEM business can again expect to generate revenues in the order of

approximately € 500 million.

Revenues in the commercial maintenance business are expected to remain stable in 2010. Demand 5.4.1. Outlook for 2010

in € million Forecast 2010 Actual 2009

Revenues stable 2,610.8

Earnings before interest and tax (EBIT adjusted) stable 292.3

Earnings after tax (EAT) stable 141.0

Free cash flow _~100 120.2

Outlook 2010

In the coming financial years, the company will be looking to drive forward development of the geared turbofan for new engine programs and get volume production of the turbine center frame for the GEnx engine firmly established. At the present time it is not possible to assess how the company may be affected by any decisions taken regarding a re-engineering program for the Airbus A320.

Targets

MTU’s targets for the financial year 2010 are as follows:

[ ] _{Business performance expec-}

Operating profit

For 2010, MTU is expecting an operating profit (EBIT adjusted) at roughly the same level as in 2009. Compared with 2009, the 2010 result will be negatively impacted by a slight rise in development ex- penditure – especially in connection with the geared turbofan programs. This will be compensated by cost savings resulting from the Challenge 2010 improvement program. The prospecitive impact of Challenge 2010 is discussed in Section 1.3.1. (Strategy).

Earnings after tax (EAT)

Earnings after tax (EAT) for the financial year 2010 are similarly expected to remain close to the 2009 level. The main determining factors here, alongside the expected operating profit, are the high level of estimation uncertainty attached to the U.S. dollar exchange rate and the price of nickel at the balance sheet date, used to measure the fair value of the corresponding hedging instruments, and the effects of discount rates and interest-rate changes on contingent liabilities, which will affect the financial result. Free cash flow

In the financial year 2010, the company expects a free cash flow in the order of € 100 million. Dividend payment

After maintaining the dividend for the financial year 2008 at the same level as in 2007 (€ 0.93 per share), the Board of Management will again propose an identical dividend to the Annual General Meeting for the financial year 2009, thus adhering to its policy of continuity in dividend payments. Investors can expect the MTU share to yield a substantial return, not only in 2010 but also in future years. Conse- quently, MTU intends to maintain its policy of stable dividends, depending on the net profit the company has available for distribution under the provisions of the German Commercial Code.

The following chart shows the trend in dividend payments (the year shown is that of the cash outflow for the dividend of the previous financial year).

Capital expenditure and funding resources

In addition to final investments in the new site in Poland, capital expenditure in the financial year 2010 is earmarked mainly for building up production capacity for the GEnx program as well as for special operating equipment required for the geared turbofan programs. The capitalized development costs for the GEnx and GE38 engine programs in the financial year 2010 are likely to be about the same as in 2009.

The structure of the company‘s funding resources should remain unchanged in 2010. All the projects planned can be financed from free cash flow. Above and beyond this, authorized capital provides the

20101) _{2009 2008 2007 2006}

Dividend paid per share, in € 0.93 0.93 0.93 0.82 0.73

1) _{Board of Management‘s proposal to the Annual General Meeting} Dividend paid

[ ] _{MTU adheres to its policy of}

Development of prices and costs

MTU is not expecting the prices and conditions prevailing in its procurement and sales markets to change substantially. In order to reduce the risk of price changes, MTU has concluded hedging agree- ments for commodities and U.S. dollar cash flows – described more fully in Section 6. (Risk report) and in Note 42. to the consolidated financial statements (Risk management and derivative financial instruments) – and made contractual agreements with suppliers.

Legal structure

No material changes to the legal structure of the group are being considered at the present time. Employees

MTU expects the size of its workforce in 2010 to remain much the same as in 2009.

Revenues

For the financial year 2011, the company expects both the world economy and the aviation sector to return to their previous long-term growth rates. Based on IATA’s medium-term forecasts, MTU‘s revenues would be expected to grow by around 5 % from the level of 2010.

Operating profit

As an operating result level (EBIT), MTU continues to forecast a high level of development expense and growing series business volumes for the GEnx and GP7000 programs. The Group therefore expects business performance to remain stable in the financial year 2011, with an adjusted EBIT margin of over 10 %. Additional programm participations could influence this figure.

5.5. Overall prognosis of