Japan Aerospace & Defense RTX 2Q results read across GTF aftermarket strong

Equity Research 24 July 2026 | 8:19AM JST

Japan Aerospace & Defense: RTX 2Q results read-across: GTF aftermarket strong; monitoring increase in OE engine shipments

After the close on July 23 JST, RTX Corp. (RTX) announced its 2Q FY12/26 results Yuichiro Isayama | (covered by Americas Aerospace & Defense Analyst, Noah Poponak). Among stocks Goldman Sachs Japan Co., Ltd. in our Japan aerospace & defense coverage, we summarize the read-across for IHI Takato Enoki (Neutral), Kawasaki Heavy Industries (Neutral), and Mitsubishi Heavy Industries (Buy), | which collaborate with Pratt & Whitney, a division of RTX Corp., on the PW1100G Goldman Sachs Japan Co., Ltd.

and other commercial aero engine programs. Chie Hu | Goldman Sachs Japan Co., Ltd.

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Goldman Sachs Japan Aerospace & Defense

Exhibit 1: Pratt & Whitney: Adjusted operating profit and Exhibit 2: Operating margins for engine OEMs and IHI margin

(mn USD) Pratt & Whitney OP OPM (rhs) GE Aerospace (CES) RTX Corp. (P&W) IHI Segment adj. OPM

$1,000 10% 30% $900 9% 25% $800 8% $700 7% 20% $600 6% $500 5% 15% $400 4% 10% $300 3% $200 2% 5% $100 1% $0 0% 0% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q

CY2023 CY2024 CY2025 CY2026 CY2023 CY2024 CY2025 CY2026

Source: Company data, Data compiled by Goldman Sachs Global Investment The CY2026 2Q (FY3/27 1Q) IHI OPM is a GS estimate. Research Source: Company data, Goldman Sachs Global Investment Research

What happened Pratt & Whitney (P&W), a division of RTX, posted adjusted sales of $8,889 million (+16% yoy), adjusted operating profits of $740 million (+22% yoy), and an adjusted operating margin of 8.3% (+30 bps yoy) in 2Q. By item, sales from the commercial engine aftermarket were up +25% yoy (driven by higher MRO volume), commercial OE engine sales were down -8% yoy (due to engine mix effects), and military engine sales were up +23% yoy (driven by higher F135 volume). The P&W segment did not book any customer bankruptcy-related expenses during 2Q.

Regarding the GTF (Geared Turbofan) / PW1100G engine, the company noted that AOG (Aircraft on Ground) units are down -25% year-to-date and that GTF MRO output grew more than +40% yoy. This suggests that the situation surrounding grounded aircraft is improving and that volumes of high-margin MRO work are also increasing. With respect to the full-year outlook for new (installed) engine shipments, the company commented that it expects to increase deliveries to Airbus in the second half of the year and that annual GTF unit volumes are expected to reach a record high.

The company also announced an upward revision to its FY12/26 guidance. P&W’s adjusted sales growth was raised to +high-single digits (previously: +mid-single digits), and adjusted operating profit guidance was raised to $2.75 billion - $3.5 billion (previously: $2.25 billion - $3.25 billion).

Read-across for IHI/Kawasaki Heavy Industries/Mitsubishi Heavy Industries We view both the 2Q results and the second-half outlook as a modest near-term tailwind for the profit mix at IHI, Kawasaki Heavy Industries, and Mitsubishi Heavy Industries. Our Japan Industrial Team continues to monitor the increase in new (installed) engine shipments, which represent a near-term headwind to the profit mix relative to the high-margin aftermarket business, even as aircraft OEMs continue to ramp up airframe production rates. That said, in light of the latest comments on the GTF, we infer that while the outlook for installed engine shipments to aircraft OEMs remains unchanged, there appears to be a shift in the allocation of components — with materials that would otherwise have been directed toward spare…