RTX: FAQs on “Powdered Metal” Issue After Shares Crashed 10%

Company Update (RTX US) (Buy)

RTX (formerly Raytheon Technologies) shares finished Tuesday (July 25) down 10%, after management disclosed an issue on “powdered metal” used to manufacture Pratt & Whitney engines. This quick note lists the key questions around the issue and the answers we have at present. At this stage we can only rely on comments from RTX executives, who in turn have only a preliminary view on the issue. However, based on what is known so far, the issue is one-off, manageable and will have just a modest impact on 2025 financials. Q2 2023 results were solid. We believe RTX shares remain attractive and added significantly to our position during the day. We will circulate a full note with a review of Q2 results and our updated forecasts in due course.

What is the issue?

A previous “quality escape” issue in RTX’s internal production of powdered metal meant that some contained “microscopic” amounts of contaminants, which could reduce the lifespan of parts made from the metal.

RTX believes the contaminants …