FACC AG (FACC) Earnings Call Transcript & Summary

We are looking forward to the results and I hand over to Mr. Steirer.

Many thanks for the introduction. Thank you, Sofa, and good morning to everyone. Welcome to FACC's earnings call in regard to the financial year 2022. My name is Michael as already mentioned. And together with me today are our CEO, Robert Machtlinger; our CFO, Aleš Stárek; as well as Tania Masenberger, our Investor Relations expert. As always, we have already provided some detailed information, financial information in our press release issued earlier today. And shouldn't it be possible to address all possible questions which may arise into this meeting, we will be available for any one-on-one meetings afterwards. So in this case, please let us know, give us any information, and we'll try to schedule such a meeting afterwards. In order to coordinate the appropriate appointments, please inform Tania and myself, if needed. Now I'd like to turn over the call to Robert Machtlinger, our CEO. And thank you so far.

Michael, thank you for the introduction. Good morning, everyone, participating in our today's call. It's a pleasure to hear you and see you this time as well, at least you can see us. Pleasure to be here today. Next page, please, Michael. So a quick overview on the market and you all are quite close to the market we're watching it. But overall, this is a continuous trend. The traffic business is constantly rising. So 2022 was a good year in terms of revenue passenger miles across the world, not too much of a surprise. The domestic markets developing slightly faster than the international connections, but overall, looking into the forecast of the airlines, the domestic markets like Europe, like North America and the Middle East will break even, meaning that our domestic traveling will reach levels as we have seen it before the 2020 Corona crisis. Internationally, a little bit slower than as expected, I think not a surprise here as well, but also quite good development in the year of 2022 with forecast going in the right direction. We all know that international traveling was heavily handicapped by the strong COVID regulations in the Asian area, especially China, with a list of those restricted late last year, early this year, also the connections between North America and China, especially in Asia, in the brighter term, but also Europe is the same case will intensify. This is the good news overall. If you can go to the next page. And we see this also with deliveries of our customers. As always, we show Airbus and Boeing, which is, of course, dominating the market. And here, we see a strong uplift in aircraft deliveries overall 20% between the year 2021 and 2022, nearly as expected, however, with a couple of slowdown effects, especially in the last quarter of 2022, as you all have followed the announcements of our customers. So far so good. I think in terms of FACC, we have been on top of the ramp-up. So we have delivered everything our customers has requested of Boeing. And also looking into the net orders that the airlines have booked with our customers. Also here a strong upward trend with a 61% increase comparing between 2021 and 2022. Quite surprising, we had to reassured the figure twice, both Airbus and Boeing has a 61% rate in mid-quarters. So this is not a calculation mistake or hope you paste mistake pretty much, it was very equal. So comparing the net orders with deliveries of last year, the book-to-bill ratio again, is above 1%. So 1.39% is the ratio, which also relates to a slight increase in the firm order backlogs of our customers and also efficiency are enjoyed. Next page, please. Well, this leads us to the long-term forecast, which is unchanged goods. So no big change here. So I will not talk too much on that slide. You all know it, we all know it. So the long-term forecast is round about 40 airplanes until 2041. Of course, not too much of a change compared to last year. So the long-term forecast for aerospace looks good, looks promising as it was looking also in the last years and the last decades. Michael, next page, please. How is this order backlog spread across the market? Also here, not the big surprise. U.S., Europe, and of course, Asia are the strongest markets. By itself China with 8,400 airplanes is demand overall. So also not surprising, pretty much equal demand in Europe, which right now in the forecast shows also the Russian environment. And we have carved out the Russian demand for 280 widebodies and 1,160 narrow-body airplanes. So 1,400 airplane demand in that region. Why do we talk about it? Because western applied sanction on Russia of course is prohibiting here, western customers to deliver airplanes in the region. This, of course, is not the best news. However, it only reflects 2.7% of the global market demand. So looking into the big picture, this is pretty much, I would say, that digester and other markets probably would take especially the narrow-body airplanes where we see a strong demand in requirement today but also going forward. Next page, Michael. How do we see the overall market? Of course, the market recovery continues. We just talked about it. Aircraft production rates are increasing. Last year, certainly was strong increases in output around about 20% with all the discussions and mitigations the industry had to take, especially in the second half of the year. This turns into a 20% increase in turnover in FACC in the last year. Again, we are strongly benefiting from the narrow-body airplanes, especially the A320 family, which is the strongest platform in FACC and the ramp-up of the airplane supported growth last year, but also will support growth with programs we have on board next year -- this year, next year and the years are coming. Also good news, I think the widebody market, especially the A350 and the Boeing 787 are ramping up. So those rates have been fairly flat over the last 2 years. Right now, we see a growing demand. Demand even grows a little bit faster than what we have expected last year. So looking ahead into 2026, 2027 time frame, we see pretty much twice the demand we are producing today. We thought it's a little bit less, but our latest updates we have received from the market is going in that direction. But we mention that, as you all know, strongest [indiscernible] is the A320. However, the widebody market, especially the 2 main airplanes, the A350 family and the 787 family. It was quite substantial in revenue in A350 before the crisis, around about EUR 270 million of revenue came from those airplanes with a deep drop after COVID-19. Right now, this business is also recovering and will support our future development. So that's the good thing. EBIT last year was EUR 5.5 million. Aleš will talk a little bit more in detail on it, certainly are impacted by our global inflation and cost increases. Increases efficiency normally can negotiate with customers with a little bit of time offset. So our contracts allowed to adjust pricing, but it's -- generally, in the following year, looking in the past. So this year, this will be one of our objectives in negotiations are quite good progressing. We also have expanded our production sites and the production footprint with the ramp-up and reopening of our plant 6. In Croatia, ramp-up done very successfully. We have finished the building in December of 2021. We find people are already doing that phase. But right now, we have a little bit more than 200 people in our new site, which is producing predominantly interior components, good output, good performance, slightly better than expected. So the company is making us quite happy. And as also mentioned in earlier calls, we are planning to extend that facility in 2023, 2024. And for us, finally important energy supply independence. Our initiatives, we have launched already 15 years ago to move from natural gas into other means of energy like hot water springs, [indiscernible] and other energy supplies hectares quite well overcoming the crisis the industry has seen in 2022. Again, just as a reminder, from 100% gas independence in 2006 to 2022, energy consumption relating on gas supply was only 17%, 1-7. Next page, Michael. In the next page, please. So overall highlights, 20% growth in top line, EUR 607 million of group sales. Recurring sales, meaning product sales pretty much as expected with strong demand, especially in the second half of the year. Also good was a significant increase on engineering services. We have been invoiced for all of our customers. EBIT, we just talked EUR 5.5 million, certainly is an impact from changes in the global environment after February 26 -- 24 of last year. Investments in R&D, future technologies and programs are explained with EUR 43.5 million. And what we also have done, of course, we cope with West Indies to ramp up. We have extended our workforce by around about 400 full-time equivalents. Most of them in Austria, some of them are in our global subsidies. Overall, we are currently having 3,100 people in project efficiency. The 2019 is the full-time equivalent. So also here, good progress made, probably a little bit different than some of others. We've prepared for this ramp-up in our initiatives to attract talent to work in the industry for FACC are quite successful expected. Next page. New site Croatia. We talked about it last year, just as a summary. This facility is explained right now, currently a little bit more than 200 people. We will further grow the employment by another 400 employees in the next 2 years. The site will be extended to triple the size of the facility in 2023 and 2024. So this facility will be a turnkey facility for interiors, and we take work from our [indiscernible] Austria, but also new contracts we are going for in the Interior segment. Next page. Also one thing besides our core business, which is developing or redeveloping as planned with ramp-ups of our actual business, but also ramp ups with new business. Just one statement on the Airbus 220, as you can probably remember, we have signed in September 2021, significant contract with Airbus producing parts of the [indiscernible], especially the rather is the elevator for the airplane. We also to do certain weaker body fairing large systems underneath the wing and the future life of this airplane. So the 220 for FACC will be a very important platform with revenues growing from currently EUR 35 million in 2022 to EUR 100 million in revenue in 2026 based on 2 base customers in market forecasts. [indiscernible], Archer Midnight was a new program we have signed up with during the course of 2022. Archer Midnight is supporting our diversification strategy to build up a strong footprint mix of components, which is, of course, Aerostructures, aging the cell and interiors for commercial airplanes, including business jets. New means of transportation is getting more and more serious and more and more visible. Archer is 1 of 4 projects we are currently working in this field of new mobility. With Archer, I think we have a great cooperation together with Archer -- United Airlines and Stellantis, European car manufacturer. We are developing this airplane. FACC is producing the fuselage as well as the wings, and we also produce the interiors for the airplane. We will deliver first product to Archer in the -- at the end of the first -- at the end of June of this year with another 8 units following during the second half of the year with rate ramp-ups following in 2024 to 2025. So this airplane certainly is a strong milestone and FACC is diversification strategy with revenue targets in 2025, 2026 looking into high double-digit millions per annum. Next page. Well, Aleš, may I ask you to go into the financials. Thank you for attention, and I will come back with [indiscernible].

Yes. Thank you very much. Good morning from my side to everybody on the call on the video conference. So now let me guide you to some financial figures and some numbers. What we see on this page is the development of revenues on annual basis. So basically, you see that we are again, on the increasing trajectory in terms of sales after the 2 years, 2020, 2021, and that were impacted by the COVID volume decrease, we are now on the way back -- on the way up. We are a little bit better than what we have originally planed. And the deviation, as we already mentioned in our preliminary number release is coming slightly from the volumes. So the volume and the business was a little bit better than expected. But the most part of the additional increase of approximately EUR 50 million is coming for once from the [indiscernible], that had an impact on the top line. And the second bigger number is again as last year's 2021 and 2022, we have accelerated collection of project-related costs. I will come to that a bit later in more detail. But then basically, that has had an impact on the top line -- positive impact on the top line. So when you look on the right-hand side, you see the business distribution. You see that the dominance of the A320 platform increased again to 42%. I would say that this is a kind of a peak year. Now picking up in that. Again, 2022 was basically a very low year in -- for the Boeing business for the 787. So obviously and then the share of that business is very, very low. And as now basically it seems all the quality issues are resolved and then Boeing is assuming production and delivery. That platform will increase in share again also the Russian, the Chinese business with the C919 and A321. Now basically, again, in the A321 we'll be probably a little bit constant, but then the C919 will increase. So that will increase as well. And also the 220 platform is in a ramp up. So the share of this platform will increase and that we all normalize the currently huge dependency on the A320. So basically, the perspective or the prospects for the next 2 to 3 years as it is the same as what we have communicated throughout the other investor calls that we had. On the next slide, I would like to focus on EBIT and profitability. You see here also a positive improvement, even though 2020 was impacted by the provisions and by the restructuring that we had in 2021 was impacted by our legal case. Operationally, when we compare 2021 to 2022, then we are pretty much on a sales level. Also in 2021, the EUR 4.3 million included the result from accelerated project cost amortizations in the same way as it was included in 2022. So operationally, the operation numbers, the EUR 4 million from 2021 and the EUR 5 million from 2022 are pretty much comparable. And let's say, on a bigger picture, the plan was to basically utilize most of the volume increase in the problem business that we actually have seen in 2022. The plan was to basically utilize most of it and then turn it into profit. That has not happened to the extent that we have expected and that we have wanted. We had the biggest 3 issues, certainly you see listed on the right hand side, probably the supply chain management is the biggest impact, of course, material energy cost increases and inflation increases in wages impacted the development as well, but the supply chain management and the resulting also inefficiencies on our side and our production growth. This has been probably the biggest burden on profitability in 2022. On the next slide, you see the development of the sales and in the EBIT on quarterly basis. You see that for the 3 quarters, for the first 3 quarters in 2022, the business has been staying, increase the revenue and you see the jump in Q4 2022. You see also the jump in Q4 in 2021. So as I said, both quarters were basically impacted by the collection of the project-related cost amortization. The impact in 2020 was a little bit bigger than the impact in 2021. But in both quarters, you see these jumps. And as I say, it's mainly the project-related cost. And on the EBIT side, Q1, Q2 are pretty flat to be constant, then basically in the second half of the year. The inefficiency started, Q3 was relatively -- was basically the first difficult quarter. And then Q4 as well, however, a certain profitability from the project-related cost settlements. That has basically turned the Q4 into profit bench. On division level, on the next slide, you see the development [indiscernible] Cabin Interiors, the biggest division in terms of turnover. Aerostructures catching up substantially. And as I said, in the next 1 or 2 years, Aerostructures will become the dominant division again. We are on a good trajectory here. So that's fine. Cabin Interiors, let's say, profitability of all 3 are actually profitable, yes. But I think it would be fair to say that in Interiors, fresher profitability is related to the settlements of the project-related costs. This was a division where we had the most settlements. So operationally, still we need to do a little bit of homework to get Interiors into operational profitability. On next slide, we have the cash flow. Here, basically, again, the comparison 2021 to 2022. 2021, on the reported side, then impacted by the provisions for our legal case. So operationally, we'll be starting pretty much on the same level. We have, in the depreciation, EUR 62 million in 2021 versus EUR 49 million in 2022. In 2021, we have a depreciation, let's say. In that, we have the provisions for the for the legal case and we have also a little bit of the settlements of the project-related costs here. On the [indiscernible] EUR 48 million, it is basically the same picture, normal regular depreciations and amortizations of the settlements that we have done. So overall, all I would say, I think if I were to normalize the EBITDA, then I would be pretty much on the same level in 2021 and in 2022, maybe slightly higher in 2022, slightly higher EBITDA. And then we have the others, sometimes it is valuations, it is pretty much noncash items, then we have an unchanged that we have in the balance sheet. Sometimes it's positive, sometime negative. In 2022, it was minus EUR 10 miilon. In 2021, volume was minus EUR 27 million. So a little bit more cash constant consumption from all of these balance sheet items. In terms of investments, on pretty much the same level, slightly less cash out in investments and we need to see, it's basically are the investments in the fixed assets. The investments into engineering, they are kind of part of the other changes as well. So -- and investments altogether are pretty much on the same level in both years, but we see basically the big change in working capital. While we were generating quite a lot of cash flow from improvements in working capital in 2021, we have been actually consuming a fair share of our cash flow in 2022. On the payable side, pretty much same development in both years, no big changes here. Payment terms remain the same and such. On receivables, speaking much the same picture in terms of no big changes here, cash collection on the same level, so really pass down the inventory. And again, here, it's not only profitability but also inventory and cash flow that basically is negatively impacted by what we all see in -- currently in the industry, supply chain management inefficiencies are all costs of place. So that's unfortunate, but this is something that we need to face and that we need to manage effectively going forward. On the financial status, on the next slide, this -- it's showing you the situation as it was in December with our syndicated loan facility, around EUR 220 million with the set of banks that basically, we had back then. And then you see net debt in 2021 compared to 2022, slight decrease with a negative free cash flow and the negative total cash flow and then that increased slightly EUR 500 million. But on the leverage side, it's good news, we are basically exactly where we needed to be with some headroom towards the EUR 4.5 million that we have to achieve. In the meantime, you will be interested to see how we go forward. In the meantime, we have closed all negotiations with our banks. We have a new syndicated loan facility for the next 5 years. The amount of the loan facility is slightly higher. It's EUR 225 million right now. The composition is similar as it was before. The bottom is slightly lower. It's EUR 95 million in revolver that is basically committed and not utilized there. And the delta is then again, subsidized loans. The EUR 50 million in the KRR facility remains and the rest, the EUR 70 million have been restructured. The COVID funding has been repaid and replaced by a subsidiary funding related to Croatia and to the future investments we will do in Croatia and the export invest facility has been increased to slightly over EUR 40 million. So that the structure going forward in terms of banks, the German banks have exited the [indiscernible] the banks and the takes that they were behind were absorbed by UniCredit and RBI and actually foremost by the ERSTE bank. ERSTE Bank is heavily interested to increase the cooperation with FACC. So this is, I would say, good news as well. On the next slide, we see the investment development. It's slightly going down. But as I say, there is no big changes in the investments. We have been on a high level pre-COVID -- during COVID, we have reduced significantly the general investments, investments in general facilities as we have been investing quite a lot in the year of '16 to '19 into that. That level has remained the same. And then the fluctuations that we see on the investment side is pretty much due to the timing of investments in the new projects. I think it's fair to say that there is a little bit of a switch and since we are investing more, let's say, we are developing and while a lot of developments going into our new business areas into internal mobility. And that development is not amortized. We are collecting basically the development cost with the margin payment. And so the overall development activity is on the same level, but the investments that you see here are basically on a decrease in trend because we are more development -- we're collecting more development costs with milestone payments and we have less amortization. So overall, I think here, the risk profile of our balance sheet has changed over the last few years significantly as we are changing to more milestones' payments in our project related work as we have collected or we have accelerated collection of project related costs, the risk in our balance sheet has significantly decreased over time. The risk that is kind of that would be due to the market risk [Audio Gap] to the sales of airplanes, that risk has decreased significantly over the last 2 to 3 years. Other than that, the leverage development, and we already said that it was close to EUR 5 million in 2021 and has improved, and we are on an improving level. One more statement on the bank loan for this year in June and in December, the testing, [indiscernible] also be on a EUR 4.5 million level. So we have, at least in terms of the requirement of flat development, and then it will go down to EUR 4.25 million in next year and EUR 4 million in 2025. And that should give us enough headroom. We have discussed it a couple of fronts. I think the deleveraging of the company is not our first priority for removing. Our first priority is investment into new business and into growth and then the new, let's say, set of covenants is giving us the flexibility to do so. With that, I would like to close my part of the presentation and hand that over to Robert for the outlook.

Thank you for the presentation. If we can quickly jump to the outlook. Well, what we see is positive market development. We talked about it earlier. There is a continuous recovery of air traffic in our markets [Audio Gap] growth for efficiency in 2023. Also quite promising and well received in the market is quite large orders from airlines received in the last couple of weeks, just naming 2 of them are India, with 450 airplanes are ordered with both Airbus and Boeing. But also the new Saudi Arabia airline that will be founded or refounded with the demand of initially 150 airplanes. Again, platform efficiencies represented on with technology we are producing. Long-term forecast, I will not go into that in detail because it's reconfirmed. Nevertheless, we see some headwind as well. The challenges in front of us. The ramp-up needs to be secured as it's profitability on global supply chains and the impact rate as you see with the working capital increase of close to EUR 40 million. Last year, we had to do that in order to secure FACC's production, but also deliveries to our customers. We are still seeing this trend developing in the first couple of months of 2023 with probably a relaxation of the situation later in the year, but probably a full recovery of global supply chains during the course of 2024. We see some tense situation in regard to capital and liquidity or linked to ramp-ups, of course, but also to a new program in production. High inflation is an issue, especially in Europe. So comparing Central Europe and Europe by it's terrif to the rest of the world, there is more inflation here. I think our Croatia investment, of course, is helping here, our global footprint with production output in India, but also China and U.S. is important here. And of course, there will be additional initiatives to cope with the demographic changes. I just mentioned it before, we are prepared for that. This is nothing new. We know since 30 years that this will come. So we shall not be surprised. We have taken counter actions in time, and we bring people on board as we need them. In order to mitigate some of the issues where we have ensured great ramp-up last year to our customers, and we will continue doing so in 2023. So basically, we are in constant deliveries, stable deliveries that all of our customers are with increasing demand in the next months to come. And as mentioned, there was certainly some Stock & Co operations last year, especially in the second half of the last year influenced by logistics globally influenced by the one or the other supply condition. We certainly lead back to our productivity, not homemade per efficiency, but we had to deal with it. Again, here, we prepared in 2023. We are still expecting the one or the other Stock & Co operation as I said before, [indiscernible] materials we get from the global market. We focus on our cost and price adjustment to compensate our cost of high inflation. As stated before, this can be done in our contracts always a little bit time offset. So what we have seen in price increases last year, some of it already is escalated and some of it will be escalated in the next months. Expansion of the 3 core businesses definitely is a key element going forward. We talked a lot on mobility. Good for us, I think we are perfectly positioned. However, our core competence area, Aerostructures [indiscernible] Interiors, there's a significant growth potential. We currently see some industry restructuring activities ongoing with the growing demand of a customer request to resource product. I think we are perfectly positioned here and we're expecting to get on board some market share in the next month to come. And of course, as stated before, the extension of our production site in Croatia is a key driver for long-term and sustainable profit liquidity in our Interiors facility. So overall, we are forecasting a growth in 2023, certainly in a still challenging environment. But so far, our task forces mitigation plans are helping us and they are quite positive even we are managing it quite well. And in saying that, I will close our presentation. Thank you, Aleš, for your report, and we are open to receive your questions.

Thank you very much, Mr. Machtlinger and Mr. Stárek for the detailed presentation. We will now move over to the Q&A session. [Operator Instructions] And we already received the first question, Miguel Lago.

Yes. I would like to come back to your outlook. From what I can tell from your presentation, you get for an increase in revenue and EBIT. How come that you cannot more -- that you cannot state this more precisely. I mean we have good visibility on order backlog from the large OEMs. So revenue is -- I mean, should be guidable. I mean we had low or high uncertainties, challenging market environments in the past years already. So maybe you can elaborate on -- especially on the revenue side of your guidance.

Yes. Miguel, I can do that, of course, a good question, and this question is keeping the entire industry a little bit busy at the time being. And you're right, the customer -- the end customer demands are pretty much firm. So airlines are asking for airplanes. That's the fact. I think the situation -- the discovery ongoing in the industry and just looking into the first quarter deliveries of our customers. They are not at the point, I think, as we have seen them in 2022. This does not mean that airplanes are not produced. I just can confirm, the industry is at the higher rate in all public domain, I would say, I'm not telling any secrets. Looking into the airplane deliveries from certain customers, the end customers, they look quite weak in the first quarter of 2022 -- 2023. Why is that? There could be some small parts missing, some bigger parts missing. So airplanes are pretty much finished to 95%, 96%, 97% or 99%. One piece is missing hindering our customers to hand over the airplane. So this is giving some uncertainty. And how this will develop? And we can tell you that the entire industry is well connected. We are supporting the weak links in the chain because together, we're only as strong as the weakest link. That's what we are currently doing, well-coordinated. We only can repeat myself. I think there is some instability, I think, especially in the first half of the year, our view is this will stabilize further during the course of 2023. In order to answer your question a little bit more precisely, I think there is a -- the reason around about high single digit, low double-digit growth in front of us in 2023 in terms of airplane outlook, but also in terms of FACC growth, but we need to watch the situation very carefully. And as just seen last year in Q4, there was a strong demand reduction for some of our customers simply driven because of the situation we described. But it's a fair question. And again, airlines have locked up their demand and the others is just a part of the beginning.

Okay. That's helpful. Then a couple of questions to go, to be honest. The next one would be on your free cash flow generation that is to what I understand, way better than you expected in the course of last year. Can you maybe elaborate on this, what the effects were that was driving this more positive performance?

You think -- you mean in 2023 or 2022?

No, '22.

2022. Yes. Well, as I already mentioned, I mean, our cash flow at the moment for the last, I think, 3 years was pretty much basically the story of inventory. As I explained on the other side, this is pretty much basically stable and predictable. And the -- and then basically, sort of free cash flow is pretty much driven by inventory. And that was the case in 2021, 2022. We have got a 2020, even in 2020, we created, let's say, we kept quite a lot of safety buffers on inventory lockdowns all over the place. Supply chains couldn't be predictable, we needed to secure delivery. So we had negative cash flow impact from higher inventories then as towards the end of 2020 and 2021, the situation pretty much improved in a way that the predictability of availability of parts improved. We had a strong run on inventory improvement. And then as I showed in the presentation, in 2021, most of the EUR 70 million free cash flow was basically coming from the inventory improvement. Now Corona was over and the next issue [indiscernible] and again, in the situation with very fragile supply chain with very low visibility and predictability. And so that basically again impacted inventory pretty negatively. And you've seen the negative move in inventory development in 2022. And so the cash flow is pretty much driven by inventory. And then going forward 2023, as Robert already said, difficult to predict how the market will go. It will increase, that's for sure. And that is for us and effects to and to [indiscernible] and leverage again inventory improvement in the course of 2023. As we said, we are expecting the uncertainties will go down as the uncertainties will go down, inventory management will become easier, and that should have a positive impact on cash flow in 2023.

Okay. Can you maybe provide some more color on the inventory level? How much of this is reserve capacities or reserve inventories to be able to ship products? And what is the share of inventory that will be shipped, let's say, soon? Can you maybe split this up in terms of...

I think currently, the inventory and efficiency is around EUR 15 million, I would say, yes. 1-5. And it's moving to raw material, not the finished product because the finished product we deliver to our customers on demand, it's more raw material inventory increases to protect FACC's production in...

Yes. No, that's for sure. Yes. All right. Then on the engines and the sales business. You stated the 787 output was weak. But from what I understand, the output almost doubled in the last year. Can you maybe elaborate on this?

Well, the 787 output last year was pretty much 0. We have to say, so we had some production at the start of the year, then there was a delivery stock implied for certain reasons. As Aleš mentioned, those issues have been solved by our customer and deliveries that we started. And basically, what we see in 2023, a significant increase in demand on the 787 compared to last year because we already delivered a handful of units. The rest is pretty much stored in Boeing. So here we see a turnaround in demand, which was really pretty much here [indiscernible] the revenue of -- with Boeing only was 2%. This will go back starting in 2023, but will continue in 2024, '25 because the widebody market, the larger cap market is asking for new airplanes to meet customer or end customers from airline demand. So I think [Audio Gap] We are basically planning a rate certainly above EUR 7 million or EUR 8 million per month to be precise.

So I missed the last part. How much per month?

In 2026, above at least EUR 7 million or EUR 8 million per month from currently EUR 3 million per month.

Then to your Interior business and the Croatian production, the ramp-up went accordingly. What was the revenue contribution from this production side? Was it already on significant levels? And what will be the contribution in this year?

Yes. So I think, first of all, Croatia is not a subsidiary that is having external business. Croatia is an extended group range. So basically, it's more about a reduction of production costs and not about generating external turnover again. So we look at it from -- more from the perspective of how much of the production process has been has been transferred to Croatia and not from the perspective of how much turnover Croatia is doing. That's not a decisive. And on that, yes, I think that is going quite well. We have been the first -- in first step, we have actually in-sourced quite a lot there of business that we had already in Croatia. So the impact in -- from the first stage of business in Croatia or the first stage of in-loading or first stage of ramp-up was not so high in 2022. As I say, it was also a ramp-up year. So we are not running on full capacity for the whole year. It's been increasing steadily. I think the -- it would be fair to say that the contribution under the profitability contribution from Croatia in last year was around EUR 1.5 million.

Okay. And for -- what is the production share for this year, that you envisaged? And can you quantify this?

Yes. And just -- I think maybe we'll just go into more details on that in [indiscernible]. I think we should -- we have a limited time and we probably need to give the other participants also a chance to ask some questions. I think please set up a call with Michael and then we can into more details. Thank you for understanding.

Thank you very much for the questions. [Operator Instructions] Mr. Breach.

Yes, can you hear me?

Yes, we can hear you very well.

Perfect, sorry. Maybe to keep things short, firstly, just with the Urban air mobility side, Robert, thanks for giving us some information earlier about the Archer Midnight program. Can you remind us now how many total Urban mobility programs you have positions on? And can you give us any feeling for the total Urban air mobility sort of revenue levels, looking out a few years, maybe to 2025, 2026 as you did for Archer. Secondly, just, again, wondering about -- and this is a difficult one, right, maybe difficult to answer, Aleš, with the OEM price renegotiations, is it reasonable -- should we be thinking about those being sort of finished by maybe the halfway point of the year, by the end of June or that it could take longer? And then maybe last question about when we might see sort of margin sort of maybe normalizing in the 3 businesses and particularly the recovery at Cabin Interiors, I guess previously, when we spoke about this when you spoke about this, you were thinking about around 2025 being back maybe for the group to around 7% margins and I appreciate many things have changed since then. Cost inflation is a big part of that. When do you think that we can get back to something like that level of margin?

Harry, thank you for your questions. On the Urban air mobility side, we are currently engaged with 4 customers. So we -- we all know from previous calls, EHang, who was our starting platform, where we are supporting covered Ehang in the flight test program in China. We consumed 40,000 flight hours of more than 30,000 with passengers. So in the China environment, we see that EHang is doing quite well and is going for initial certification to do revenue flights, passenger can book during the quarter 2023. Archer, we talked about was certainly at different platform or set up. Quite impressive company, I have to say with the setup Silicon Valley-based adjacent company with United Airlines is a development and a partner, but also as a partner who will utilize and fly the platforms as add on benefit to their customers flying into larger hubs like Chicago or whatever larger city and offering their passengers a connecting flight at the center of the city. It's a very interesting concept in this combination. We still on this, of course, bringing in some other ideas from high-volume production like the car industry. There is 2 other programs, and I'm sorry not to make announcements who those ones are, we cannot talk about it still. The one problem we are working for some longer time already. This is not a passenger drone. This is something different. However, looking into forecasting Harry, we need to be a little bit careful here, and we're a little bit more conservative. So we get feedback from our customers. We are ramping up on the one or the other program. So especially on one project, I cannot announce the customer, we have delivered 100 drones over the last 16 months. They are flying. They are used, and they are tested in '23. But the 2026 revenue, we are forecasting with the projects we have on board could be between EUR 150 million and EUR 250 million per annum. So that's what we currently see from discussions in forecast we get from our customers, of course. And Harry, you know, all fading on the certification success of the platforms by itself. I hope this is answering a little bit of the question. So if everything works nice and certification can be achieved by those 4 customers. And the rates we see from our partners, there is some good sales and top line growth from that investment. In terms of OEM pricing, I would like to comment on those points as well. So some of the escalations are pretty much standard escalations, pretty much within the contract you seeing at SAC indexes, mainly from North America or global SACs. Extended process ongoing pretty much very forward not too much of a discussion. And there is, of course, some extraordinary discussions we're having for price increases, inflation costs that have been out of FACC's control. And here, definitely Harry, we can say that we are in advanced discussions, and we are targeting a full settlement of -- for our discussions with our customers before June of 2023. So progressing as planned. And I think on the EBIT development, we have a plan rolled out definitely. Aerostructures and this is the positive, as Aleš said, is back on the growth path. Aerostructures was the strongest segment in FACC because before it was hit by COVID-19, as mentioned before, a strong revenues stream from widebodies, 7 -- A7350 a good business, a profitable business, but we lost a lot of the demand there. Right now, it's coming back as Aleš said next year, Aerostructures again will be the strongest division in FACC. And Harry, looking back the profitability of Aerostructures was in the double-digit area before COVID-19. And that's what we're expecting again once the Aerostructures has the growth, I think we enjoyed before. Interiors, Aleš mentioned as well, there is still some homework to do. It's not only, I think, Croatia that, of course, will help. It's a big investment with good cost conditions. However, we had a couple of ramp-ups last year with learning curves at the very high end, especially in the business trip market, but also some new platforms we have to introduce. Here, we are in a good learning curve. Labor hours and reducing, efficiency is increasing, remote coming into a normal production run rate, which is the second part of our interrogate wear plan. Overall, we think 2024 will be the year of breakeven for interiors and then within the next 3 years to come in tear gas shall be in a profitability level of slightly above 5% as well, contributing to an EBIT range of FACC in total being in the high single-digit area by 2026, '27. I hope this is a little bit giving a guidance, Harry, and reconfirm discussions we had before.

Thank you very much. Mr. Breach, if there are any follow-up questions, please feel free to contact Investor Relations. Due to the advanced time, we come to an end of today's earnings call. Thank you very much for your questions and taking the time to answer them, Mr. Machtlinger, Mr. Stárek. We will now move to the end. I hand over for some final remarks to Mr. Steirer.

Okay. Many thanks at that point for your attention in the ending today's earnings calls. And as already mentioned, I think that was a challenging year, 2022, which is behind us. We know the current environment is challenging as well. And for sure, there will be some ones in the future. But we as FACC, we are convinced that the growing market, which is the expectation, not only from us at FACC, but from the whole market will support us in order to become more profitable again in the future. And therefore, I think that is the closing statement from our side, and as mentioned, in case of any further questions, which we may not have answered today, please give us a call, and we will arrange some one-on-one meetings afterwards. Thank you so far. Have a good day. and see you soon. Thank you.

Thank you, everyone. Bye-bye.