FACC AG (FACC) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen and on behalf of Montega, a warm welcome to today's earnings call of the FACC AG following the publication of the financial year figures of 2023. We are delighted to welcome the CEO, Robert Machtlinger as well as Michael Steirer from Investor Relations. So the gentlemen will speak in a moment and guide us through the presentation and the results. After the presentation, we will move on with our Q&A session in which you will be allowed to ask your questions directly to the management. Having said this, Mr. Steirer, please go ahead, the stage is yours.

Thank you, Sara, and good morning, everyone. So welcome to FACC's earnings call for the fiscal year 2023. My name is Michael Steirer and together, as already mentioned with me is Robert Machtlinger, our CEO; and Tanja Maisenberger, my colleague from the IR department. As always, we have already provided some detailed information in our press release issued earlier today. And if, as always, due to some time constraints, it's not possible to cover all questions on today's call, we will be happy to schedule some additional one-on-one meetings afterwards. So please let us know in case required. And now I'd like to hand over to Robert Machtlinger, our CEO, who will guide us through the presentation. Thank you.

Michael, thank you very much. Good morning, dear ladies. Good morning, the gentlemen. Thank you for joining our today's earnings call for the fiscal year 2023. I have the pleasure to guide you through the happenings of last year. And just a quick snapshot on the market development, as you all know, and as we have reported and discussed with all of you and ourselves, during the midpoint of the year, the aerospace market is on a stable recovery. Post-COVID, revenue passenger kilometers around the world are stabilizing and growing in all markets, national and internationally as well. As you might remember from earlier calls, the national markets developed well, already starting in 2022 following 2023. The international traveling was a little bit lagging behind not unexpected. But looking back into 2023, there was a very strong recovery from international traveling as well. In line with growing traveling demand, aircraft deliveries stepped up by around about 10.7%. Our growth in all segments, also in the business jet area, which is the center bar on this chart. So what we are experiencing, starting already somehow in 2023 is a significant increase in business jet production demand, ranging from 30% to 40%, as I said before, starting in 2023, but continuously strong in 2024. In terms of airplane rate deliveries, and I would have a more detailed chart later on. But important for FACC, a strong forecast on the wide-body segment in airplanes that travel internationally like the Airbus 350 and the Boeing 787, which we had significant decreases in demand starting in 2020. Not really a big production demand in 2022 and '21. Slight recovery already seen in '23, but both airplane platforms will come back to nearly production rates as we have seen them before COVID-19. We also see a very stable and constant increase on the Airbus 220 production rates which will double in the next 3 years to come. And what you also see in the industry is quite a big number of request for quotation, so our customers are currently either benchmarking the industry in terms of work transfers or they are re-swapping their supply chains for various reasons. One, of course, is the global environment and working -- work are local -- for local. On the very right side, supply chain, still difficulties in 2023. We had to manage and work around, but we see further stabilization, especially in the last quarter of 2023. This is a continuous and steady improvement, of course, helping also FACC to be in a more stable production environment. There are a few words to it later. In the China business, as you all know, besides our majority business, which is Western-related customers like Airbus, Embraer, Bombardier, Rolls-Royce and Pratt & Whitney and the other ones, we are engaged with the China aviation industry since 2004. Here, we are currently seeing ramp-ups, especially on the COMAC 919 with quite substantial rate increases already in 2024, but also in the following years, again, helping FACC to grow organically. Next page is pretty much the aircraft at the air traveling recovery. In a few lines, I think what I have expressed just before, strong recovery across the global networks, global markets like North America, but also Middle East already had higher passenger revenue kilometers in the year of 2023 compared to post-COVID and international traveling is strongly picking up. Next page. Well, I will live from our customers, our deliveries and orders. On the left of the chart, we have seen an extraordinary order intake in the aerospace industry last year. So compared to 2022, the order intake with Airbus and Boeing increased by 125%, selling 3,670 airplanes to airline customers. This is already the net orders. So the cancellations the industry has seen, which is a normal process already have been deducted. So another increase in the order backlog with our customers and it's a clear indication that airlines are ordering more efficient, more performing airplanes in order to meet their growth expectations, but also the environmental expectations. In terms of deliveries, 10.7% increase in airplane production and handover to airline customers. 735 deliveries from Airbus, slightly above the guidance, which was 720 and Boeing with 528, which is also a stable pickup of deliveries compared to 2022. Next page. Just as a reminder, and we talked about this chart many times, the long-term order book is quite stable, still 41,000 airplane demand in the next 20 years. 80% of the demand is short and midrange airplanes like the Airbus 320, which is the strongest platform in the market and also the strongest platform in FACC, followed, of course, by the Airbus 220, 737 MAX and with a strong signal also from China on the COMAC 919. 20% is the right for the airplanes, namely the A350, the Boeing 787, but also the 777 will join the market in the next quarters to come. So nothing too much new, just to reconfirmation of what we have shared with you in earlier calls. Next page. What are we expecting from the market? As you all know, FACC is delivering products to all our worldwide customers, if it's airplanes or engines, product is delivered to all customers in the airplanes. Of course, our strongest customer in FACC is Airbus with a share in revenue still above 50%. Looking into the platforms and this is the major platforms where we are invested in Airbus 220 average rate of 2023 was 7 airplanes. This production airplane rates will climb to 11 to 14 between 2025 and '26, which is a growth of nearly 60% to doubling the rate. A320 family, the backbone of the industry, 52 deliveries a month in average in 2023, again, growing by 25% to 44%. And if you go through the list, I will not do that because it's just an information and summary, so we see a nice revenue growth across the platforms we are engaged. Just looking into the 2025-'26 numbers, taking the volume per airplane, we see a growth potential of around about EUR 0.25 billion to EUR 300 million based on the final rate we will see in 2026, with a little bit of spread of whatever the airplane rates will do but looking forward, there is natural growth in those patterns we are currently producing. Next page please. Fiscal year 2023, quick the next page please. Key priorities where we started the year with the guidance with a sales growth of 12% to 16%. We came up a little bit higher at slightly above 20%, driven by a couple of effects, also development contracts and good rates development across the industry. Ramp-up of new programs, of course, was a focal point. Strong focus on our further financial KPIs, like cash flow, profitability and leverage. We also had a target to conclude inflation cost negotiations with our partners. That goes both ways, first of all, upstream to our customers, but also downstream with our supplier partners and what we also had in our radar screen was the benefit from the industry, the resourcing from certain activities our customers are currently driving and by winning new contracts to increase our market share in the core business. Next page please. So what was the outcome with the strong orders from airlines with our customers? Our order book increased to USD 5.8 billion, which is certainly giving us a good visibility to plan further demand and investments. EUR 736 million of group revenue, which is up 21.3%, which is more than the growth in the industry. Why is it more? I think we are benefiting slightly from new programs we have brought on board the last 2 years. So we're ramping up those programs and also the Urban Air Mobility as well as the COMAC 919 is a stronger contributor to extraordinary growth. We had a target to a step-up in EBIT, which we have successfully done, our operating profitability climbed up to EUR 17.5 million with a net profit of EUR 9.1 million at the end of the day. This was managed in a quite challenging environment by onboarding a couple of hundred people qualify then, but also in a not always stable supply chain environment which are resulted to the one or the other. Stock in gold production, we had to compensate with special shifts and weekends, so of course, the cost was a little bit higher in terms of stable production but was managed and was inside our expectations. Operational cash flow at EUR 36.5 million with a free cash flow of EUR 17.2 million. Leverage, we have deleveraged the company further to 3.7% ratio between net debt to EBITDA. As you know, we have financing instruments are calling for a leverage below 4.5%. So here, especially the last quarter of 2024 was very successful in managing cash and our leverage. On and above, we have added 536 additional employees in order to manage ramp up. If you go into the financials, next page, please. And looking into the revenue, steady increase. As you know, we have been heavily impacted in 2020. 2021 was more flat year with recovery starting in 2022 to EUR 607 million, and again, 2023, 21% growth. In terms of growth drivers, it's still the A320 family with a 36% total revenue share on the total revenue of the group, which is coming slightly down from last year because other platforms developed quite as well. And I have a comparison on the next chart for you. Business jets is currently 1/5 of our revenue, 21%, driven by high demand in the midsize segment of this business. A350, rather stable, but we see further significant growth in the next 2 to 3 years to come. 220 more or less flat with 7% more to come in the next years to come as well. And the Boeing portfolio is still at the low end. As you might remember, before COVID, this was -- the Boeing content was more towards 20%. This will come back over the next years strongly driven by the 787 re-ramp-up. Next page, please. This is the promised comparison between platforms 2022 versus 2023. As you can see, a little bit of a shift, especially the A320 with a 6% reduction in share. However, 320 has grown significantly in 2023 as well, but other platforms increased even further. So still, I think good portfolio with a good development potential once we see the rate increases from one of the previous charts. Next page, EBIT development. Well, pretty much what we have talked, not easy years in the fiscal years 2020, 2021, turnaround in 2022 and further, I think, activities executed in fiscal year 2023. In a good environment, I would say, if you consider the top line, but still in a challenging environment in terms of global supply chains, energy cost and some other cost drivers. So pretty much as expected. If you look back into 2023, positive takeaway, continuous aerospace recovery, very much in line with our expectations. A little bit of a turning in trend of energy and logistics costs. Logistic cost pretty much normalized in 2023, not fully down to what we have experienced before 2020, but still on a good track. Good discussions with our customers worldwide to manage inflation costs. Well, we had to navigate and I think all of our teams and people navigated quite successfully through the environment we have seen and as a result, key financial KPIs we've put into our plans have been met. Difficulties, as said before, there was quite substantial stop and go caused by supply chain instability, ramp-up issues here in the other one or the material bottleneck we had to work around. We compensated with high flexibility in our workforce across the globe. So managed well, fulfilled all our customer expectations but of course, this came with some extra efforts we had to take. Labor cost has risen because of inflation but also the qualification of new employees was a plain activity. So onboarding a couple of hundred people and increasing the work for us by more than 500 people requires training in order to safeguard stable production, produce high quality and guarantee safety. That was done. That was a huge investment, but we will benefit in the years to come, already 2024. Customer demand, still was some instability with demand signal and short demand updates, but we managed around. EU inflation is definitely higher than global, and we are acting against it well. And the other point is we had to support the one or the other supplier financially in order to manage the ramp-up costs. As a takeaway for 2024, I think what we have done in 2023 provides potential for 2024. We see, especially in the last quarter, more and more stabilizing supply chain across the globe. So extra efforts are being removed. Special shifts are pretty much not the norm anymore and this, of course, helps us in driving efficiency. Staff learning curve is significantly enhancing because of being trained and having a higher education, it's good. Well, we already have negotiated customer agreements going forward, helping us on compensating inflation costs and deleverage ratio of 3.7%, of course, is a good support in refinancing or renegotiating some of our financing instrument, which is currently ongoing. Next page. If you look into the details in revenue, as we see a little bit of seasonality as we always have it. Q1 and Q3 always is a little bit weaker because of seasonality effects. Nevertheless, a good trend line and Q4 2024 was a strong quarter with revenues above EUR 200 million. Still some volatility in the EBIT development, which came from, of course, onboarding, a special effect in the market, especially Q3 of last year was a tough quarter. Nevertheless, this is right now stabilizing, and we are forecasting a more stable quarter-to-quarter development in 2024. Next page, looking into the divisions. As we all know, looking to the left side of the chart, aerostructures are always worse and will be one of our strongest divisions in terms of revenue, but also profitability. Distribution had suffered the most in 2021, losing nearly half of the revenue, putting utilization under some constraint. Aerostructures right now is coming back with good EBIT development. This positive effect will continue in 2024. Engines & Nacelles, nice turnaround and sustainable turnaround. Overall growth in engine, but also Engines & Nacelles and good efficiency measures across operations in combination with developments in our urban air mobility segment, which is currently a part of our Engines & Nacelles divisions. Interiors, well, we are still in the turnaround. 2022, we had a couple of very positive one-off effect as we have reported. Well, the ramp-up of our Croatian facility is ongoing, delivering first results. As expected, last year was our first year of operations with 300 new people. Revenue curve developing, however, new project ramp-ups we have pretty much turned the portfolio on the A320 with the airspace and the new standard in, but also the cost in our business jet have slightly increased, where negotiations are still ongoing with supply chains and customers, expected turnaround in 2024 and so far on track. Next page, cash flow turnaround to the very positive side from slightly negative cash flow in 2022 to EUR 17.2 million of free cash flow in 2023, where we have, of course, managed investments at the EUR 19.4 million investment, most of it came from our investment in Croatia, extending our floor space and making Croatia an even more significant hub for FACC. The rest is self-explaining from higher EBIT and EBITDA, which is also going to our leverage at the end of the day. Next page, financial status are pretty much unchanged, very stable. Our syndicated loan facilities are very stable and unchanged with not used EUR 50.5 million of the financing we have in place. On the top right, important figures, net debt to EBITDA ratio significantly below the obligations we have, so 4.5% was the requirement, we achieved 3.7%. And the equity ratio pretty stable, slightly stepped up from 31.1% to 31.2%. So overall, stable and developing as planned. Financial status in terms of investments, slight update -- next page, please. Slight updates based on IFRS requirement. We are right now splitting the capitalized engineering with the other investments. So the light gray bar is the capitalized engineering and the bar below is the other investments, EUR 25.3 million in total investment down in 2023, which is a slight step-up compared to 2022 and pretty much putting us in the range of 2020-2021. Leverage, well, we have deleveraged the company between 2016 and the years before. Just a little bit of a history looking into the business development and revenue development. If you overlay the charts in terms of revenue and EBIT, with the leverage chart, I think we are in a repeating situation right now, that utilization goes up, demand goes up, and we are able to use benefit from high utilization. So the deleveraging curve shows a nice trend going downwards. I think to be very transparent, we have our guarantees and obligations with our syndicated banks, which we are holding up to. Nevertheless, there is the one or the other investment in front of us. Ramp-up is, of course, consuming some financial resources in terms of material procurement, but also the one or the other. CapEx will be in front of us because of a good market development, but overall, as planned and as forecasted. A few words on the outlook for 2024. How do we see the market, how do we see the customer demand in inputs? We still see a strong growth, again, between 10% to 15%. We will be more specific at the half of the year. We still see some shifts in demand on the one or the other platform, which comes in on short notice, driven by various, I think, issues on the global market, one could be an engine availability across the industry. Well, we are certainly heavily focused on managing the industrial ramp-up with all of our customers. Our action item teams in procurement, the supply chain are still co-located across the globe with our global suppliers in order to guarantee on time and on quality and safe delivery of materials we need. And of course, efficiency improvements and the onboarding new employees is in our focus. So safety and quality come first, and we secure this with a very high professional and will fall through employment training. We are completing plant #6 extension in Croatia, which is nicely performing and progressing in the June-July time frame. The extension will be completed and we will further fill up the empty capacity with work transfers from Upper Austria, but also new programs into this new facility. Continuously focus and high focus on increasing cash and profitability, of course, is in our radar screen. Keeping the leverage target of 4.25 at the end of June is on the agenda and there is still a good dynamic in the industry by asking also FACC quoting on certain products, which is part of our core business, but also part of our noncore business. In saying that, this is a quick run through at the last year in a quick guidance for 2024. In saying that, thank you for your attention, and we are ready to take your questions.

Thank you so much Mr. Machtlinger for your presentation. [Operator instructions] And we already received the first virtual hand by Bastian Brach.

Perfect. So 2 questions for me. I want to get a bit more color on your employee ramp-up plan. So obviously, you will finish the Croatia plant in summer this year and I remember you said previously that the ramp-up there will be going to early 2025. So do you see a stable headcount increase compared to 2023 until then a reduction afterwards in net additions? This is my first question. My second one is on the EBIT margin for the cabin segment. So what you see to be on track in the other 2 segments to reach your long-term target? The cabin segment is lagging a bit behind so obviously, Croatia plays a part there, but can you outline and maybe quantify other issues, maybe like the ramp-up in COMAC and urban air mobility production or any other moving parts there?

Well, thank you for the questions. Well, in terms of headcount once going forward, we have a plan in place. So expected total headcount in the FACC group by the end of 2024 will be around about 4,000. So we will add a little bit more than 400 in the next rolling 12 months where we are already a little bit, let's say, hiring in ahead of schedule because we need some time to train people. In terms of Croatia, Croatia today stands at around about 300 people. How is the process working? Once we hire people in Croatia, so if it's people we need to ramp up already existing work in Croatia, the training of new hires in Croatia is already performed at the Croatian side by our training staff in Croatia. If we need employment ramp-up in Croatia to take a new package, we have people from Croatia being trained in our Upper Austrian Training Center, which is a basic training, which is a safety training. We give them certain qualifications, then they have a hands-on training on the product we want to move in the next stage. And if this training is finished, pretty much we already have a pretrained workforce once the product then is moved to Croatia. So this is a very, let's say, well-thought process. We also have applied in other transfers like India or China in the past years. This is stable. And we're not roller coasting, so we are not hiring today and then we are reducing the workforce. So what it is, is if people start new, they have a little bit of a learning curve, which is not at the same level. Where if it's in Austria at the time being, with the learning curve and efficiency increases, there are people released we can use for ramp-ups or a new program. So this is not roller coaster up and down, hire and then reducing the headcount again, this is more stable. And to give you a figure with the set that we currently have by tripling the size last year and this year, Croatia will be an operation that could deliver roughly 1 million labor hours in 2027, latest 2028. This does not mean that we are significantly reducing headcount in Upper Austria the capacity, we free for the interior manufacturing in Upper Austria, we are using for aerostructures on new programs but also ramp up. So we see currently a little bit of a higher demand and employment increase in Croatia, more stable in Upper Austria. But as I said before, the setup in Upper Austria will be used accordingly. EBIT development in cabin. We have launched a plan 2 years ago where Croatia plays a major role on a so-called interior turnaround plan. Croatia is one factor out of it. The one or the other resourcing of core competence like, we call it vertical integration of business jet composites is another point. Resourcing of material is a third element, and I can give you examples. We have changed just recently harnesses we bought from Europe at a certain price. We have offloaded or double-sourced the wire harnesses right now from India, giving us a 50% cost reduction on wire harnesses. So there is a number of activities ongoing pretty much following our plans. I have to say what is the intention, interior breakeven point shall be with the fiscal year 2024, latest 2025, and we are seeing a stable, sustainable EBIT of 5% to 7.5% starting in the year 2027-2028. So this is the time when the offload to Croatia are pretty much executed. There's another element, the COMAC 919 interior, where we have produced around about 20 sets. Here in Austrian is currently moving to our production hub in China. This is an ongoing activity during the course of 2024, by squeezing out logistic cost on these platforms, but also reducing cost with our China operations. I hope this is answering your questions.

We will now move on with the questions from Miguel.

Can you hear me?

Perfect.

I have a couple of questions. Is it okay if I ask them one by one?

Whatever you prefer. No problems.

So the first one would be regarding the gross profit margin in Q4, which was at 18.4% is super high. Was there any exceptional booking or was this just, let's say, the usual seasonality that you encounter in your business?

No, I think there is 2 effects at the time being. The one is inflation cost compensation, which is in 2022-'23, an ongoing activity, as you can imagine. There is some discussions with some of our customers' renegotiations took longer, and we had a little bit of, let's say, one-off booking compensating us for earlier cost increases in the year. So this was one element. And the second element was that we have received in terms of development contract execution, we have fulfilled the one or the other important contract milestone, which triggered a payment but also helped us to realize our profitability on our development programs, but mainly...

Can you quantify the first effect a bit. I mean, like there was it mid-single digit, something like that? Or how much was this inflation cost compensation payment?

Well, it's a little bit -- it's 2 sided. There's inflation cost compensation payments already happening on a rolling monthly price increases, and the other one was, let's say, doing an invoice compensating us for November, December, which has been a strong month, but also having a backward-looking payment. Out of my mind, I need to say, I cannot tell you right now. We do not want to drop a number out of my mind because this might be a little bit complex and I do not want to mislead anyone. So we can do this, and Miguel, I think Michael could follow up on your question.

Yes, we'll do so.

I do not want to put numbers out of my -- off my mind because this might influence your ideas, and I do not want to do that. I'm sorry for that one.

Sure. But just on the second point, the milestone payments, I mean, isn't that a, say, normal development or were these really exceptional milestone payments...

No. You're right, Miguel, this is a normal development. This comes in certain quarters. Well, I think there was quite a few milestones, especially in the urban air mobility area. Where I didn't talk too much today, I have to say, but urban air mobility for us is not a battle anymore. So we have development contracts between today and 2027 in the range of USD 19 million already booked. We are currently working on this development. And as you say, this is a good statement. This comes right more on a regular basis because milestones are executed as we speak.

Okay. And on the other hand, in administration expenses, the cost was like EUR 24 million in Q4 compared to EUR 16 million, 1 year earlier. Was there any like one-off component in this administration expenses?

Well, we need to be a little bit careful. Administration does not mean automatically fixed cost, that we have pulled up fixed costs dramatically. This is not the case. The pure fixed cost was kept stable but in the administration cost, and this is a good catch from yourself, the training of our people -- of the new people is part of this administration cost. So you see that we have quite invested a lot in quality and in safety with the new people we brought on board. But this is a good catch, thank you for asking. This is giving you a little bit of a guideline on what we have invested in 2023 to have a good workforce and well-trained workforce in 2024 and going forward.

Okay. So can I drill down a bit in this -- into this admin expenses, please, if okay for you. So if I look in the annual report on EUR 147 million, I see that personnel costs went up a bit from EUR 22.5 million to, say, EUR 26 million. Depreciation was quite stable. There wasn't an FX impact, but there was also like the general operating expenses, which increased by EUR 8 million from EUR 14.7 million to EUR 22.7 million. Is there anything you would like to mention there or which you can say, well, there was a special effect? Or is this also quite, let's say, normal scaling of the business?

No. As I said before, this is the cost of the training for our employees. We have invested. So the 536 people the headcount increase we had, we had to bring in a little bit more people because there is normal people turn, so some people are volunteered to leave us. So overall, we had more than 800 new people, and all of those 800 people had to go through a training session. And this training of this new employee is part of this expenses you are just mentioning.

Okay. It's not personnel costs. Okay. So this will then -- if you just...

It is related to personnel costs because those people are repay, they get the payment check as everyone but they are not manufacturing products. So this is a real educational cost. And again, I'm not saying too much, this is one of our biggest potentials, I think, in terms of efficiency and the profitability for 2024 because this cost is a non-repeating cost element or at least not in that magnitude.

Okay. And I have 2 left, the first one regarding the Interior segment, which was obviously, let's say, driven by this loss in Q3 because of the supply chain issues, you mentioned at that time. Is this now gone? I mean, was this more like an issue for 2023? And in 2024, you now have a, say, blue sky and we can expect profitability in interiors really to normalize again to around 0, maybe like in the last couple of years, it was? Or what is your guidance?

Yes. I think supply chain issues is not only related to one very specific division. This was pretty much across the business and the group revenues. So this also had an impact on the other 2 divisions. I think and I'm repeating the statement in interiors, it was 3 elements. First of all, the ramp-up of the operation facility, which is doing nicely. The portfolio transition on commercial interiors, switching from the enhanced cabin to the airspace and the new standard being the ramp-up of the global 3500 business jets and here, especially in the business jet environment, we talk some high-cost equipment like entertainment system, like more complex wire bundles. Here, we have seen cost increases with supply chains, 2 elements here. Again, repeating, we are changing suppliers from all suppliers we worked with for a couple of years and decades. The new supply chains are helping us to save cost. And on the other hand, it's learning curve effects, we are expecting to come. Breakeven point in interiors expected during the course of 2024, especially in the last quarter. And then looking ahead in '26-'27 5% to 7.5% EBIT profitability in that segment, mainly influenced by Croatia.

Okay. I just realized you already mentioned that before to the question from my colleague. One last question, FX. You typically have a U.S. dollar loan exposure which is quite significant. I see the EUR 9 million FX or EUR 9.7 million FX loss you booked in the admin expenses. Can you please remind me, first of all, how you are natural hedging progresses and what the current U.S. dollar or unhedged U.S. dollar exposure is like and also how these FX losses are booked or how they -- basically how they -- like the economics around these FX losses, please?

Well, I think on the FX, we have a strategy, which is a forward-looking hedging. Two things. Materials is naturally hedged because close to 80%, it's a little bit fluctuating, a little bit on where supply chains are and what the FX is. But 80% plus/minus of the material we are consuming we buy in U.S. dollar. So this is a natural hedge. We buy in U.S. dollar, we sell in U.S. dollar, so no exposure there. The rest, we have a strategy that 2024 right now is fully hedged with agreements we have in place and we are currently hedged slightly at 1.1%, a little bit below that are compared to the Euro. So basically, FX is considered in our forecast in our profitability expectations. I can tell you what we have put into our internal forecast for 2023. There were certain FX impacts planned. The final result was around about EUR 0.5 million benefit or it's a better result from FX compared to the plan. So we're looking into a long-term hedging and I also can tell you 2025, we started our hedging activities already. And normally, we are buying dollars once the dollar is favorable, so again, round about 12 months minimum hedging, that's our philosophy. And right now starting to hedge 2025.

So I will now move on to the questions from our check box. So the first one is, can you give us an indication when a new CFO will join FACC?

Yes, of course, I can do that. The selection process is in a very far advanced process. There is discussions with one, plus another person and I'm expecting that these negotiations at the contract will be put in place within the next 3 to 4 weeks. So there is expectations that by the end of April or during the month of April, there will be the announcement.

All right. So maybe we can welcome a new face on our next earnings call. We will see.

Absolutely.

Another question, I'm concerning you mentioned weakness of some suppliers. Is that raising the opportunity for acquisitions in that area for FACC?

Not really because the struggling suppliers is more in the raw material and semi-finished products like metal part machining. It's more companies having a size between EUR 5 million to EUR 50 million. We see a tendency that smaller suppliers having less access to capital struggling with the ramp-up by material in advance. So here, we help them with earlier payments. It's not -- we don't see this trend with larger suppliers. They are in good shape and our supply chain heat maps are also having a strong focus on financial health of the company. So it's more a smaller ones and not of an interest for any M&A with FACC.

All right. Another question. Can you give us some words about your drone efforts?

Yes, absolutely. Well, as you know, our core business is civil aerospace, what we have done in the last 35 years. Few years ago, we have extended our strategy to include urban air mobility and space at the later phase of the decade. Urban air mobility is something we have started to look into already in 2018. We have defined a strategy with whom we would like to collaborate. I think what we have thought about, we have executed. We are currently having excellent relationship with 5 customers in the urban air mobility market. Three I announced. As you know, it's our first program was EHang. We are still supporting. EHang, right now certified in China in taking flight passengers. The other 2 announced is [ Archer], a taxi drone manufacturing start-up in Silicon Valley with investors like Stellantis from Europe, like United Airlines being the airline flying the drone and moving passengers from hubs to the center of the city. And also recently, Boeing invested into the company. The other announced customer is [ Eve ], a 100% carve out from Embraer, pretty much having the same development in the pipeline like Archer, a similar system with a collaboration with United Airlines as well. And then there is 2 unannounced customers, we are currently working and developing. So what is it for us? As I said before, this is not the bubble, this is not the dream only, this is generating revenue. Trust development contracts, which is indices and milestones. There's a volume of EUR 90 million, which is currently booked into our next 3 years. And we are executing on a monthly, quarterly basis. In the EUR 5.8 billion order backlog, we have not yet accounted the production volume. We would enjoy with the contracts we are currently having. But giving you a figure, if in 2025-'26, this is the point when Archer and Eve want to deploy a passenger service out of United of U.S. hubs, and the rates are going up to the expectations, the contractual revenue stream of those 5 contracts is in the board of EUR 300 million a year, starting in 2026-'27. So there is something I think we currently are quite happy with what we have done. Still the products are in certification. Certification is a prerequisite to start earnings with our customers where the customers can start earnings. So we are there. Currently, it's revenues from development, but also picking up in product delivery in the next, I would say, 12 to 18 months to come.

All right. And then we have 2 questions left concerning growth. The first one is how much of the working capital build up do you plan for your growth plans?

Well, we have substantially increased our working capital over the last 2 years. We see currently a turning point. We are not expecting to further increase our working capital. It's more the target to reduce working capital for a couple of reasons. First of all, the churn rate has been lowered to secure, let's say, ability to produce. The production lead times are again being reduced because of more stability from market demand. So I think we have peaked in inventory levels in 2023. There is still some add-ons in the month of January, February, but from that point on, we have a strong focus on working capital reduction.

All right. And the last question, do you plan new capacities besides Croatia for further growth in the next 2 or 3 years?

Well, Croatia, as I said before, no more statement, up and running. There is round about EUR 30 million to EUR 80 million volume offload currently ongoing from Austria to our production hub in China. This is mainly the Chinese aerospace product the C919. So here, there is no need to invest out of FACC's capital because this is not an FACC-owned facility, this is a facility owned our majority shareholder, and we are using it. So no investments planned there. There's a couple of production relocations into India, where we have a production partner since 2010. Here, we want to reinforce our partnership in probably in the year 2027-2028. We want to reinforce our production hubs in the United States and mainly Wichita and Florida.

Great. So by answering this question, we will come to the end of today's earnings call by, I guess, really an hour so we are on point. Thank you, everyone, now for joining and to showing interest in FACC and for that encouraging conversation. So -- and a big thank you also to you, Mr. Machtlinger for the presentation and Mr. Steirer and Ms. Maisenberger for being here with us today. So we wish you all a lovely remaining week. Happy Easter and I'd say thank you, and goodbye.

Thank you from here in Vienna as well. Bye-bye, everyone.

Thank you. Bye-bye.