FACC AG (FACC) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and a warm welcome to today's earnings call of the FACC AG, following the publication of the financial year figures of 2024. I am delighted to welcome the CEO, Robert Machtlinger; CFO, Florian Heindl; as well as Michael Steirer from Investor Relations. So we'll start the presentation shortly. After the presentation, we will move on to a Q&A session, in which you will be allowed to place your questions directly to the management. We are looking forward to the numbers. And having said this, Mr. Steirer, the stage is yours.

Thank you, Ina, and good morning to everyone. So welcome to today's FACC earnings call for the fiscal year 2024. As already mentioned, my name is Michael, and together with me are Robert Machtlinger, our CEO; and Florian Heindl, our CFO. As always, we have already provided some detailed information or financial information in our press release issued earlier today. If, for example, due to some time constraints, we are not able to answer all possible questions during today's call, please let us know, and we will arrange some schedules or some meetings afterwards in order to clarify everything necessary. At this point, I would like to hand over to Robert Machtlinger, our CEO, for starting the presentation. Thank you.

Thank you very much, Michael, for the introduction. Hello, everyone, and a warm welcome from my side as well to the FACC earnings presentation for the fiscal year 2024. Next slide, please, Michael. Well, as we all know, the aviation industry has another year of growth behind them. So 2024 was another year where the aerospace industry developed very well. 4.9 billion passengers worldwide used an airplane in 2024. This is a record number in the history of aviation. Of course, I think our industry, the aviation industry is benefiting from this growth. Those high passenger demand are asking for a continuous increase of airplane production rates. The environment, I think that is, however, still challenging because of various issues like supply chain, geopolitical changes as we see and a rapidly changing environment we have to adopt. We, as FACC, really are taking those challenges. We're adopting to those environments. At the same time, we keep a high focus on our key objectives, which is, of course, dealing with the market potential, but also transforming FACC in this environment for a better financial stability. So overall, the market outlook and the guidance we have provided to all of you starting in the first quarter of last year have been met. So our forecasting was quite precise. This was leading to a 20% revenue increase during the fiscal year of 2024. Also our measures in terms of profitability improvement take a momentum. So we have increased the EBIT by 62% compared to 2023. I think it's fair to say that the EBIT is still not at a level we have enjoyed before the 2020 corona crisis. Nevertheless, Florian will talk about, we have measures in place to be back to the old performances. Overall, we have a very stable long-term order book with a volume of EUR 5.8 billion, which is, of course, good to allow FACC to plan the next steps and the next investments. Next page, please. A few words on the market. As always, the traffic is recovering constantly. So in 2023, there was a swing in terms of stability in the industry. This trend continued in 2024, which is, of course, a strong sign from the traveling market. Strongest growth is back to Asia, the Middle East and China, of course, but also Europe and the North American markets are developing as expected. Next page, please. Taking a closer look on the overall development of the aerospace industry, I think this is quite impressive. Just looking into the development of the infrastructure, 42 new airports worldwide have been put in place. We are seeing 160 new airlines that have been founded over the last decades and years. So indicating that air traveling is a mobility the world needs. 7,250 new routes worldwide have been added to an already quite intense network of traffic. As I said before, 4.9 billion passengers used airplanes in 2024. And the other forecast for 2025 is forecasting another 6.7% increase. So 5.2 billion people will take airplanes to travel worldwide. 40 million flights conducted in 2025. And what we also see, there is a further increase in demand on all passenger airplanes worldwide. Of course, this is benefiting FACC. Looking into the long forecast in terms of regions, we see a strong demand in Asia with a 5.1% average growth over the next 20 years, adding another 2.6 billion passengers comparing today's traveling activities to 2043. So overall, in a nutshell, in average, the world traffic in aerospace will grow 3.8%, adding another 4.1 billion passengers to the route structure between today and 2043. Next page, please. Well, this is the total deliveries of our main customers, Airbus and Boeing. They are still dictating the market. As we can see, and this is a clear indication comparing the 2024 airplane deliveries to the 2018 year, which was the year before Boeing had to slow down production because of their 737 issues. There is still a gap to be closed of around about close to 500 airplanes. So the industry already produced more airplanes some years ago. Airbus is quite close to the record year 2019, but still has an 11% gap to be closed to the 2019 figures. Boeing is still behind the 2018 output. Reasons are well known in the industry. Nevertheless, also Boeing is on a course to constantly and slowly ramping up their production rate. So overall, there is demand out, and this is visible on the right side of the chart, 14,883 firm orders booked with Airbus and Boeing portfolios, which clearly makes it transparent that we have a more than 10 year order backlog in front of us. So the industry is highly focused on the delivery of that strong order backlog, a good position to be in. Next page, please. Overall, there is 17,000 firm orders in the industry, considering also other OEMs like COMAC, like Embraer and other players in the industry. Again, the biggest backlog is booked with Airbus airplanes, 51% of the global demand is with Airbus and Airbus also is FACC's strongest customer. Followed by Boeing and COMAC is continuously increasing their market share, which right now stands at around about 9% considering the order backlog. Also, and you know that from the past, the backbone of the industry is the single-aisle airplane platforms, namely the A320 family, the 737MAX, but also the COMAC 919, which is taking a momentum with the Asian sales they are doing. In region, also unchanged, a big backlog from Asia, 41% of all orders are booked in the Asian region. In the last 2 years, a big move from India buying lots of airplanes and following, I would say, the trend that China has set 20 years ago. Next page, please. Well, in terms of the distribution, we already talked about it, the single-aisle market is the strongest market, the backbone and also the backbone in FACC as Florian will describe in his slides a little bit later on. Next page. Well, in saying that, I would like to hand over to Florian, giving you more input and insight on the financials and details of the last fiscal year.

Thank you, Robert. Good morning to everyone joining the call. Michael, please next slide. So overall, the fiscal year 2024, you can see on this slide, some main messages from my side. So as you already heard from Robert, the market recovery continues. What does it mean for FACC on the top right side, we have a planned development in our core business and also in our Advanced Air Mobility business, which is the drone business. Robert already mentioned the 20% revenue increase that we enjoyed in 2024, bringing us up to a revenue of EUR 884.5 million, resulting in an EBIT of EUR 28.3 million, meaning an EBIT ratio of 3.2%, which is, of course, and Robert also mentioned that not something that is sufficient going forward. But as you will see going after the next slides, we will work on that, and we will improve further. Also in the last year, we had another ramp-up in FTEs, additional employees in our company, 394, to cover the 20% revenue growth. The last point on the slide is something also that is one of the key indicators in our company that we have to heavily work on is a free cash flow of EUR 7.7 million, which was again positive also in 2023, a positive free cash flow. But as we stated regularly also over the last couple of quarters, this is something which is not sufficient. We have to work on it. I have it later on the slide as well. Working capital remains a big issue in the company where we have to work on going forward in 2025. Next one, Michael. Overview of revenue and EBIT. On the left side, you can see the development of EBIT. Robert also mentioned in his presentation already that we are now back on track before COVID with a revenue of EUR 884.5 million compared to a revenue of EUR 801 million before the COVID crisis. So again, back over the pre-COVID levels in terms of revenue. In terms of EBIT, you see also the slowly recovery on the right side. Last year, we had an EBIT margin of 2.4%, bringing us 17.5% in 2023 million. In 2024, we enjoyed EUR 28.3 million, bringing us to a ratio of 3.2%. Next one. On a division level, what we can see that all our divisions are enjoying the revenue growth that we just described with Aerostructures jumping from EUR 272 million in 2023 to EUR 350 million, around about 40% revenue share of the total revenues. Engines & Nacelles jumping from EUR 130 million in 2023 to EUR 157.6 million and also Cabin Interiors, still our largest division with around about 42% of revenue share of total revenues, jumping from EUR 334 million in 2023 to EUR 376.8 million in 2024. Next one. In terms of EBIT, the picture is a little bit mixed. You know the development pretty much from the last couple of quarters. Aerostructures still on an upward trend in absolute figures. Engines & Nacelles, currently our strongest division, both in terms of absolute terms, but also in relative EBIT ratios for last year with EUR 19.1 million absolute EBIT level with 12.1% EBIT margin. And Cabin Interiors, still disappointing, I have to say, with minus 6.2% EBIT in 2024 and a negative EBIT margin ratio of 1.6%. What we can see there, although is a slight recovery in terms of a comparison to 2023, where we had a negative margin of minus 2.7%. We are working on that. We have lots of measures in place. I'll talk a little bit more later on. Next one. The revenue distribution in terms of 2024 compared to 2023. On the left side, you see the distribution in 2024 on platform level. You know the slide as it is a frequent slide that we have in our presentation. A320 family, still the most important platform of FACC with a revenue share of 37% last year, 36%. So a slight relative increase. Business Jet, still the second most important segment that we have in our company, although relatively speaking, the share decreased from 21% in '23 to 19% in 2024. All the other candidates are pretty much the same. A350 coming in third. And then we have a little bit of a mixed picture with the others that we have clustered in where also the advanced air mobility business is in there. And also worth mentioning is the ever-increasing China business that we are enjoying in 2023 with a revenue share of 5%, moving up to a 6% revenue share in 2024, basically consisting of the C919 program and the ARJ21, which is now called the C909 platform. Next one. Free cash flow, as I highlighted in the beginning, this is still a concern of the company, although in positive territory with EUR 7.7 million. This is definitely not something that we, as the Management Board are satisfied about. So we have lots of measures in place. Robert in his final statements will tell you a little bit more of what we are doing. The biggest driver in free cash flow development is, of course, still the working capital issues, mainly driven by our high inventories. I have it on the next slide that we are seeing. So still an issue for the company, challenging environment. Of course, we have also seen that in January and February in the customer environment. But we still think that we are on a good path for the full year to solve those issues and making a major step forward by the end of the year 2025. Next one. Here we go in terms of the investments on the left side, you see a slight ramp-up in investments, which was driven again, of course, by our investments in Croatia, where we have set up another expansion phase in our Croatian plant, the so-called Phase 2 that we finished in 2024. But the more important issue is on the right side, as I just spoke before, is our inventory development. You see over the last couple of years, of course, increasing with the ever-increasing revenues that we enjoy. But again, a jump from 2023 of EUR 158 million to EUR 178 million in terms of inventory. If you compare it to the last quarterly figures that we published, it was a positive development, bringing us down from the Q3 figures of 2024, which were around EUR 190 million to EUR 178 million. So there was a little bit of an improvement, but it's still not enough because we are, of course, looking at several ratios that are important for us. One of them is, for example, the ratio of total inventory to total assets where we are still at elevated numbers compared to the times that we enjoyed before the COVID crisis and also to certain industry standards. And this is a big task for 2025, also mentioned a couple of times already in the last year's communication, where we say, okay, this is the biggest cash flow level that we have in the company. We have resources on that program to improve the development, and we are heavily working it day by day in the company. Next one. Balance sheet key figures, also standard slide. Net financial debt increased to EUR 241 million in absolute terms. In terms of leverage, net financial debt by EBITDA, we have a slight improvement from 3.70 in 2023 to 3.60 in 2024. Speaking of our KPIs in our funding contracts, which you all know, which are basically only 2. One is the leverage ratio. The second one is the equity ratio. The leverage ratio will decrease in terms of the level that we have to achieve in 2025 to a level of 3.75. That was 4.25 in 2024. So the level that we have to achieve in 2025 will decrease again. And the equity ratio that we have to achieve still remains on 25%, where we are currently for the last fiscal year at around 30%. Next one. So saying that, I will hand over again to Robert to give you the outlook and our final comments before we are entering the Q&A session.

Florian, thank you very much for the details shared with our guests. Next page, please. Well, in terms of the outlook, what we see on the top line, we see a continuous growth of the aerospace market and our business segments. So what we have seen in the last 2 years in the core business, but also in the future business, the urban air mobility, the trend shows still upwards. We have a very balanced portfolio in terms of customer and platforms, as you know. And for the time being, we have -- we do see a revenue growth between 5% to 15%. You might ask yourself, why is the spread 10%? Well, we're still watching the industry very carefully. We have seen a couple of volatility effects, especially in the first 2 quarters of 2024 with the one or the other order adjustment from the market. We see a similar dynamic in the year of 2025. So customers are still as we are having a strong focus on the supply chain, which also is the one or the other reason for the high inventory levels the industry is carrying. What we will do is, we will narrow down our revenue forecast after the first or second quarter, having more insight on the industry. So overall, we are forecasting a year of growth in front of us. Operating results, as mentioned by Florian, there is some headwind from the global environment, mainly driven by the one or the other issues globally, but also supply chain. Here, we stay very focused and our focus is on the improvement of the operating profitability. This will be tailwinded by higher scaling effects driven by growth, but also our initiatives I will talk to you on the next slide. Build rate increases, that's what we see across the industry. All of our customers are constantly increasing the build rate, especially the A320, but also the COMAC 919 sees a steeper ramp-up in the year 2025, but also 2026. What you also see is a stable construction rates on the wide-body aircraft, namely the A350 and the Boeing 787, which are for FACC very strong platforms. As a reminder, before the COVID crisis, the A350 and the 787 had a revenue of around about EUR 250 million per year. Based on the rate adjustment coming with COVID, those rates have been dropped. Right now, we are picking up again, giving us additional fuel for growth on programs we already have in-house. Challenges we see still supply chain stability is an industry issue, not only keeping our customers very focused on the global supply chains, also, we do that in a strong alignment with our customers. We have rising operational costs, especially in Europe, driven by high inflations. A few words how we mitigate those issues in FACC and the geopolitical changes we see every month. We keep an eye here as well. I think we can adopt quick to those activities because FACC, as you know, has a very global setup in Europe, in North America, but also in Asia. Next page, please. On priorities, key priorities, well, executing the rate ramp-ups for us is key. We do this very well aligned with our customers. Our quality and safety still remains a focal area here in FACC as well. Cost reductions, Florian already talked about it. EBIT is on a growing trend, which is good. It shows that our initiatives already taken in the year of 2024 is showing positive effect. Nevertheless, there is work in front of us, and we have launched, as already talked to you in the last calls, a company-wide project, we call it CORE and CORE stands for cost down for streamlining the organization, return of capital and efficiency increases. So there is numerous actions ongoing, tackling all of these issues. We have prepared a plan of an EUR 80 million cost saving across all of FACC, including inflation compensation requests with our customers, but also efficiency increases in our operational environment and in terms of cost, material is 55% of our cost. And here, we are currently working on certain supply chain restructuring activities contributing with another EUR 25 million of cost reduction opportunities. Results of this CORE project will come in steps over the next 2 years. We are very focused on it. Based on the execution of the project, certainly, our Interior division will breakeven and go into sustainable profitability starting in 2025. And the EBIT targets we are forecasting will be at the range of 2018 figures in the next 3 years to come. Local for local for us is important, first of all, to mitigate geopolitical impacts or changes we are seeing. Local for local for us means, of course, in Europe, using our investment in Croatia for labor-intensive operations. This company, as we have set it up in 2022, is performing very well. The targets we have set ourselves in reducing labor cost out of Croatia, meet our expectations. The setup we have in Croatia is allowing us 1.1 million labor hours -- direct labor hours. We are currently utilizing in 2024, 550,000 labor hours. So in the year of 2025, 2026, the company will be fully loaded and the full benefit of the 1.1 million labor hours will be another positive effect on the EBIT, but also cash flow side. In saying that, this is the plan for 2025. This is the focus areas. And in saying that the floor is yours for the Q&A. Thank you for listening.

[Operator Instructions] And we have a question from Mr. Mateca.

Congratulations to your numbers and your still existing very credible efforts to increase the working capital issue and so on. My question is some kind of sideline to your business regarding drones. You always had mentioned in the past that you did have some efforts in that respect, calling the U.S.A. and calling some kind of new affordable features in our daily business like postal office and so on. What is interesting for me, what is the proceeding currently? And what do you think about the current year proceeding in drones?

Yes. Thank you. Welcome for raising the question. This is, of course, a very important business segment for FACC. As we have announced and we put it out to all of you, we are currently holding development contract in the range of USD 100 million. We are executing as we speak. Our main focus in customers are on the North American and South American markets. We can name certainly 2. As you know, it's Archer being our strongest customer in the drone business, followed by Eve, which is a spin-off of Embraer. Where are those 2? Archer and Eve is public companies. We can read it. So I'm not disclosing any secrets. Archer is on its way to certifying the airplane. FACC is one of the biggest partners of Archer. We are delivering to Archer the entire wind, the entire fuselage fully assembled, including the cabin interiors. We're expecting -- or Archer is expecting to have a certification granted in the United States or possibly in the Middle East together with partners in Abu Dhabi and Dubai soon in 2026. And together with United Airlines, Archer wants to offer passenger services from our main airport into the center of the city. The Archer setup is very interesting because Archer is a Silicon Valley start-up with investments or shareholding from Stellantis, as you all know, European car manufacturer. And we are trying to combine both worlds, the aerospace world with the competitiveness of the car industry where Stellantis is bringing a lot of knowledge to the table. So that's one project. The other one is Eve. Eve is very similar to Archer in terms of the airplane by itself. It's a taxi drone that can move 5 people from A to B. FACC scope of work is, again, aerostructures, wind component and the tail of the airplane, very similar setup. Also United Airlines is partnering with Eve. So United Airlines has Eve and Archer as their main partners. So they are counting on 2 because United Airlines would like to execute the vision on passenger services last mile. A third project, I'm still not able to talk about the customer. We are working with is aimed to last-mile delivery of packages of consumer goods. Here, we have delivered 250 drones to our customer, who is doing regular flights in the United States every day. So around about 1,000 deliveries a day are done as we speak, growing every month. The forecast for 2025 is around about 550 drones we have to deliver to this customer. And this customer right now is also setting up a hub in Europe to set up the transportation technology, not only in the States, also in Europe. So going forward with this customer, we are seeing a big potential in terms of output in the next 2 years. Overall, and we are still conservative because certification is the key element that is missing, but we see a good chance with those customers where we have been engaged that in 2026, '27, the volume will be more significant for FACC.

It's a real pity that you're not able to conclude who that customer is already.

We'll come sooner or later.

Of course, of course. But it's a very, very, very let's say, honest thing and honoring product that you are delivering those because the competition was, as I've heard, very harsh and you did win that. My add-on question, if I may, too, is related towards the future development of the industry, the airport airplane industry. What you've seen on your slides that you have some hydrogen airplanes being already in the planning. And what I know is those fuel-saving machines on the future airplanes are increasing and dominating the future habit of the airplanes. What is your thinking about that development? And how will it change your business model, maybe?

Well, the hydrotrain technology is still something that is very interesting going forward. I think also public domain Airbus announced that the entry into service will take longer because the technology is complex and it's changing the world. We are engaged with an American customer as well on a prototype or test vehicle. So we are already here in rolling them. However, the next technology that is key for the aerospace industry is SAF, sustainable aviation fuel. This is not changing the technology so much, I would say, for the airplanes by itself. It's more an engine manufacturer issue. Also here, we have a strong engagement with our customers. Again, I can name one of it, it's Rolls-Royce, where FACC is a development partner on the UltraFan airplane, which is an engine that can fly with 100% usage of SAF. Today's engines have a capability of 50% maximum 80% SAF content. So half of it to 20% must be kerosene. So here, I think we are engaged also with the one or the other engine manufacturer. This will be the key for the next engine generation, which we think will be offered to the market together with new airplane models. And also here, we think Airbus and Boeing will come out with ideas on the next-generation airplane starting in 2028 as soon as, but more likely 2029 to 2030.

So we will be forced to eat more French fries in the future to bring SAF into the market?

Could be one element, but I think the industry is more counting on other sources. So trading food for aerospace fuel is not, I think, the target aerospace.

And we move on to the next participant with a question, Aymeric Pula.

Yes, I've got a few questions, mostly to quantify a bit more the guidance. So the range of 5% to 15% growth you gave, could you explain where, again, the sensitivity comes from? Because you mentioned COMAC is ramping up faster. The A320 run rate is kind of in the line of linearity that we should have expected, and you have a relatively low exposure to Boeing. So I'm just curious about where we should have this sensitivity applied in terms of the various customers you supply? That would be the first question. The second question is more on the margin sensitivity to the top line growth. You mentioned a plan for EUR 80 million savings. So what would be the right level of margins before it was a bit more about top line and the gross margin applied to that incremental top line growth, but there are obviously the extra savings that we should allocate this year and the timing of which is not always very clear. So could you give us a bit more granularity on how the margin should evolve? And I think you mentioned also the breakeven point on the interior. So maybe allocation by division would be useful. You didn't mention the working capital plan for this year. So just could you confirm that you're still targeting EUR 50 million savings on the inventory side this year? And last, but not least, you didn't mention anything around tariffs. Are there any specific tariff impact that we should think about for 2025, if indeed the U.S. administration is imposing some of those tariffs to the industry?

Well, that's a good question, Aymeric. I think I will answer the first and the last one. And the middle, I think, Florian will come back to you. So on the sensitivity, I think there is a couple of more complexity in the system. So we believe on the forecast, the guidance our main customers are also giving to you in their outlooks. So we think they will deliver those airplanes as they are guiding. The complexity, I think, is not that much on how many airplanes do we deliver. The complexity is a little bit on what have we delivered already to those OEMs and what is the current inventory level. And the inventory level, as we see it at the time being, is not fully, I would say, balanced. So there is supply chains that are performing better and well. So there is more inventory on those well-performing supply chains. And there is a couple of issues in the industry where our OEMs are suffering, which is slowing down here and there their performance as well. So at a certain point, we are expecting our customers to try to level load. So I'm giving you one example. If we have already delivered a certain amount of product to our customers and there is an inventory level, which is peaking compared to a slower or let's say, a more critical supply chain, they will level load and balance it out. So meaning those companies who have performed well will be slowed down a little bit in order to balance the inventory level with our customers. This is still the dynamics we have seen 2024. This is the dynamics we see still in 2025. So in other terms, the OEM output will be as it's forecasted. But if we are a little bit ahead of schedule because of our good performance in the past years, there might be the one or the other slowdown we might see. So our production rates to a certain customer might be a little bit lower because they already have inventory from us. And this is the widespread we are giving at the time being. Again, before the middle of the year, we normally, over the first 4 months, we see this volatility, we can precise our guidance in terms of the top line. I hope this is answering your question on the sensibility. On the other thing you mentioned, Boeing is less of a share in FACC. And here, you're right because with Boeing, the bigger share is on the 787, where we produced 14 airplanes before the ramp down. The positive thing is on the 787, but also on the 737MAX where we have some packages is ramping up. So the low share in Boeing will again increase over the next years to come. On the tariffs, that was your last question. We are watching it very carefully. Normally, in the industry, there have been no tariffs on aerospace products. And I only can share with you what we talk with our customers, especially in the United States. They are very much engaged with the American administration because tariffs on aerospace will also hurt the United States aerospace industry. Why? The switching cost. So moving supply chains from A to B, especially on higher technology products as we are producing is very intensive, and it's normally linked to recertification of the product. So in terms of taking the one or the other FACC product we are delivering to our American customers, switching from a European tourist FACC or any other would take years and would take millions of U.S. dollars to do so. So again, this is not a guarantee that tariffs will not come. If tariffs would come with our contracts, import tariffs have to be carried by our customer and not by FACC. This is only a short-term mitigation because on the next-generation airplanes, FACC must be competitive. So I'm less concerned on today's products, but we are watching it very carefully once going forward.

Thanks, Robert. I will pick up Aymeric's two questions in the middle about margin sensitivity and working capital and inventory. Maybe starting with the third one with inventory. Thanks for your question. And of course, we will stick to our target given you last year. What you have seen comparing the Q3 figures in 2024 and now the full year figures in 2024, you have already seen a decrease in terms of inventory. As Robert has mentioned already in his statement before, responding to your questions in terms of revenues, there will be some shifts during the year to expect, but the target for inventory decrease overall over the time span of 2024 and 2025 is, of course, still intact, and we are still sticking to it. In terms of your second question, margin sensitivity, if we look to our 3 divisions, that was part of your question as well. We expect, of course, the biggest improvement in our Cabin Interiors division, again, reminding ourselves, the EBIT margin that we had last year was a minus 1.6%. So as Robert also has already stated, we are expecting to have a big improvement this year also, of course, because we are further ramping up the Croatia loading of our new plant, but also, Robert mentioned it also in our core initiative, corporate reshaping also in terms of the materials section and corporate efficiency overall, this should drive margin in Cabin Interiors. Speaking about Engines & Nacelles, where we enjoyed a 12.1% EBIT margin in 2024. This will remain in terms of ratio, our strongest division in 2025, very good on track. And Aerostructures is as you might know or I'm sure you know, in the industry right now, some issues in certain material segments, especially fasteners where we have to cope with some headwinds that we are having. But also, again, we are seeing improvements there. Overall, as Robert mentioned, right now, there is some, I would say, challenges in the industry with certain shifts over the next couple of months. So again, also highlighting Robert's statement again, we are expecting to have a more clearer picture in the second half of the year to be more precise on our revenue and also EBIT forecast that we have given you. Does that answer your question?

We come to the next participant. Mr. Diemer, you should be able to speak now.

Michael [indiscernible]. I would like to ask a question with regards to COMAC. It has been mentioned a few times in the presentation. COMAC, as we all know, is a Chinese state-owned company. And as Chinese state-owned companies usually act, it is their goal to source within China. Now you have been saying that you are -- that business is picking up with them, and they will have a greater market share worldwide in the future. But state-owned companies in China tend to source locally if in case they source without -- out of China. It is something they do for a limited period as soon as they can replace those foreign imported goods with some acceptable, let's say, production and quality level of their own, then they might do so as you can limitly see within the automotive industry. Now, my question would be, how do you make sure that this does not happen to you?

This is a very good question, Mr. [indiscernible]. And FACC is engaged with COMAC since 2004. So 21 years right now, an engagement we have entered long before FACC changed shareholding and long before any others believed in the China market. So I think this has given us a good standing inside the COMAC world. But you're right, this is the geopolitical changes as we see it. Our western customers had a lot of business in China. East and West cannot decouple from each other because we're living in a global world. But western customers are derisking and certain single Suez contracts that had placed in China or Asia are currently double Suez. So that's the one side of the coin, and we're benefiting from it because we get work right now that was produced in China back to Europe. So because of the derisking behavior of our customer base. On the other hand, and here, you're absolutely right, Mr. [indiscernible], China is doing the same thing. On the COMAC 919, China COMAC has around about 1,000 suppliers. More than half of those suppliers are coming from the Western world. And the COMAC strategy is to turn that around being 3/4 to be produced locally in China, local for local sourcing and the one or the other technology, they need to buy from the western market. What does that mean to us? In 2012, we decided to set up a manufacturing site close to Shanghai, where FACC did the planning of the facility. The facility is owned by our shareholder, but we are operating it. During the year of 2025, 2024, I'm sorry, we also executed the plan, which was put in place a couple of years before to offload the FACC 919 production lines from Austria to China for 2 reasons, logistic cost, but also other costs. So we are currently producing the 919 work content in China, local for local, and we are using our FACC Limited company setup in Shanghai to manage the business. For us, this is another positive effect for 2025, producing the 919 components in Austria and exporting to China was costly with the offload to China, we already see a very positive trend in terms of cost because logistics is not anymore an issue for us. So also this will help the Interiors division. And going forward, and this is, again, I think, important to know, the FACC 919 product is qualified, tested and certified under the engineering of FACC. So there is a limitation that this cannot be copied and produced somewhere else. There is another engagement we have with COMAC which is on their 929 project. This is the wide-body airplane COMAC wants to bring to the market. Also here, we are already engaged in certain areas where FACC could take a share on developing and producing that airplane. So our strategy is working with all markets, Europe, out of Austria and Croatia, supporting our European customers. We have business setups in the United States, in Wichita, in Florida, but also in Canada, where we are foreseeing to grow our business, supporting our local North American customers. And of course, the Asian business, we are supporting out of our FACC Limited company in Shanghai and the production network we have set up in Shanghai as well.

Yes. Thank you for the questions. And in the meantime, we have received no further questions. I'm waiting for a few seconds to wait. And yes, we have another question. Mr. Brach, you should be able to speak now.

So most of my questions have already been answered, but one last one on inflation. You still mentioned or highlighted the inflationary pressures you see mainly in Europe despite inflation coming down quite a bit from the highs in '22 and '23. Do you see them more on the material side or more on the personnel side on the wage side? And do you guide on how many personnel you will add or you will need to add in 2025?

Well, Mr. Brach, inflation, I think, is normalizing again. That's good. FACC over the last 30 years was able to manage normal inflation by efficiency increases in automation, digitalization. And again, you are right, the last 3 years where we had inflation cost of close to 8% to 10% cannot be compensated within a year. So CORE, as Florian elaborated, also is focusing on those things. We have a disadvantage in Central Europe compared to other markets, which is effective to compensate. CORE is focusing in terms of efficiency by producing more with the same amount of people. This does not work from one day to the other because we did a lot over the last 20 years, but we are taking further measures in terms of increasing efficiency. So this will take us 2 years. One element here, of course, is also offloading the one or the other product to Croatia, but also to Asia. The other thing is material. Well, if material is bought in Europe, of course, the inflation also goes into material. And here, we have very few -- a couple of -- we have good partners in Europe. They are dealing with inflation by doing the same thing. We are doing, improving the efficiency. However, there is other supply chains. They cannot or do not want to adopt to the new environment. And here, we are transferring supply chains from European countries into other countries. Also India is engaged here or Brazil. We today have 55 transfer of works in the material field ongoing, first of all, to protect cost, but secondly to lower cost, which will contribute with another EUR 25 million of lowering cost over the next 2 years. So inflation was a big issue in the last 3 years. It's right now normalizing. If we stay at the level around about 2%, we can manage if it's going up again to 5%, further actions are needed.

And on the personnel side, how many personnel will you need to add in 2025 to reach your top line goals?

Sorry, yes, good question. I think on the white collar, we want to stay stable and work the increases with the setup we are currently having. On the blue collar side, there will be a slight increase, but not linear with the revenue increase. Why? First of all, we have invested heavily in the setup of the workforce in the last 2 years. Learning curves and efficiency is right now triggering in. So people are getting more efficient. And we think we might add another 150 people to the workforce over the course of the year. Bigger amount in Croatia, some of it in Austria, but the learning curve effect and efficiency will further help us to produce more with nearly the same people we have on board.

Yes. In the meantime, we have received no further questions. And with watching the time running out, we currently ask you need to send further questions to the IR department. Thank you for your interest in FACC. We, therefore, come to the end of today's earnings call. A big thank you also to the gentleman for the presentation and the time you took to answer the questions. And should further questions arise at a later time, please feel free to contact Investor Relations of FACC. I wish you all a lovely remaining day. Thank you, and goodbye.

Thank you.

Thank you very much. Goodbye.