FACC AG has reported a positive quarterly operating result for the third quarter in a row. The aerospace group indicates it is also on target in terms of revenue and is benefiting from the ongoing upturn in the industry following the relaxation of worldwide travel restrictions. While the financials are looking healthier, FACC is continuing to focus on a group-wide cost and efficiency improvement programme.
“The aviation market is increasingly recovering. We have achieved the targeted operational turnaround. To this end, we benefited above all from our flexibility for new market conditions, our consistent cost reduction and efficiency improvement programme, and the exemplary commitment of our FACC crew,” stated Robert Machtlinger, CEO of FACC AG. “A number of important major projects that we have been able to secure in recent weeks increase FACC’s market share in its core business.”
Revenues in the third quarter (1 July to 30 September, 2021) amounted to EUR 118.1 million (US$135.4m) and developed positively, with an increase of 16.3% compared to the same period last year. Revenues in the first nine months of 2021 amount to EUR 358.3 million (US$410.8m) (comparative period 2020: EUR 398.5 million (US$456.9m)).
FACC reports that, regarding the previous year’s revenues for the first nine months of 2020, the revenues from the first quarter of 2020 have to be considered closely. These revenues amounted to EUR 195.4 million (US$224m) and are only suitable as a reference value to a limited extent, as Q1 2020 was not affected by the Covid-19 pandemic. Revenues in the summer months of July and August 2021 were seasonally lower, as expected.
Reported earnings before interest and taxes (EBIT) for the first nine months of 2021 stood at EUR 2.9 million (US$3.3m) (comparative period 2020: EUR -53.0 million (US$-60.8m)). The measures implemented by FACC to reduce costs and increase efficiency have had a positive effect: on the one hand, this enabled the Group to further reduce net debt in the third quarter to EUR 213.4 million (US$244.7m) as of 30 September, 2021. On the other hand, says FACC, the measures also laid the important foundation for a sustainable improvement in performance with a stronger increase in revenues in the future.
New projects for sustainable growth
Despite the challenging market environment, FACC says it was able to expand its strong position in the international aviation industry and underpin its role as a turnkey partner through a raft of new orders. For example, FACC extended its long-standing partnership with Airbus with the order to manufacture the tail components for the A220 family aircraft.
The order is a major project that will provide important impulses for FACC, but also for the FACC’s local region. “We can and will use our distinctive know-how in the aerostructures segment, thus increasingly entering the field of primary structures in accordance with our strategy and sustainably strengthening our market position as a leading Upper Austrian company,” said Machtlinger.
Market recovery creates jobs at FACC
Travel activity and thus the recovery of the aviation market is accelerating. The opening of the USA as of 8 November is an important driver and ‘stabilisation engine’ for the aviation industry in terms of long-haul flights. Above all, FACC has noted rising demand for new short- and medium-haul aircraft, which continues into the fourth quarter. As a consequence, the build rates of FACC’s most important platform, the Airbus A320 family, are currently developing ‘very favourably’, as announced by Airbus.
These factors, together with the start of series production of the new projects and the opening up of new business areas as envisaged in the FACC Group strategy, were the starting signal for a recruiting campaign, which will see FACC increase its workforce by around 100 employees in the coming months.
Outlook
Operationally, FACC says the financial year to date has been in line with the plans of its management board. Thus, FACC does not expect any significant deviations from the planned revenues and operating results in the fourth quarter. In this respect, the expectations for the end of the year for consolidated annual revenues remain unchanged at around EUR 500 million (US$573.3m).
However, due to a number of court decisions, FACC will have to record negative one-off effects of approximately EUR 30 million (US$34.4m) in the fourth quarter. At the same time, a further positive operating EBIT in the single-digit million range is expected from operating activities.
Measures such as the commissioning of a new manufacturing plant in Croatia with an improvement in earnings in the Cabin Interiors division, the continuation of the vertical integration of strategic components and materials, a further reduction in inventory, as well as the realisation of a reverse factoring programme, are the focus of FACC in the fourth quarter.
For the next financial year 2022, FACC’s management expect a slight revenue growth in the range of 5%, based on anticipated customer demand. The planned EBIT is expected to increase with sales growth and to be in the lower double-digit million EUR range. FACC continues to assume that pre-crisis revenues will be reached in 2024 – at the latest in 2025.
“It will still take time for global air traffic to reach heights like 2019 again. But the aviation industry is on a stable, good path and we will also follow this path with an eye to the future. Our Strategy 2030, which focuses on growth through innovation, research and the development of new solutions and materials, is our constant companion in this,” Machtlinger concluded.
