The business development of FACC AG in the first nine months of the 2020 financial year (1 January - 30 September) continues to be marked by the effects of the COVID-19 pandemic. The global downturn and the economic repercussions on the global aerospace industry are reflected in a decline in group revenues and EBIT. At the same time, milestones in the implementation of group-wide optimization programs, project start-ups and forward-looking research were successfully reached. After several months of considerably reduced demand, the first sustained positive trends are becoming visible in Asia.
Visible signs of a slow recovery of global air traffic, albeit with marked regional differences between world markets
At EUR 392.8 million, revenues in the first nine months of 2020 were 32.6 % lower than in the previous year (EUR 582.6 million)
Operating result stands at EUR - 57.5 million
Special effects of EUR 48.5 million have a one-time negative impact on earnings
Internal optimization program is taking effect
Demand up by 30% in September
Personnel adjustment completed at the beginning of the fourth quarter
Outlook for the full year 2020 confirmed
'Global air traffic volumes have undergone major changes since February as a result of the corona crisis. This has led to a significant downturn in the overall market environment, thus triggering rate reductions in all major aircraft programs,' reports Robert Machtlinger, CEO of FACC AG, and adds: 'Despite the initial difficulty of accurately assessing the impact of the crisis in conjunction with the difficult market situation, we have been able to remain fully efficient and continue to provide our customers with reliable deliveries, even during lockdowns.'
Revenues generated in the first nine months of 2020 amounted to EUR 392.8 million. The decline of 32.6% compared to the same period of the previous year (EUR 582.6 million) is attributable to the reduction in built rates in all aircraft programs of major importance to FACC. All FACC divisions (Aerostructures, Cabin Interiors and Engines & Nacelles) were affected and recorded marked declines. In view of the overall situation, customer call-offs in July and August were up to 50% lower than in the previous year. September saw a clear turnaround, with demand exceeding the level of the two previous months by approximately 30%.
Reported earnings before interest and taxes (EBIT) for the first nine months of 2020 stood at EUR -57.5 million (comparative period in 2019: EUR 9.7 million). As previously stated, EBIT for the first nine months of 2020 include one-time effects due to impairments, changes in estimates in connection with the COVID-19 crisis and the associated effects on the medium-term market environment as well as the allocation of a provision for social plan costs. The result of the first three quarters was negatively affected by special effects totaling EUR 48.5 million.
The operating result, adjusted for special effects, amounted to EUR -9.0 million and was strongly impacted by the reduced capacity utilization of the plants since the beginning of the second quarter of 2020 following the onset of the COVID-19 pandemic.
Global markets are expected to recover slowly and may not return to pre-corona levels until 2024 from today's perspective. In response to the new market forecasts, FACC announced in mid-September that capacity adjustments were unavoidable and that the group would consequently reduce its workforce by 650 employees in the fourth quarter. A redundancy plan has been agreed for the members of staff concerned. Moreover, FACC discontinued short-time work in almost all areas of the group at the end of September.
Outlook confirmed on the basis of an extensive package of measures
The global corona crisis will continue to affect society and markets for a long time to come. FACC is closely observing and analyzing current developments and is taking targeted strategic and operational measures to quickly and resolutely adapt to the new requirements. Thus, fixed costs will be cut by means of a group-wide optimization program, vertical integration in the area of metal processing will be further promoted in order to reduce material costs, and the planned new FACC site in Croatia is to be implemented with a new design and dimensions and/or with a time delay. The insourcing of previously outsourced components is running according to plan and will increase the capacity utilization of the plants from the beginning of 2021. 'With these measures, we will secure around 100 highly qualified jobs at our sites in the long term and thus prevent the loss of valuable employee know-how. Although the markets are still highly volatile, we are currently planning annual sales of between EUR 500 and 520 million. In terms of earnings, we are still expecting EBIT in a range of EUR -55 to -65 million,' says Robert Machtlinger.
Consistent future-oriented focus at FACC
FACC is consistently investing in the future, even in a completely new market environment. 'Research and development, innovation and reliability are key elements of our past and our future,' emphasizes Machtlinger. 'On the one hand, we are paying special attention to the topics of efficiency and sustainability, both at our FACC plants and with regard to our lightweight systems, which enable more efficient flying while reducing CO2 emissions. In addition, we wish to drive forward the new area of Urban Air Mobility with innovative solutions and to make further progress in the space environment.' At the same time, business areas and markets are being reinforced and further expanded with new products. Examples include the delivery of the first A320 Airspace entrance area and the presentation of the LAV4ALL barrier-free toilet system developed by FACC in the Aftermarket Services area.
In the Aftermarket Services segment in particular, FACC sees great potential: The extensive range of products and services is in high demand by airlines, MRO stations and OEMs worldwide. FACC is further expanding this field of business after being awarded the international EN9110 certification following this year's Chinese accreditation as a maintenance company. In Austria, FACC is the only company to receive this certification among a total of only around 800 certified companies worldwide. 'As a provider of aerospace components and services, quality standards and certifications are important to us. The awards we have received only recently for our quality work from Airbus and Bombardier confirm that we are on the right track,' states Machtlinger. As in the two previous years, FACC was awarded for its high delivery performance in the Supplier Quality Improvement Plan Program (SQUIP) of Airbus. Bombardier's Diamond Supplier certificate also testifies to FACC's outstanding achievements in the areas of quality and delivery reliability.
Interim Report Q3 2020 for Download