FACC AG

Quarterly Report • May 12, 2020

FACC AG Interim Report Q1 2020

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Selected Group Key Performance Indicators

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	01.01.2019 - 31.03.2019 in EUR mill.	01.01.2020 - 31.03.2020 in EUR mill.
Revenues	205.6	193.7
thereof Aerostructures	84.2	69.1
thereof Engines & Nacelles	47.4	46.3
thereof Interiors	74.0	78.3
Earnings before interest, taxes, depreciation and amortisation (EBITDA) 1)	7.7	22.1
Earnings before interest and taxes (EBIT)	–8.3	13.1
thereof Aerostructures	–1.7	6.2
thereof Engines & Nacelles	0.2	3.1
thereof Interiors	–6.8	3.8
EBIT margin	–4.0%	6.7%
Earnings after taxes	–5.3	8.6
Earnings per share (in EUR)	–0.12	0.19
	31.03.2019 in EUR mill.	31.03.2020 in EUR mill.
Cash flow from operating activities	1.7	–1.7
Cash flow from investing activities	0.0	–5.3
	31.03.2019 in EUR mill.	31.03.2020 in EUR mill.
Net Working Capital	179.3	170.7
Net financial debt	235.9	222.9
Equity ratio	39.9%	40.0%
Balance sheet total	742.3	797.9
	01.01.2019 – 31.03.2019	01.01.2020 – 31.03.2020
Trading volume	12,434,424	13,996,470
Average daily trading volume	197,372	218,694.8
Höchstkurs der Periode	16.3	12.9
Tiefstkurs der Periode	12.6	5.2
Closing price	12.94	7.8
Periodenperformance	–1.8%	–33.9%
Market capitalization	592.5	356.9

1) The EBITDA is calculated as the sum of the EBIT plus depreciation and impairment and amortization of the contract performance costs.

Revenues and earnings development

Q1 2020 in EUR million	Change
193.7	–5.8%
13.1	-
797.9	7.5%
5.4	-

For the sake of greater comparability, the first quarter of the previous financial year has been adjusted to the calendar year. This has resulted in deviations with respect to previous reports. The reference period has neither been evaluated by the auditor nor reviewed.

Revenues in the first three months of 2020 amounted to EUR 193.7 million (reference period 2019: EUR 205.6 million). The 5.8% decline is due to a reduction in development revenues to EUR 7.3 million (reference period 2019: EUR 17.1 million) in the first three months of 2020.

Despite the current external circumstances, product sales remained at almost the same level. In the first quarter of 2020, all major aircraft programs of our main customers Airbus, Boeing, Bombardier, Embraer and Comac, as well as revenues from the respective engine families contributed to the development of revenues in the Group's product business.

The cost of sales in relation to turnover (gross profit on sales) amounted to 88.2 % (reference period 2019: 96.3 %).

Earnings before interest and taxes (EBIT) amounted to EUR 13.1 million in the first three months of 2020 (reference period 2019: EUR -8.3 million). The negative result of the reference period is mainly due to Airbus' announcement that it will cease delivery of A380 aircraft in 2021. This has resulted in a negative one-off effect in the amount of EUR 11.4 million from the write-down of unamortized development costs.

The optimization program announced at the beginning of the 2020 financial year to achieve sustainable reductions in the Group-wide cost structure is taking effect, and produced initial positive effects in the first quarter of 2020.

FACC has reacted proactively and implemented extensive measures in the face of the Corona crisis.

Since the Corona crisis became public, FACC has reacted quickly and implemented extensive measures by means of an internal CO-RONA task force. Management is now focusing on creating a balance between the protection of each individual employee, the economic stability of the company and providing support to our customers worldwide. Existing liquidity reserves were significantly expanded immediately through additional credit lines. In addition, all short-term requirements were coordinated with every customer and the supply of materials was secured within the entire supplier chain. Despite considerable developments taking place with regard to CORONA, the health of the entire workforce has been safeguarded at all times, and all our customer requirements have been met entirely. As a result of a significant drop in market requirements, the optimization program "F.A.C.T.", which is already being implemented, has been driven forward with great commitment and enhanced by new operations and strategies. An additional special savings program of EUR 15 million, which was introduced at short notice, has been defined and is currently being implemented. Since 30 March 2020, a short-time working model has been in place for employees in Austria for the duration of three months.

Currently, FACC has sufficient credit lines to meet potential future requirements. This also includes the upcoming repayment of a bond with a volume of EUR 90 million on 24 June 2020. In this particular situation, FACC is also benefitting from its high equity ratio.

SEGMENT REPORTING

Aerostructures

	Q1 2019 in EUR million	Q1 2020 in EUR million	Change
Revenues	84.2	69.1	–18.0%
Earnings before interest and taxes	–1.7	6.2	-
EBIT margin	–2.1%	8.9%	-
Assets	319.6	339.1	6.1%
Investments of the period	0.1	2.3	-

Revenues in the Aerostructures segment amounted to EUR 69.1 million in the first three months of 2020 (reference period 2019: EUR 84.2 million). Revenues from product deliveries fell by 5.9% to EUR 67.4 million.

Significant revenues in the Aerostructures segment are generated by the Airbus A220, A32F and A350 programs and the B787. The volume of these programs was not able to fully compensate for the previously announced phase-out of the Boeing B737NG Winglets and Airbus A380 structural components.

Earnings before interest and taxes (EBIT) amounted to EUR 6.2 million in the first three months of 2020 (reference period 2019: EUR -1.7 million). Last year's negative result is mainly due to Airbus' announcement that it will cease delivery of A380 aircraft in 2021. This has resulted in a negative one-off effect in the amount of EUR 8.3 million from the write-down of unamortized development costs in the Aerostructures segment.

Engines & Nacelles

	Q1 2019 in EUR million	Q1 2020 in EUR million	Change
Revenues	47.4	46.3	–2.2%
Earnings before interest and taxes	0.2	3.1	-
EBIT margin	0.5%	6.8%	-
Assets	164.4	165.1	0.4%
Investments of the period	0.0	1.1	-

Revenues in the Engines & Nacelles segment amounted to EUR 46.3 million in the first three months of 2020 (reference period 2019: EUR 47.4 million). Revenues from product deliveries decreased by 8.3% to EUR 42.2 million. This was attributable to a general reduction in the A330neo production rate in line with market demand as well as a reduction in our customer's stocks of finished goods in the area of A350 nacelle systems and a resultant reduction in FACC's call-off orders.

Earnings before interest and taxes (EBIT) in the Engines & Nacelles segment amounted to EUR 3.1 million in the first three months of 2020 (reference period 2019: EUR 0.2 million). Last year's negative result is mainly due to Airbus' announcement that it will cease delivery of A380 aircraft in 2021. This has resulted in a negative one-off effect in the amount of EUR 1.2 million from the write-down of unamortized development costs in the Engines & Nacelles segment.

Cabin Interiors

	Q1 2019 in EUR million	Q1 2020 in EUR million	Change
Revenues	74.0	78.3	5.8%
Earnings before interest and taxes	–6.8	3.8	-
EBIT margin	–9.2%	4.8%	-
Assets	258.3	293.8	13.7%
Investments of the period	0.2	1.9	-

Revenues in the Cabin Interiors segment amounted to EUR 78.3 million in the first three months of 2020 (reference period 2019: EUR 74.0 million). Revenues from product deliveries increased by 8.4% to EUR 76.7 million. This is primarily attributable to the rampup of the new A320 Airspace cabin, growing deliveries of the COMAC ARJ 21 and a continued stable demand for business jet interiors.

Earnings before interest and taxes (EBIT) in the Cabin Interiors segment amounted to EUR 3.8 million in the first three months of 2020 (reference period 2019: EUR -6.8 million). Last year's negative result is mainly due to the ramp-up costs of new programs (as described in the Interim Reports of the 2019 financial year) and to Airbus' announcement that it will cease delivery of A380 aircraft in 2021. This has resulted in a negative one-off effect in the amount of EUR 2.0 million from the write-down of unamortized development costs in the Cabin Interiors segment.

Financial Position

Inventories at the end of the reporting period amount to EUR 133.1 million (31 December 2019: EUR 122.8 million). Due to the longer lead times, the reduction in material orders was not implemented adequately in line with the decline in production.

Trade receivables increased from EUR 98.8 million to EUR 115.2 million. Due to the current situation, customers rarely take advantage of cash discounts and generally pay only when payment is due.

Other current financial liabilities increased from EUR 26.0 million to EUR 68.5 million. This is primarily attributable to the upcoming repayment of the bond. By issuing a promissory note in July 2019, FACC thus secured sufficient liquidity reserves.

Investments in the first three months of 2020 amount to EUR 5.4 million (reference period 2019: EUR 0.4 million).

The company's share capital amounts to EUR 45.8 million and is fully paid up. It is divided into 45,790,000 individual shares of EUR 1 each.

Outlook

With the emergence of the COVID-19 virus and the global economic stagnation it brought with it in February in China, and in March and April in the rest of the world, the movement of goods and people across the globe underwent drastic changes in the short and medium term. The first quarter of the financial year 2020 developed in line with management's estimates in terms of both sales and increased profitability. It is not yet possible to make a solid and reliable forecast for the year as a whole in the current environment, but significant demand and production restrictions are to be expected in the first half of 2020 and the year as a whole.

Against the backdrop of the CORONA crisis, 80% of the global aircraft fleet is temporarily out of service. The traffic volume in Central Europe decreased by approx. 95% in April 2020 in direct comparison to the rate of service in April 2019. The last 20 years show that the aircraft industry generally boasts a high resilience to economic shocks. Proof of this can be found in the industry's recovery data in the years of crisis between 1997 and 2008, the Asian crisis in 1997, 9/11, SARS and the financial crisis in 2008 - air traffic volumes recovered relatively quickly despite significant dips immediately after the crisis occurred. The major difference between COVID-19 and previous shocks lies in the local crisis management of states and the resultant slump in the global goods and travel volume. The duration of the crisis will depend on how quickly supranational preventative measures are implemented against the coronavirus. Once this has been accomplished, the aviation sector will also recover.

The ability to plan is momentarily very limited and requires an ongoing reassessment of the current situation. We assume that reliable market data will be available in July 2020 for a general assessment of short and medium-term market requirements. Capacities have been adjusted, and the Austrian locations are on short-time from April to June.

As it is currently only partially possible to plan for the 2020 financial year, essential operational and strategic measures have been introduced:

• The activities launched before the outbreak of the COVID-19 crisis to reduce fixed costs will be continued. Additional measures, adapted to the new market situation, are defined and are currently being implemented.
• The investment budget for 2020 will be replanned in a reduced form to meet the modified requirements of the market.
• The measures defined in the fourth quarter of 2019 for the vertical integration of strategic components and materials will be continued and intensified without restriction.
• Due to the current situation relating to the COVID-19 crisis, it was decided to review the investments in the Croatian location and, following a reassessment of the prevailing market situation, to delay their implementation. It is to be emphasized that the location is essential for reducing production costs in the medium and long term.
• In view of strengthening the company's liquidity, the Supervisory Board and Management Board will propose to the Annual General Meeting that no dividends be paid for the short 2019 financial year.
• In order to take due account of the current market situation, management of FACC AG has decided to increase the available liquidity reserves and to make use of state-subsidized funds. Negotiations are currently underway with the core banks to increase the credit line granted within the control bank refinancing framework (KRR) by EUR 60 million.

The economic impact as well as the global development of the COVID-19 crisis call for an ongoing assessment of the current situation. Since the effects on the global economy cannot yet be assessed, an outlook on the results for the 2020 financial year can currently only be given in the present form.

Consolidated Profit and Loss Statement

for the period from 1 January 2020 to 31 March 2020

	01.01.2019 – 31.03.2019 EUR'000	01.01.2020 – 31.03.2020 EUR'000
Revenues	205,621	193,722
COGS - Cost of goods sold	–198,034	–171,013
Gross profit	7,587	22,708
Research and developement expenses	–975	–190
Selling expenses	–2,076	–2,043
Administration expenses	–4,100	–8,724
Other operating income	1,271	1,566
Other operating expenses	–10,011	–251
Earnings before interest and taxes (EBIT)	–8,304	13,067
Financing expenses	–3,151	–2,671
Other financial result	1,108	619
Financial result	–2,043	–2,052
Earnings before taxes (EBT)	–10,347	11,015
Income taxes	5,084	–2,390
Earnings after taxes	–5,263	8,625
of which attributable to non-controlling interests	3	6
of which attributable to shareholders of the parent company	–5,266	8,618
Diluted (=undiluted) earnings per share (in EUR)	–0.12	0.19
Issued shares (in shares)	45,790,000	45,790,000

Consolidated Statement of Comprehensive Income

for the period from 1 January 2020 to 31 March 2020

	01.01.2019 – 31.03.2019 EUR'000	01.01.2020 – 31.03.2020 EUR'000
Earnings after taxes	–5,263	8,625
Currency translation differences from consolidation	104	–104
Cash flow hedges	6,124	–6,901
Tax effect	–1,531	1,725
Items subsequently reclassified to profit and loss	4,696	–5,279
Revaluation effects of termination benefits	–181	–20
Fair value measurement of securities (fair value through other comprehensive income)	6	–27
Tax effect	44	12
Items not subsequently reclassified to profit and loss	–131	–35
Other comprehensive income after taxes	4,565	–5,315
Total comprehensive income	–698	3,310
of which attributable to non-controlling interests	3	6
of which attributable to shareholders of the parent company	–700	3,304

Consolidated Statement of Financial Position

as of 31 March 2020

	As of 31.12.2019 EUR'000	As of 31.03.2020 EUR'000
Intangible assets	22,096	22,773
Property, plant and equipment	181,616	181,381
Receivables from customer-related engineering	109,166	108,172
Contract assets	5,433	3,852
Contract costs	42,665	43,009
Other financial assets	472	472
Receivables from related companies	5,633	5,829
Other receivables	8,838	8,881
Deferred taxes	2,465	4,457
Non-current assets	378,384	378,825
Inventories	122,798	133,057
Customer-related engineering	8,715	10,475
Trade receivables	98,824	115,184
Receivables from related companies	19,390	19,775
Current tax income receivables	407	197
Other receivables and deferred items	35,125	31,238
Cash and cash equivalents	75,790	109,174
Current assets	361,049	419,100
Balance sheet total	739,434	797,925

EQUITY AND LIABILITIES

	As of 31.12.2019 EUR'000	As of 31.03.2020 EUR'000
Share capital	45,790	45,790
Capital reserve	221,459	221,459
Currency translation reserve	–621	–725
Other reserves	–4,418	–9,629
Retained earnings	53,868	62,388
Equity attributable to shareholders of the parent company	316,078	319,284
Non-controlling interests	49	55
Equity	316,127	319,339
Promissory note loans	70,000	70,000
Lease liabilities	79,772	80,889
Other financial liabilities	18,718	18,062
Derivative financial instruments	14	1,709
Investment grants	6,494	6,440
Employee benefit obligations	10,657	10,916
Other liabilities	66	66
Deferred tax liabilities	609	624
Non-current liabilities	186,329	188,706
Bonds	89,916	89,959
Lease liabilities	4,622	4,630
Other financial liabilities	25,994	68,532
Derivative financial instruments	1,910	9,688
Contract liabilities from customer-related engineering	4,845	7,962
Trade payables	83,465	79,216
Liabilities from related companies	4,508	3,224
Investment grants	635	635
Income tax liabilities	1,210	1,459
Other provisions	879	1,989
Other liabilities and deferred items	18,994	22,587
Current liabilities	236,978	289,881
Balance sheet total	739,434	797,925

Consolidated Statement of Changes in Equity

for the period from 1 January 2020 to 31 March 2020

	Attributable to shareholders of the parent company
	Share capital EUR'000	Capital reserve EUR'000	Currency transla tion reserve EUR'000
As of 1 January 2019	45,790	221,459	–718
Earnings after taxes	0	0	0
Other comprehensive income after taxes	0	0	104
Total comprehensive income	0	0	104
Other	0	0	0
As of 31 March 2019	45,790	221,459	–615
As of 1 January 2020	45,790	221,459	–621
Earnings after taxes	0	0	0
Other comprehensive income after taxes	0	0	–104
Total comprehensive income	0	0	–104
Other	0	0	0
As of 31 March 2020	45,790	221,459	–725

Attributable to shareholders of the parent company
		Other reserves
Securities - fair value through other com	Cash flow hedges	Reserves IAS 19	Retained earnings	Total	Non-controlling interests	Total equity
prehensive income EUR'000	EUR'000	EUR'000	EUR'000	EUR'000	EUR'000	EUR'000
–12	–8,395	–3,201	42,032	296,954	30	296,984
0	0	0	–5,266	–5,266	3	–5,263
4	4,593	–135	0	4,565	0	4,565
4	4,593	–135	–5,266	–700	3	–698
0	0	0	116	116	0	116
–8	–3,802	–3,336	36,882	296,370	33	296,402
9	–1,026	–3,401	53,868	316,078	49	316,127
0	0	0	8,618	8,618	6	8,625
–20	–5,176	–15	0	–5,315	0	–5,315
–20	–5,176	–15	8,618	3,304	6	3,310
0	0	0	–98	–98	0	–98
–11	–6,202	–3,416	62,388	319,284	55	319,339

Consolidated Statement of Cash Flows

as of 31 March 2020

	As of 31.03.2019 EUR'000	As of 31.03.2020 EUR'000
Earnings before taxes (EBT)	–10,347	11,015
Plus financial result	2,043	2,052
Earnings before interest and taxes (EBIT)	–8,304	13,067
Plus/minus
Depreciation, amortisation and impairment	4,637	6,003
Amortisation contract costs	4,082	3,057
Impairment contract costs	7,287	0
Income from the reversal of investment grants	–2,353	–54
Change in other non-current provisions	–246	0
Change in employee benefit obligations	461	239
Other non-cash expenses/income	–11,086	–7,112
	–5,523	15,200
Change in working capital
Change in inventory and customer-related engineering	4,264	–12,243
Change in trade receivables and other receivables, receivables from customer-related engineering and contract assets	2,996	–8,430
Change in trade payables and other liabilities	–639	2,592
Change in current provisions	656	1,109
Cash flow from ongoing activities	1,754	–1,771
Interest received	331	74
Income taxes paid	–395	–22
Cash flow from operating activities	1,690	–1,719
Payments for the acquisition of non-current assets	–374	–5,385
Proceeds from the disposal of non-current assets	351	59
Cash flow from investing activities	–23	–5,326
Proceeds from non-current interest-bearing liabilities	32,499	6,059
Repayments of non-current interest-bearing liabilities	–7,907	–6,751
Change in current interest-bearing liabilities	33,156	42,546
Outflows from leasing agreements	–604	–1,848
Interest paid	–3,156	–2,724
Cash flow from financing activities	53,988	37,282
Net changes in cash and cash equivalents	55,655	30,238
Cash and cash equivalents at the beginning of the period	6,067	75,790
Effects from foreign exchange rates	3,339	3,146
Cash and cash equivalents at the end of the period	65,062	109,174

Selected Notes

NOTE

The condensed Consolidated Interim Financial Statement as of 31 March 2020 have been prepared in accordance with the rules and regulations of "Prime market - Section Interim Reports" of the Vienna Stock Exchange.

The reporting currency is Euro (EUR). All figures presented in the condensed Consolidated Interim Financial Statement are quoted in thousands of euros (EUR'000), unless otherwise stated.

Rounding errors may occur when adding rounded amounts and percentages due to the use of automated invoicing aids.

WAIVER OF AUDIT REVIEW

The present consolidated interim financial statement has neither been audited nor reviewed.

Ried im Innkreis, 12 May 2020

Robert Machtlinger Chairman of the Management Board

Andreas Ockel Member of the Management Board

Aleš Stárek Member of the Management Board

Yongsheng Wang Member of the Management Board

Investor Relations

BASIC INFORMATION ABOUT THE FACC SHARE

T
International Securities Identifi cation Number (ISIN)	AT00000FACC2
Currency	EUR
Stock market	Vienna (XETRA)
Market segment	Prime market (official trading)
Initial listing	25.06.2014
Issue price	9.5 EUR
Paying agent	ERSTE GROUP
Indices	ATX, ATX GP, ATX IGS, ATX Prime, WBI
Share class	Ordinary shares
Ticker symbol	FACC
Reuters symbol	FACC.VI
Bloombergs symbol	FACC AV
Shares outstanding	45,790,000 shares

SHAREHOLDER STRUCTURE AND SHARE CAPITAL

FACC AG's share capital amounts to EUR 45,790,000 and is divided into 45,790,000 no-par value shares. The Aviation Industry Corporation of China holds 55.5% of voting rights of FACC AG via AVIC Cabin System Co., Ltd (previously FACC International).

The remaining 44.5% of shares represent free float and are held by both international and Austrian investors.

FACC AG did not hold any treasury shares at the end of the reporting period.

CONTACT

Manuel Taverne Director Investor Relations Phone +43 59 616 2819 Mobile +43 59 616 72819 m.taverne@facc.com