Good day, and welcome to the FACC AG H1 2022 results conference call. Today's conference is being recorded. At this time, I'd like to hand the conference over to Michael. Please go ahead.
Thank you for the introduction, and good afternoon to everyone. Welcome to FACC's earnings call in regard to the half year financial report 2022. I'm Michael Steirer, and with me today are Robert Machtlinger, FACC's CEO, and Aleš Stárek, FACC's CFO. As always, we have already provided detailed financial information in our press release issued earlier today. Should it be possible to address all possible questions in today's call due to time constraints, we are very happy to schedule additional one-on-one meetings afterwards. In this case, I'd ask you to contact our IT department, Daniel, or even myself, to coordinate any appropriate appointments. Now I will turn the call over to Robert Machtlinger, our CEO. Thank you.
Michael, thank you for the introduction. Dear ladies and gentlemen, thank you for your time in participating during this conference call. Well, let's go into the slides. We have distributed them, and they are online on our webpage. Overall, a quick snapshot on our first six months of our fiscal year 2022. Overall, we have delivered on the growth as planned, especially driven by a more and more stabilizing aerospace market. Very positive is the continuous ramp up of various production rates where FACC is producing and delivering components to our worldwide customers.
I think very important for us is the continuous ramp up of the Airbus A320 family airplanes, which are doing quite well, and which, as you know from previous calls, is a very essential platform for FACC. In line with passenger traveling demand, increasing demand of new and more fuel efficient airplanes, the FACC revenue grew by 12.4% in the first six months of the fiscal year, whereas in the second quarter the growth rate was 16%, and the first quarter was 9%. Consolidated the growth overall was 12.4%. Pretty much in line with our management expectations, slightly better than what we have thought at the beginning of the year.
Also positive is a strong increase in our aerostructures segment. Why is this important? As you also know from our previous calls and reports, the FACC aerostructures segment is the most profitable segment in FACC. Since rates are picking up here again, this growth is helping twice. First of all, in revenue, but also stabilizing our profitability. Also interiors is continuously growing because of production ramp-ups of existing business, but also the entry into service of new programs we brought on board during the course of last year. EBIT development is also in line with our expectations. We have more than doubled the EBIT compared to the KPIs of 2021.
I also would like to express at this point that we had a couple of headwinds during the first six months, which we have been able to compensate with operational performance and deliveries to our customers. I think significantly was the energy cost increase we all have experienced due to the Ukraine Russian conflict that is still ongoing. To give a little bit of an insight, FACC of course is hedging the energy supply, whereas we never have hedged 100% of the supply, depending on the market situation between 50% and 75% of the energy supply is based on long-term contracts. The remainder is pretty much based on spot price supply costs.
In the last four months, we have recognized around about EUR 350,000 cost increase because of energy supplies. However, we have been successful to compensate with other measures. Also important in this first six months was a new contract we have signed up with ARTAM for the development of a passenger drone, and I will be a little bit more specific in a later slide. Also promising and as a result of the well progressing recovery of the aerospace market is the firm order backlog, which is right now back to $5.5 billion. Again, I want to repeat, this only counts for products where the airline customer has placed a firm order with one of our customers.
Aleš Stárek will be specific on working capital, where we have increased the working capital over the first six months. Planned, I have to say, because we wanted to care about our supply chain risks we have recognized over the last couple of months. We have pulled up critical materials by extra inventory, simply to protect FACC's production lines and to protect our customers with on time and on quality deliveries. Plant six, which is the FACC first production facility we have set up last year with the EUR 15 million investment, has started its operation in early 2022. We are right now employing 170 people there, and the operations in Croatia is running as planned, on time and on quality.
Also will have a few specific slides for you later on in my presentation. Very important, in March of this year, very close to the outbreak of the Russian-Ukrainian dispute, we have launched an investment in FACC to be independent from Russian gas supplies. Investments are released. We are in the middle of executing those investments, and by the end of the year, FACC will be independent from Russian gas supplies. I have a slide for you a little bit later as well. Coming to the next page with KPIs. Revenue in the first six months was EUR 270 million, a growth of 12.4% compared to last year.
EBIT in line with FACC's management plan with EUR 6.1 million, pretty much doubled compared to last year. Investment also as planned, EUR 11.8 million in the first six months. Mainly investment into new technologies, new programs, and cost reduction initiatives. New orders with a value of half a billion EUR have been signed up in our core competency area, aerospace, but also the urban air mobility together with Archer. Order backlog, again, back to pre-COVID-19 levels. We also have ramped up our crew size by 200 people. We are right now employing 2,732 people in the FACC group. I wanna go to the next slide, plant opening at Croatia.
As mentioned before, a $15 million investment went into operations in December 2021. The first production runs since the early days in 2022. The plant is fully in operations with currently 170 people employed. We are producing interior parts in that new facility, and we are ramping up the plant to 250 people by the end of 2022. Because of the performance we see in the facility and the delivered cost reductions, which are again, very much in line with our expectations, the management board has released the planning execution for phase II and phase three, meaning that Croatia will be tripled in size by 2024. Planning currently is ongoing.
We are inloading work from the Austrian operations into Croatia within the next two-three years. The Austrian operations will be used for higher technology components in aerostructures, as well as in engineering sales and our urban air mobility initiatives. In saying that, I would like to share with you one slide concerning the FACC energy supply. FACC over the last 15 years was very focused on the energy management, stepping away from fossil energy supplies to renewable or other energy supplies.
Basically, in the chart you see that a big amount of our thermal energy we need to heat up our process and autoclaves and to produce a composite product is depending on geothermal energy, which is hot springs we have in our Upper Austrian region. 14% is by district heating that is also based on non-fossil energy supplies, and 44% is based on electrical power which we mainly get from hydro power plants in the surroundings of Upper Austria. 18% of the total energy supply was and is depending on natural gas or, in the future, oil consumption.
What we have started in 2007, transforming the energy to more sustainable energy supplies, right now is paying back a second time. In the last years, we have benefited from low energy costs. Right now we are still benefiting from fairly low energy costs, but we also will benefit from independence from Russian gas supplies by the end of the year. The 18% natural gas supply will be replaced by oil. Within the next couple of years, we'll be transforming that energy supply to non-fossil supplies. Again, this will take us a couple of years, but we are well prepared to do so. The positive takeaway from the chart, we have launched our processes already in March.
We are in the middle of the transformation process and within the next couple of months. We still need fossil energy, but with more access, not depending on Russia. A few slides on the market development, on the first page on the market segment, you see the development of revenue passenger miles in the overall market, basically Europe, USA, China, and Middle East. You see a couple of rating charts here. On the upper end, this is the domestic and international utilization or revenue passenger miles compared to pre-COVID. The inner circle always is the domestic development compared to 2019.
The outer circle is the international development of revenue passenger miles compared to 2019. The upper row is the traffic we have seen in week of February 24, 2022. This was the week before the Russian, Ukrainian war did start. In the lower portion of the chart, you see the traffic as we see it in the week of July 13. There was a concern, an assessment made, with the outbreak of the war in Ukraine that European traveling might be impacted, which was not the case. Just comparing the two charts for Europe. Domestic traveling in Europe between February and July 13 increased by 20%. Internationally, the market developed positive as well.
International traveling increased by 13%. Overall, Europe right now, domestically, is close to 90%, compared to pre-COVID numbers. Internationally, we are at 76%. USA is very similar and comparable to Europe. China is heavily lagging behind international traveling because of their ongoing COVID-19 shutdowns and regulations. Domestically, they are pretty much in line with U.S. and Europe. The Middle East is pretty much fully recovered. In domestic, they already have a break-even point achieved. Domestic traveling in the Middle East is above COVID-19 already. Internationally, the region is at 94% compared to COVID-19, also strongly improving within the first six months of the fiscal year.
Overall, people are more and more traveling. We see it every day, with fairly booked flights, but also, I would say quite significant increases in ticket pricing, which is, of course an indication, that demand is there and that the airplanes are filling up nicely. On the next slide, you see the development of production rates, on single-aisle and wide-body airplanes, starting in 2019 before COVID-19, with the big dip in reduction in output, and deliveries in 2020 and 2021, and a clear indication, that the market is recovering. The dark gray area is the Airbus single-aisle development, which is the A220 family. Again, the A220 family for FACC is a very important platform.
35% of our total revenue comes from the A220 family, and especially that family is picking up on rates ahead of time, being very nicely and we are benefiting from that ramp-ups. I also would like to quickly address the Airbus A220 airplane family. A platform where we have signed a major contract last year, and we announced it with the empennage parts, the rudders, and the elevators. Also the A220 forecast is very promising. Rates will significantly increase over the next period and by 2024, the Airbus A220 will generate a revenue of roughly EUR 100 million per year based on the rate forecasts we see today.
Overall, promising market forecast from our major customers, not only on the larger airplanes, but also in the business jet environment. We see a significant increase in production rates, especially in the second half of 2023 and beyond that date. There is a backlog with our customers that's on the next slide, is also increasing. Here we have, again, if you plot them. Airbus and Boeing separate developments from February 2021 to February of this year and the end of July. Both Airbus and Boeing picking up, so the backlog simply due because of higher airplane demand from the airline.
The single aisle market, the Airbus A320 family and the Boeing 737 market are the most dominant platforms, being responsible for 80% of the business. FACC is strong on the mid- and short-term airplanes. We're benefiting from those trends perhaps the most. How does this airplane market spread around the globe? Overall, Airbus and Boeing are forecasting around 40,000 airplanes within the next 20 years. Again, 80% of the demand comes from short- and mid-sized airplanes. It's A320 and 737 platforms and 20% is wide-body markets like the Airbus A350 and the 787, all platforms where FACC has significant market share.
Overall, the Asia-Pacific market is responsible for 40% of the demand, but also the North American and European market are remaining very strong. On the upper left, we have extracted demand-
Excuse me, pardon the interruption. I'm sorry. There is static coming from your line. If you have any electronics near you or the speaker, please just move those away. You do have static coming from your line. Thank you.
Okay. We removed all our mobiles. It should be better right now. I'm sorry for that one, and thank you for letting us know. On the Russian market, we have extracted that market from the published number. In the 8,140 airplane demands we see in Europe, 1,440 is for the Russian market, which is 2.85% of the total demand. Overall, we in FACC think that the Russian airplane demand will not be accessible to Western markets like Airbus, Boeing, Embraer, Bombardier. I think, the demand must come from Russian internal manufacturing. Again, 2.85% is the total market demand for the region.
The impact, as we see it, we think, is insignificant because most of the airplanes that are ordered right now from Russian airlines is A320 and 737, and those airplanes easily can be sold to the remaining worldwide market. A few words on our latest customer, Archer, who is producing urban air mobility vehicles. Archer is a company in the United States, being engaged with the development and production of a passenger drone. Archer is partnering with United Airlines, who already ordered 100 of Archer eVTOLs for their own demand. Archer is also partnering with Stellantis, and well-known car manufacturer.
Basically the partnership between Stellantis and Archer is designed for cost and producibility and long-term product support worldwide. FACC is part of the partnership is responsible for the design manufacturing of the fuselage and the wing components. Overall, the concept is a lifetime contract, a couple of hundred million EUR in size. As of today, depending on market development and the objective of Archer is to complete all ground and flight tests with the FAA during the course of 2024, achieve type certificate in the same year, and start operations together with United Airlines in the later phase of 2024, early 2025. For FACC, that contract is important.
It's our third contract in the urban air mobility environment, following EHang, where we have a partnership since four years. A customer where we are doing logistic drones for materials we deliver or they deliver. Right now Archer is our third customer in the new segment, which for us has a strategic importance for revenue growth in 2025 and beyond. In saying that, I would like hand over to Aleš Stárek, giving you a few more insights on the financial KPIs.
Thank you, Robert, and good afternoon to everybody on the call. I'm gonna guide you through the numbers as usual. We start with the turnover and with the EBIT. Where you see a little bit of a trend lines, where we are coming from, where we are today. Basically on a company level, you can see a positive trend, slightly positive trend recovering from the lows of around EUR 100 million in the early quarters of the pandemic. Coming to around EUR 120 million, and by now we are moving around EUR 140 million euros turnover per quarter. In the same way as the turnover and the sales are recovering also EBIT is increasing.
The restructuring that we have performed in 2020 looks as delivering the appropriate results and we can benefit and yield from the increasing volumes. Overall in the last six quarters, we have delivered a positive operating result. The Q4 2021 has been impacted by the one-offs related to our legal dispute. Other than that, we see an increasing profitability on the EBIT level. When we look at the individual segments, Aerostructures, probably here you will see the biggest increase over the last six to seven quarters, currently around EUR 50 million turnover on a quarterly basis.
Also here, last year was pretty much a break even year in every quarter. Q4 2024 was then again impacted by the lawsuits that was attributable to the Aerostructures business to 100%. Since then Q1, Q2 steady increasing EBIT profits in Aerostructures. Aerostructures is recovering profitability as the volumes in Aerostructures are recovering. When we switch to the next slide, and then we look at engine and nacelles, we see a pretty stable stable turnover. Q1 2021 was, and Q4 2020 was where we're a little bit higher than the rest, but the rest is pretty much moving around EUR 22-23 million.
That's basically due to the fact that we know engine nacelle they are basically depending on the 787 translating sleeve, which is basically the main story, and it has been the main story for a couple of quarters. That's the case also continuing in Q2 as there were no deliveries on the 787 translating sleeve. Deliveries will pick up, so we will be able to benefit from the new contract. Looking at EBIT, you see a little bit of erratic movement here. It's a little bit a tricky situation relating to the 787 and relating to the old versus new contract.
The best way to describe it probably is to basically look into the old contract that was on the recurring price, a loss-making contract. However, there was a volume independent fixed payment related to spare parts that was in the old contract, and that ran out in Q1 2022, which was the last quarter when we invoiced that fixed fee to the customer. The new contract doesn't have that fixed fee and is basically relying only on the profitability of the recurring revenues and the price has been adjusted accordingly. This is basically where you see Q2 2021 versus Q2 2022.
The Q2 2021 is still basically depending on the fixed fee or still reflecting the fixed fee to a certain degree. Q2 2022 is not reflecting that fee. The rest of the fluctuations is pretty much then a function of the A350 translating sleeve lower profitability versus the engine component higher profitability. Then as the mix is changing, then basically on these low volumes, there are swings basically around I don't know a couple of hundred thousands up and down. That's pretty much the profitability in the nacelles.
I would expect that as now the 787 translating sleeve production is picking up, and the volumes are picking up, we will see in the quarters to come, we will see basically similar picture in engine nacelle as we see in Aerostructures. The volume increasing impacts will be then basically translated into profitability. When we look at cabin interiors, on the sales side, a similar picture as we see in Aerostructures, slightly increasing. The rate of increases in Aerostructures, the recovery in Aerostructures is faster than in interiors. Again, Aerostructures suffered more decrease during the pandemic than interiors did. This is pretty much in line with what we have seen. The profitability situation in interiors is still kind of fluctuating.
Q2 2022 was positive, but that's pretty much a project mix issue. As I say, a long-term return into profitability implies that we will have Croatia facility fully ramp up. Also Q3 through Q4 in the 2022 may show fluctuations around the zero line only from 2023 onwards when Croatia is fully ramped up. We may see a stable quarter by quarter profitable situation in interiors. Free cash flow pretty much straightforward with respect to EBIT, depreciation, EBITDA. The EBITDA is following the improvement of the EBIT.
What we see in others is pretty much a game of capitalization of engineering expenses into contract costs, which always happens when we have SOPs, start of production on one of the programs, or when we are adding in the period shortly after the SOP, we are then basically some engineering works related still to the development phase or the development of the project adding to the contract costs. We had a little bit more capitalization in last year than we have in this year. Working capital is again then a function of how we judge and how we estimate the supply chains.
Here I probably need to go a step back into 2020, when we have increased inventories in the beginning of the pandemic in order to safeguard deliveries to our customers. From there, as we saw that the supply chain is stabilizing, we have started optimizing and improving inventory management and reducing inventory, which has been basically in the first half of 2021 a positive impact on working capital. In this year, we are swinging back as basically the supply chain is as unpredictable or risky as we've seen it in 2020, for different reasons this time.
In order to safeguard delivery to the customers, we are, let's say, in a targeted way and in a managed way, increasing inventories, building inventory buffers, risk buffers, in order to be able to have parts when we need them for production, which again then leads to inventory increases. Out of EUR 50 million that you see as a cash out of working capital, EUR 20 million is attributable to these inventory increases. Another EUR 10 million is attributable to regular increase in receivables. Receivables are pretty much optimized in FACC. As the volumes are increasing, receivables are increasing, so there's EUR 10 million out of that.
What you also are seeing there is another EUR 10 million receivable increase that is an impact or result of the lockdown in Shanghai in May and June, where basically the Chinese customer was not able to pay us because there was nobody in the office. That impact will fade out over time as we are now basically starting collecting money from COMAC as basically production and payment and all the processes that basically you have in an operation are basically coming back. July and then in August, September, there'll be a recovery month and this impact will fade out over time.
In terms of net investment, pretty much similar level, EUR 4 million versus EUR 5.7 million in last year. You'll see that I would like to go on the next page. You'll see basically here on the left-hand side when we look at investment and working capital. The beginning of the year is usually a low investment cash out, and then the Q3 and Q4 are usually the stronger in investment cash out quarters. This is basically also repeating itself in 2022. No extraordinary issues on the investment side.
Looking at working capital and when we think about inventory here, which is the major driver for working capital, as I said, 2020, we have built up inventories in order to safeguard delivery, then we started reducing them. In the middle of 2021, the working capital was at EUR 140 million. We've seen another drop to EUR 100 million. Since 2022, we have started building up inventories to provide security for customer delivery. Working capital is increasing again. Still, when we look at it today at EUR 119 million, it's far below the EUR 143 million that we still carried around in the middle of last year.
Even less than what we have carried on the balance sheet before. Closing the financial section with the last slide on net debt and leverage, we see a slightly decreasing tendency and trend in net debt coming from EUR 225 million one year ago to EUR 211 million in June of this year. December 2021, and if you recall what we have discussed back then we had a couple of extraordinary payments from customers. Airbus especially conducted some prepayments from receivables that were actually due in January, February. We have shown an extraordinarily low net debt.
I've already indicated back then that we will see a normalization, and then this is what we see. Still overall, on the one-year level, we see a decreasing tendency in net debt, so slight deleveraging over time. When we look at it from the leverage perspective, as you all remember, 5.25 is the threshold that we have agreed with the banks. We have been well below the threshold in Q1 and Q2. Basically here we are moving on the safe side. Then the financing of the company is guaranteed, to spend maybe one or two more words on this.
The COVID portion of the funding that we have taken on in 2020, the EUR 60 million, is expiring in March next year. The whole club loan is expiring in August next year. We are now well ahead of the expiry and then we have started discussions with the bank, so that basically the plan would be to close or renew the funding deal by the end of this year. As I said, discussions already started, and we will spend the next four months in negotiating with the banks an extension or let's say a new syndicated facility that will replace the currently outstanding subsidized government loans and provide also a flexibility for FACC for a future growth.
With that, I would like to hand over back to Robert and to the outlook section of our presentation.
Thank you, Aleš. Well, last but not least, quick outlook on the business, how we see it. First of all, on the market. Based on the inputs from the market we have collected, we see another increase on A320 ramp ups in the next 12-16 months by another 20% compared to current rates, bringing the output close to the point as we have seen rates before the COVID-19 reductions. The same is true on the A350, where FACC has quite significant volume. There is a 25% rate increase pretty much in front of us to be executed between today and the end of 2023.
As Aleš already described, the Boeing 787 is restarting deliveries to airlines. American Airlines received the first 787 last year. FACC is relaunching production of significant work for the 787 as we speak. Based on contracts we have developed in the past, which have seen some downturn, significant downturn in the past two years, those rates are again picking up and generating additional revenues for FACC. The Airbus two twenty, we had a couple of statements before. Contract signed last year. We are currently ramping up production on the new contract. Overall, the Airbus two twenty for FACC is a very important platform.
Based on the rate expectations, we see in the market, the Airbus A220 production volume for FACC will increase from round about EUR 30 million per year last year to EUR 100 million per annum between today and 2024. The Airbus A220 will be another important platform for FACC next to the Airbus A220, the 787, and the A350 platforms, but also business jets. Business jets also here the market has fully recovered over the last year. In August trends are further positive. The business jets market is currently larger than before COVID-19, especially in the United States.
Also here on major platforms, where we supply products to mid-sized business jets, rates are ramping up round about 15%-25%, depending on the platform, higher than what we have seen before COVID-19. Also the business jets market for FACC is a growing market and well-doing market. Last but not least, COMAC has completed their ground and flight test program for the COMAC C919. The industry is expecting the type certificate to be awarded within Q3, latest Q4 of 2022. In line with type certification, production handover to airlines will start. The COMAC C919 has an order backlog of round about 800 airplanes.
The FACC volume per airplane is round about EUR 1 million per aircraft. Also here we are currently in the production ramp-up phase of the interiors and the wing components we are producing for COMAC. We're expecting a continuous growth in output between today and the next quarters to come. A quick look on issues. We have a certain focus on supply chain. We are considering and expecting that the raw material supply will stay difficult within the next 12 months. Our buffer stocks strategy will be kept and adjusted if there is adjustments necessary.
Overall, we have full control on materials, simply because we have considered extra inventory to protect FACC's production, but also our customers. We also are continuously restructuring supply chains. We are focused on a local-for-local principle, products we need or materials we need for European products. We have pretty much consolidated in Europe products we need for the US market. We are still consolidating supply chains in the United States, and we are currently setting up supply chains in China for future demands of the Comac C919. We also are pushing forward on vertical integration. As you know from previous calls, a couple of operations have been brought inside FACC.
One example is the manufacturing of metal components, which was 100% procured from the market, which is right now partially produced in FACC. We will do some more investments in the next years to come because the cost benefits and the logistic benefits we are currently already seeing from what we are doing are slightly better than what we have expected. Also here we will continue make FACC more independent, more flexible, and less in cost. Energy supply we already discussed previously. I will not repeat the statements from before. Last page on key priorities. First of all, we as the management, we are again reconfirming the guidance we have given at the start of the year.
We're expecting a 10% growth in revenues during the course of 2022. Even if some of our customers slightly adjusted the rate forecast in the second half of the year, we already have considered the one or the other issue in the market once we made our budget. The latest amount announcements from some of our customers are not impacting our guidance. EBIT targets, we stay focused and still our guidance is intact and reconfirmed. Strong focus will be on the ramp-up of our personnel staff in order to deal and cope with the ongoing ramp-ups of major platforms. Plant number six in Zagreb, we will ramp up to 250 people before the end of 2022.
Groundbreaking for phase II and phase III will be in early 2023, with the constructions being finished by the end of 2023, and volume in loads to the new facility and the growing facility to be done starting in the second half of 2023 and going into 2024. Liquidity and cash flow, Aleš Stárek, I think already explained our strong focus there. We are definitely working on the expansion of our market position with all of our customers in the business jet area, in the civil aviation, but also in urban air mobility and space. In saying that, this is pretty much what we wanted to share with you. Thank you for your attention and we are right now available to answer your questions.
If you would like to ask a question over the phone, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure mute function is turned off to allow your signal to reach our equipment. Press star two if your question has been answered. As one more reminder, it is star one if you would like to ask a question. We'll pause just for a moment to allow everyone an opportunity to signal for questions. We'll take our first question from Bernd Maurer from RBI. Please go ahead.
Good afternoon, gentlemen. Two questions, please. First, talking about segment profitability. You said before that interior segment, despite break even in the latest quarter under review, is not sustainably in positive territory. How does it look like for engines and nacelles? Do we expect here in your calculations a clear positive EBIT contribution for the full year 2022? Now looking at the second half with ramping up B787. That's question number one. Question number two, how do you think about restart of dividend payments? Can you give here some, at least midterm guidance at which profit level, which calendar year you might think of restarting payouts to your shareholders?
Well, Bernd, this is Robert speaking. First of all, I think on the interiors profitability. I think we stick to our plans as published in the investors' market day presentation from 2019. We are transforming the business. We have launched a EUR 30 million transformation program, which is hinged on setting up Croatia, reducing material costs, vertical integration of business jet interiors, and material supplier changes. I think we're in the middle of this transformation phase. Still on track. I think COVID-19 had a little bit of an impact in delaying at least Croatia by one and a half years. But the interior turnaround program is progressing.
As stated in previous statements, we're expecting interior to be sustainable, profitable, starting with the full ramp-up of Croatia. In the engine and nacelle environment, definitely we have with the 787, we had a production pause for the last couple of months, impacting our fixed cost spread in plant number four. With the production ramp-up of 787 based on the new and Elias stated terms and conditions of the contract, engine nacelle is profitable and sustainable profitable with growing volume, profitability will further increase. Also here development as planned.
I have to say, however, the 787 delivery interruption, as we have seen it over the last 12 months, definitely was impacting our output of plant number four. In terms of your second question, I think, Aleš, if you could please answer.
Yeah. Looking at dividends today, we have the situation that basically we have two restrictions. For one, the waivers that we have agreed with the banks are restricting us from paying dividends. Secondly, the COVID-19 financing that we have taken on in 2020 is restricting dividend payments as well. The goal, the target, from the renegotiations, let's say from the refinancing negotiations, with the banks that we have now started in June, July of this year, the target is clearly to get those dividend restriction payments out of the way. I think the understanding from the bank is, or from the banks, is there.
I would expect that once the refinancing is concluded, the dividend payment restrictions will be lifted. From 2023 onwards, we should be again able to pay our dividends. Basically, we will be able to go back to our usual payment policy or dividend payment policy, 20% of net profits. This is something that we will stick to.
Thank you very much.
We'll take our next question from Peter Rothenaicher with Baader Bank. Please go ahead.
Yes. Hello, gentlemen. Firstly, on the COVID-19 grant, I think in the amendment it's written that EUR 5 million from that are included in other operating income. Is this true? To what extent has this been the case in the second quarter? Do you expect here another profit for the second half of the year?
Yeah, it's true that we have realized other profits from the loss compensation because it was the governmental loss compensation program that we have applied for. Basically, losses incurred in Q1 and Q2 were then basically partly compensated by the government. That's right. We have realized those EUR 5 million, but this is basically ending. There's no further loss compensation coming from the Austrian government.
Okay. Looking into 2023, you have here clearly argued that you expect a strong increase in production rates, particularly for the A320 families, the A220 and the other programs. What would then be your expectation on sales growth in 2023? Looking purely on these statements, sales growth should be in the magnitude of 20% or so.
Well, I think we need to ask for your patience. I think we are currently consolidating the budget figures for next year. We are revising our entire business plan. I think we still would like to give our customers in this a little bit time to stabilize. Overall, I think we see a positive trend. We see a strong market recovery. You're right, we see a further growth in 2023 and 2024. Again, reconfirming that efficiency will be back to the
Company size we have enjoyed before COVID-19. We think it's reasonable, it's doable. Giving the guidance for 2023, we would do closing of the fiscal year. The overall perspective and what we are currently seeing on the market is definitely positive trends.
With regard to the payout, with regard to the legal case, can you give us here an update? Do you expect here a payout for the fourth quarter or generally for the year 2022?
Yes. We are now basically getting into a situation where, well, let's go a step back. What we have known in November last year was basically face amounts that amounted to approximately EUR 14 million that we have partly contested. Yeah, we have some of them we have accepted, some of them we have contested. Then basically we have made some estimations for interest rates and legal fees resulting then in the provisions of approximately EUR 25 million, and a cash out of EUR 20 million. Now, the interest rates have been pretty much also settled between the parties, between us and the tribunal. Then also we have achieved agreement on the legal fees.
That's now basically concretized and decided. Still, the portion of the face amount that we have contested is still not decided. What I expect is that we will have a partial cash out in this fiscal year. Depending on how quickly the finalization of the document goes, it may be in Q3, yeah, in September. Approximately, I would say EUR 7 million-EUR 10 million cash out in September. If basically for whatever formalistic reasons Q3 will not be possible, then in Q4, I would definitely expect a partial cash out from the settlement, and as I say, in the amount of EUR 7 million-EUR 10 million.
Okay. Taking into
The rest of the amounts we disputed will be basically then carried forward.
Okay. Taking into consideration this cash out, what would then be your expectation for free cash flow in the current year?
Yeah. Again, here, I think we need to do a little bit of thinking where we can end up, as I say, from inventories, that's for sure. We'll not have any improvements there, that the business is growing in Q3 and Q4. There is little we can do about improving receivables, so they will grow as well. Probably, and on the payables side, and also no leverage here. There will be some cash outflows from investment I think in Q2 and Q3 and Q4, probably in the same amount as we've seen it in 2021. Yeah.
I would need to sit down and do a little bit of more thinking to be able to give you a clear yeah guidance range whatsoever.
With regard to seasonality and that normally Q3 is always weaker than the second quarter due to the vacation time, will this also be the case? Do we have to expect for the third quarter lower sales and profitability than in Q2?
I think you already answered your own question. I think it will be, Q3 is a little bit weak because July, August is a lower demand from our customers, but, a stronger demand in Q4 every year. That's not different this year.
Yeah. Thank you.
You're welcome.
We'll take our next question from Harry Breach with Stifel. Please go ahead. Harry, your line is open.
Hi, yes. Can you hear me?
Yes, perfectly, Harry. Go ahead, please.
Yes. Thank you. Good afternoon, everyone, and thank you for taking my question. Maybe could I ask a couple, maybe a little bit more for Robert rather than giving Aleš a hard time about cash flow? Robert, a couple of things. Different commercial angles, really. Firstly, when we think about the business, particularly from your airframer customers, are we seeing stability and regularity in purchase orders and how they're taking shipments? Or are we seeing some unevenness as we particularly look at the narrow body ramp up? Second question is thinking about work packages and opportunities. I think if I remember well, I think Spirit recently mentioned that one of their suppliers had unfortunately become bankrupt and, you know, they, I'm sure they won't be the only supplier, unfortunately, that doesn't make it through.
Are you guys seeing any opportunities, any increased RFP activity, either from tier ones like Spirit or directly out of the airframers themselves? Then maybe sort of final commercial question, if I can. The congratulations on the contract from Archer clearly adding to EHang and the unnamed air freight UAM operator. When we think about UAM revenue, I think earlier you kind of gave us a number potentially on A220 revenue looking out for, you know, two or three years. When we look at UAM revenue, when we put together the potential volumes from Archer, from EHang, from this, the one that we don't name, what sort of numbers are we talking about maybe in five years time in 2027?
Yes, Harry Breach. First of all, on the order stability, I think overall, the demand signal and the deliveries are quite stable. On the wide-body anyhow because it's following at run rate, as said before, on the 787, there was no deliveries because it was paused. Right now it's ramping up again. 350, 330 was really stable. Also on the A320, where it continues ramp up. To be fair to say, there was the one or the other short-term reallocation from expediting one airline configuration in favor of an earlier configuration.
There was some re-shifting on allocation of the product, pretty much driven, I think, by the handover slot to the airline. I think that was all managed stable, and it was not too different to what we have seen in the environment before 2019. That's pretty much more. What we have recognized from time to time was a little bit of a slower return of shipping containers, which is an indication to us that the production sequence was not fully harmonized, but this was a on- or two-week event, and then it was stabilized again.
Overall, I think, considering the noise we see globally in global supply chains, logistics, I would summarize it, there is some volatility, some of which we already expected, but it's good manageable. Yeah. On the second question.
Yeah.
On the second question, work packages. We currently see quite a lot of RFQ activity from all of our customers. There is many packages that are out on the market where we are quoting and others are quoting. For the one reason you already expressed, Harry, that suppliers are failing or the suppliers cannot deal with the future market demand. We are working on packages in aerostructures, but also engineering sales. Currently a little bit less in interiors to bring market share into FACC on work that currently is produced to somebody else. There is an increasing I would say RFQ activity on the market. I can confirm that, Harry.
This is certainly giving us but also other companies, I think, the opportunity to bring in work that is currently produced to somebody else. On the urban air mobility market and revenues, we are expecting a revenue out of the contract we have today. It's EHang, it's the unannounced customer and in the future Archer, which pending still on certification entry into service and ramp ups, which could range between 80 and, sorry for the widespread, 80 and 140 million US dollar of revenue per year in 2025. Still, I think some uncertainty on certification completion entry into service and rate ramp up, but we are expecting 80 to 140 million a year in 2025.
That's really helpful. Yeah. No, but, Robert, if I can add, are you responding to any RFQs on other UAM programs?
Well, we are currently working with a few other ones we have selected, I would say. Well, as we all know, there is many, many programs out in the market. Many people try to enter that market. We try to make our selections whom we think will play a major role in this growing market. We are currently working with the three. There is engagement with another three. We are currently working and discussing potential cooperation between FACC and those potential partners.
That's great. Thank you very much indeed.
You're welcome as always.
We'll go ahead and take our last question from George McWhirter with Berenberg. Please go ahead.
Hi. Good afternoon. I have a question on the revenue guidance for the current year. The guidance implies we see a slight slowdown in growth in H2. Is this a bit of conservatism in the forecast, or can you give us a sort of talk through the reasons behind why you might see a slowdown, given you've mentioned that we might see steady increases on the key programs like the A220?
Well, I think there was a few statements made by two of our main customers on how they see the rest of the year. They slightly reduced the production output. Again, what they have currently announced on their reductions, we didn't know, I have to say, when we did our planning for 2022. We think what they currently have announced, they will deliver all of them. That's still inside our market assessment. Again, as mentioned before, Q3 will be a little bit weak in production demand. Q4 again will be strong.
Basically, we think the 10% revenue increase is what we are expecting based on what the market knows today and what we know today. For 2023, I think also our customers are pretty much open. They made certain announcements. That's the numbers we're working with as well. I think the industry will further stabilize. This year definitely was a year of a ramp up with the one or the other challenge. I think Ukraine speaks for itself. In other issues, I think next year could be a little bit more stable and better predictable. I would say the 10% we have forecasted. We are very confident.
Again, I think for next year, we will work with our customers in the next couple of weeks and months, and we will come out with our guidance, as always at the end of the year. But the indications from the market are fairly positive because the platforms we are on are developing very nicely at the time being.
With that does conclude our question and answer session. I would now like to hand the call back over to our speakers for any additional closing remarks.
I think we are finished right now. If there are any questions open, then please get in contact with our IR team, as already mentioned initially. Many thanks for joining our today's conference call and have a good day so far. Thank you.
Thank you to everyone.
Thank you.
Have a good day.
Have a good day. Bye-bye.
Bye-bye.
With that does conclude today's call. Thank you for your participation. You may now disconnect.