Good morning, ladies and gentlemen. A warm welcome to today's earnings call for FACC AG, following the publication of the Q1 figures of 2025. I'm delighted to welcome the CEO, Robert Machtlinger, the CFO, Florian Heindl, as well as Michael Steirer from Investor Relations, who will start with the presentation shortly. After the presentation, we will move on to the 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, I hand over to you.
Thank you, Jana, and good morning to everyone again. Welcome to FACC's earnings call for the first quarter of the fiscal year 2025. As already mentioned, my name is Michael Steirer, and today with me are our CEO, Robert Machtlinger, and our CFO, Florian Heindl. As always, we have already provided some more detailed information in our press release issued earlier today. In case that we cannot cope with every potential question raising during the session today, we will be happy to schedule additional one-on-one meetings afterwards. In this case, please let us know, my colleague Tanja Meissenberger or myself, and we will arrange appropriately. Now I would like to hand over to Robert Machtlinger, our CEO, in order to start with the presentation. Thank you.
Michael, thank you very much for the introduction. Good morning, ladies and gentlemen, from wherever you are dialing in. A pleasure to talk to you and giving you, together with my colleagues, a quick update on our first quarter 2025 results. Next page, please, Michael. Overall, a few highlights we would like to address on and above the financials. As we all know, technology and innovation are very key to the development of FACC. This was the case over the first 35 years of our existence, but also is very key for FACC in going forward. As you know, we have very strong R&D capability, and we are today working with our teams to define the technology for the future.
We are very proud to say that during the JEC Composites exhibition that took place in Paris earlier in the year, which is the most important composite trade event, that we have been selected to be one of the three finalists of the JEC Composite Innovation Award. A big honor to us, and what the innovation was is a joint development with one of our engine customers, where we have developed a high-performing turbine blade out of composites, out of new materials, which will make it, as we see it today, on the next generation engine platform. Very key for us in order to have a technology step in advantage compared to some of our peers. Well done from our teams. I think we also have been engaged with two customers, Collins and Airbus, in a new standard, which is called the Aero Excellence.
Aero Excellence is a new requirement that was implemented where manufacturing processes and quality standards are reviewed to new standards. Also here, we have been one of the top five worldwide suppliers to the aerospace world, where we have been qualified to these new processes. This is an indication that what we do and how we do it can guarantee safe and environmentally protected manufacturing processes. On and above, safety is a big word in the aerospace industry, as we all know. Also here, we have shown as a front runner how stable and resilient FACC is. The CEO contract was extended by another five years.
We published that talk, which of course is a big honor to me, and being able to support FACC in the next five years together with my colleagues, running the business, changing the business in a very dynamic, challenging, but also, I would say, a promising environment. A little bit more to the point right now, this is why we meet. It's the company development. On the top line, I think we are very much in line with our guidance still in the first quarter to the upper level of our guidance. As we all know, we are guiding the business year on the top line with a 5%-15% growth for the first quarter. It is pretty much to the upper line of the guidance. I however would like to elaborate a little bit on the industry dynamics.
We are still in the entire industry working in a very dynamic environment. It's not only, I would say, the geopolitical discussions. We will have a slide for yourself later on in the presentation talking about tariffs and what does it mean to us. It is still supply chains. It is still cost pressure from various angles we are managing every day. We also have seen quite the dynamic with the customer input signal. There were also adjustments made that are very much in line with the outlooks our main customers have provided to the public. We have seen shifts in demands. I would not call it, let's say, too much cuts, but it is definitely shifts from periods to the other.
We've seen the one or other working capital reduction program with one or the other customer of FACC, where they are confronted with these ambitions we are having. Working capital is high. We all know there is a couple of lagging supply chains in the industry. What we see at the time being is that all of our customers are adopting plans to make them executable, considering the one or the other issue that cannot be solved within weeks or months. What we see at the time being is still a very stable ramp-up, but a little bit of a lower speed. Still, what we see from the order intake is fully in line with our overall guidance. This short-term adjustments we've seen in the first quarter has to be managed and was managed with the one or the other extra cost we had to carry.
Of course, I think Florian will talk a little bit more during his presentation on the financials. Next page, please. A little bit of insight on the market, as we always do. Next page, please. Overall, we have the input from the 2024 deliveries. This is not new to you. We shared with you, I think, pretty much repeating a statement from FACC. We all see that there is room for more in the industry because 2024 total output was even slightly less compared to 2023, driven mainly by one major OEM. On the next slide, you will see how the two big OEMs are more converging. Nevertheless, looking into the 2018 figures, there is a 400-500 airplane gap that has to be filled up in order to have the same output we enjoyed already in the past. The momentum is there.
We all know demand is there. Airlines are asking for airplanes, and the industry has to manage the demand. Overall, the firm order booking from the two main OEMs is at 14,800, no change to what we have already shared with all of you during the last call in March. Next page, please. A little bit of insight to the first quarter with the two main customers in the industry, or OEMs. We see 266 airplanes have been delivered in the first quarter. We always know that the first quarter of the year is a little bit weaker with both customers. There is a momentum in the industry in the next quarters to come in order to pick up on deliveries, but also production. We all know, I think, the guidance that has been provided by the industry.
Looking a little bit into a comparison between 2024 first quarter and 2025 first quarter, it's getting very evident that Boeing is picking up. In the last years, Airbus always was leading in terms of output and delivery. We are expecting this will still be the case, of course, during the full year of 2025, because the gap that has to be closed is certainly significant. In the first quarter, it's getting evident that Boeing is ramping up its production, and it's pretty much equal in terms of deliveries between Airbus and Boeing. That's indicating that I think the direction is good, also good for the industry, and also good for FACC. Next page, please. In terms of the long-term forecast, also no change. I will not talk about the 20-year forecast. This is many times reconfirmed and is proving to be right.
Still interesting, and I would like still to have a quick review on the mid-term forecast of the major platforms in the industry, where we are having significant share on it on the A350. It is reconfirmed that the production rate will double in the next two to three years from currently six airplanes to 12 airplanes a month, which is doubling the requirement and also the business volume FACC has on the platform. Again, FACC has quite a significant amount of value on the A350. Pending on the configuration, it is between EUR 2 million and EUR 2.5 million per airplane. We see there is natural organic growth with the investments we have made in the past, which will come back over the next two to three years, again helping FACC to be well utilized. 787, pretty much the same, doubling the size of the demand in the next three years.
Volume of the airplane is not as big as on the A350. It's a little bit less than half, but also here, nice organic growth potential without further investments. The 777 is a little bit late in entering into the market, but also here we see a slight increase in rates, not as big in requirement to the other two. The single-aisle airplanes, which is 80% of the market, still continues growth. As I said before, at a little bit slower pace as we have received the latest updates from all of our customers. Again, the top line numbers where we are targeting to be in the next two to three years are unchanged. A320 family, as you all know, most important platform for FACC, 36% of the revenue. We'll see another 21% growth potential in the next three years.
The A220 with the 40% potential in organic growth. On the 737, this airplane is again picking up in monthly production rate increases, targeting a rate of 55 in the next years to come. The Comac C919, the Chinese platform where we have roughly EUR 1 million of revenue per airplane, is also stepping up quite significantly between 2024 deliveries and the next three years. Overall, we see a very intact demand signal from all of our customers. Again, a little bit normalized compared to previous forecasts, but still in a very stable ramp-up scenario. Next page. In saying that, I would like to hand over to Florian with a little bit more details on our financials. Thank you, Robert. Thank you, Michael. I will now go into the details of our financials in Q1 2025. Next page, please, Michael.
Overall, or in a nutshell, and Robert just touched it a little bit, the market recovery for FACC continues. We have followed our planned development in our core business and also in our new markets business, especially the AEM business, the drone business. In terms of revenue, Robert also just mentioned before, EUR 231 million of revenue, a 14% increase compared to Q1 2024, spread across all divisions that we have in our company. The operating EBIT, EUR 4.3 million in Q1, is of course a setback compared to the EUR 9.9 million that we enjoyed in Q1 2024. Reasons for that, of course, the challenging environment in the supply chain coming together with material cost increases that are hitting us right now. In Q1, we have grown our employee base by another 46 FTEs for the ongoing ramp-up.
The big difference compared to Q1 in 2024 was a free cash flow, positive free cash flow of EUR 3.5 million. Next one, Michael. This slide you all will know. On the left side, we have the revenue compared to the last couple of years in the Q1 with 231. I think enough said about that. On the right side, the EBIT for Q1 with EUR 4.3 million, which equals a 1.9% EBIT margin. Next one. In terms of our divisions, as I said before, the revenue increase spread across all divisions, aerostructures, engine components, and interior solutions. Next one. The EBIT development as well, aerostructures and engine components with positive EBITs, of course, a setback in aerostructures divisions with EUR 1.5 million EBIT in Q1 compared to 6.7 in Q1 2024.
Reason for that is a material price issue, especially in the fastener environment, currently very dynamic and challenging in the aerostructures business. Interiors in Q1 with a negative minus 3.5. Of course, we are still working on the recovery plan, which is in place, and we should see a continuous improvement over the next couple of quarters going forward. Next one. Free cash flow, as I said before, an improved picture compared to Q1 2024. We have enjoyed a positive free cash flow of EUR 3.5 million in Q1 compared to a minus EUR 37 million in Q1 2024. An improvement on that side as well. Next one. Investments, pretty much nothing surprising here. Very well controlled investments that we are taking also in connection with our core efficiency program that we are right now running.
We really have to control the investments that we are doing and only spend the necessary euros that we really, really need. On the right side, the inventory, which is still our biggest pain in the company, which has a slight increase compared to Q1 2024 to full year figures 2024, with EUR 178 million going up slightly to EUR 185 million roundabout. Reason for that is, of course, a challenging supply chain environment, but also some kind of shifts. Maybe Robert will touch a little bit later in the outlook in the first two months, January and February, on the customer side, where we had causing us some inventory issues. We expect still sticking to our target for year-end, a very big improvement in terms of our inventory going down to EUR 148 million for the year-end.
Next one. We've seen that. Handing back to Robert for the final outlook.
Thank you, Florian. Outlook. Next page, please. As we already said, and you know the aviation industry, I even would not say it's recovering because on the top line, I think we are doing well better than before COVID. Still, I think on the airplane deliveries, there is a gap to be closed. Rates are ramping up. Recovering may be still a fair statement. We will increase the build rates for short and mid-term medium-haul aircraft. What we see, and I already touched a little bit before, we see a ramp-up curve that is slightly reduced at a slightly lower speed as we have been told during 2024. I think this is a necessity to harmonize the global supply chain because there is a couple of lagging supply chains impacting the industry.
I think by level loading and harmonizing and going in the same speed overall is not a bad thing to do because we need to have stability again, not signals that are ramping up and then slowing down again. Overall, we see this not negative. I think it's helping to stabilize costs, and it's also helping, I think, the overall supply chain. As Florian said, we always have to prepare for high rates. If a rate is then slightly postponed by a couple of weeks or months, the material inflow is already ongoing, cannot be stopped because it's either on the ship or it's a long lead item, which is then driving our inventory levels to the levels we're having.
I see this not always positive, but overall, I think if we're stabilizing the industry in the month of 2025, this might have positive impacts on the efficiency of how we run the overall business, not we as FACC, but the entire industry. We are still sticking to our guidance, which is a 5-15% growth. Again, I think we will be more specific after the second quarter. We see some dynamics still in the second quarter by the one or the other shift already planned also in the material inflow. We see a more stable ramp-up then in the second and third quarter. Overall, we will grow in this spread. Again, more specific guidance, and please be patient with us after the second quarter. Priorities are very unchanged. Continue the ramp-up in line with our build rates of our customers. We are very well aligned.
I also can state here, our customers are very helpful if the change in demand is too significant. They are even willing to take some of the inventory earlier in order to help FACC in managing inventory. We are maximizing our focus on core. This is the key project we are working. I think the good news in the first quarter, significant improvement in the cash flow, as Florian already mentioned, from a significant negative cash flow last quarter one to a positive cash flow in Q1. Overall, core, our EUR 80 million efficiency project is fully up and running in all areas in terms of material, internal efficiency, cost savings, but also inflation cost compensation requests with our customers. Up and running for the next two years and progress made as we speak. Overall, the challenges are very much unchanged.
Supply chain stability remains an issue for the entire industry. We see less critical supply chains, but those ones that are still critical need special attention. The rising cost is normalizing, I have to say, even in Europe and Central Europe. The years of 7-8% inflation with significant personal cost increases is behind us. In Austria and in our industry, applicable for FACC, we just finished the labor increase negotiations for 2025. I would say very fair conditions for us as the company, but also for our employees. The increases we are seeing this year is back to normal years in the years before 2020. This is increases FACC was able and will be able to compensate with efficiency increases from one year to the other. Geopolitical situation, we all know it's still dynamic. That pretty much brings us to the last page, Michael.
The biggest challenge in the industry worldwide, not only aerospace in general, is the tariff discussion that is ongoing between the United States and the rest of the world. We did a deep dive into the subject, what tariffs mean to FACC directly in terms of our contracts. Here, I think our contracts have been set up over the last years and decades that any customs that are related to import tariffs is not the responsibility of FACC. It is the responsibility of our customers. Directly, I would say, if we deliver product, and this is again impacting our deliveries to the United States, which is around 15% of our revenue, our customer has the obligation to pay for those duties. So far, so good, I would say, in the short term. No, let's say, surprises in terms of our cost structure.
However, and we are aware about that one, the products we are producing for our United States customers, of course, from a pricing standpoint, is getting less favorable. Also here, we looked into it, and we are in very good and open discussions with our customers. There should be no fear because there will be no change in the setup. Our products are qualified to specifications and locations where we are producing today. There is switching cost and time that is not at all yet considered. Based on our IPs and our production setup for the current product portfolio, we are in a well alignment with our customers. In the long run, of course, and this is also what we have considered in our overall long-term strategy, our global manufacturing footprint. You might know about it.
We have a strong footprint, of course, in Europe because of our Austrian and Croatian facilities. However, we are actively having set up organizations in all the other markets, like the United States, in Wichita, in Florida. We also have set up Canada in Montreal many years ago to be local. We also have set up operations, of course, in China, the biggest market at the time being in terms of airplane demand, but we also are very active in India since 15 years. This strategy will pay back also in the next generation airplane manufacturing. Tariffs still remain an issue in going forward. Our strategy long-term is definitely producing components where it makes best sense. In the midterm, and I need to have a statement here as well. We all know that political uncertainty is not welcome in the overall capital market area.
There is some adjustments made as we will watch them. Also, the aerospace industry is very sensitive in terms of political instability. We are watching the booking behavior in the markets very closely. In the short term, all is as it was. In the longer term, however, there is a slight reduction already visible that business travelers between certain markets are booking less. At the time being, not too big of a concern because there is an over demand compared to the supply capability the industry currently has. Again, together with our customers, we are watching the situation very carefully. We are not yet concerned because a slight reduction in demand would not impose a reduction in supply signal because we, as I said many times before, we could deliver more airplanes to the market if we could.
In the long run, and again, I talked already, we have a very solid plan, not set up yet, but already set up in the last 5 to 10 years. We are close to this subject. We are watching it. As of today, there are changes every day. We are at the time being on top of the issue. In saying that, that's what we can tell you about tariffs and impacts to FACC. Again, no impact as we speak. In the long run, our global strategy already takes care about it. In saying that, I would say thank you for listening to us. Right now, the floor is yours for raising your questions to us.
Thank you very much for your presentation. We now move on to the Q&A session. To keep the conversation engaging, we kindly ask you to place questions via audio line.
To register your question, please click the raise your hand button below. If you've joined via phone, like some of you have, please use the key combination star 9 followed by star 6. If you do not have the opportunity to speak freely today, you can also place your questions in our chat box. We are now waiting for the first few questions. Mr. Poulain, I will give you the permission to speak now. You may ask your question.
Thank you much. The question is on the guidance for sales because I think you highlighted some of the question marks that you have, but you started the year on a strong note regarding sales. Is it because you have more pricing effect and the volume is closer to the lower end of the range, and you expect this pricing effect to be less pronounced in the coming quarter?
Is it because you still see some risk of disruption in the supply chain and you want to be prudent? Based on the start, should we assume that you'll be closer to the higher end of the range as suggested by also your peers who seem to be a bit more confident in their ability to deliver higher volumes? Safran last week, for example, or Lizzie commented on that, and they were quite confident in the track that they currently see for the ramp-up. Could you elaborate on that, please?
Yes, of course. Overall, this is not a pricing discussion here. The spread would be simply too much, I would say. The pricing has some elements in there, as Florian said, fastener pricing and availability is a discussion at the time being where we have secured supply, but at a certain cost.
Here we are engaging with our customers to find pricing agreements in compensating for that. The spread is more driven by the demand signal, as you just said correctly. I am also in line with the judgment of Safran and many other ones. We see a stable ramp-up in the industry. I think the adjustments we have seen on certain projects and platforms, I think, is harmonizing the supply signal across the industry. It does not make any sense to go for, let's say, very high rates already knowing that one or the other supply chain might not be able to deliver. Because what would that mean if 95% of the supply chain is working to this higher demand and a few parts are missing, the airplane will not take off? This will drive inventory and cash outflow in the entire industry.
As always, at a certain point, also our customers have to readjust the inventory level. That comes normally with a slowdown of demand. By harmonizing the signal and working on these few critical supply chains, I think this is doing very good to the industry. Again, I'm fully supporting the statement made last week by Safran and others that we see a very intact ramp-up also in 2025 and beyond. More harmonized, more considering the last critical issues, which all should help us to burn down inventory because buying inventory for high rate and then keeping it for another two months because we are postponing a delivery is cash-consuming. Overall, I see the trend as well positive. For the full year, the growth we have seen in the last three years will continue. Again, the spread will be narrowed down after the second quarter.
Thank you. Maybe a follow-up on the inventory reduction drive. Just to be clear, if you are cutting inventories to improve your free cash flow, it doesn't compromise the growth rate for the year. You would be able still to achieve the year-on-year growth rate at the high end of the range if indeed there's no supply chain disruptions.
No, I think in everything we do as a strong partner to our customers, we have to secure delivery because we are the only supplier partner who delivers the product. Not delivering because we have ramped down material below the need is nothing we ever would do because that would trigger other costs in terms of liability. We do this very structured. I think the more a normal drumbeat comes into place, the better we can claim.
The less critical supply chains we see, and that's what we are already recognizing, the less safety buffer we have to put in place. We all need to recognize if there is instability, we need to secure our business and our customers by putting a little bit more inventory into our stocks. The reasons could be many. It could be logistics. It could be transportation. It could be raw material that might be critical in the months to come. This was the dynamics we have seen over the last three years. That's normalizing everything we do and ramping down our inventory is very much in line with our customer demand signal. Thank you.
Thank you very much for the question. We are waiting for another question. It seems that we may not have another question.
Therefore, thank you very much for your interest in FACC and your questions. A big thank you also to the gentlemen for your presentation and the time you took to answer the questions. Should further questions arise at a later time, please feel free to contact Investor Relations. I wish you all a lovely remaining day. Thank you and goodbye.
Thank you, everyone. Bye-bye. Thank you, everyone. Thank you. Goodbye. Bye.