Faurecia Cuts Earnings Forecast on Europe Car Market Drop
Faurecia, Europe’s largest maker of car interiors, cut its 2012 profit outlook, forecasting a decline in fourth-quarter European sales on a “significant” slowdown in auto production.
Faurecia now targets full-year operating income of more than 500 million euros ($652 million), compared with July guidance for earnings in a range of 560 million euros to 610 million euros, the Nanterre, France-based company said in an e-mailed statement today. The shares fell as much as 4.5 percent.
“We are implementing cost-reduction measures to adapt” to lower levels of European auto production, Chief Financial Officer Frank Imbert said today during a conference call. “We don’t contemplate at this stage a second major sale or restructuring” after the measures taken in 2009 and 2010.
“Despite the increased contribution of other regions and already significant cost adjustments, lower sales in Europe will affect the group’s profitability in the fourth quarter,” the company said in the statement today.
Faurecia is 57 percent-owned by PSA Peugeot Citroen, which has said it was burning through 200 million euros a month in cash. The partsmaker is seeking to expand outside Europe as the region’s car market heads for a fifth straight annual decline, with Peugeot, Fiat SpA (F) and Renault SA (RNO) leading the drop.
Moody’s Investors Service cut its outlook on Faurecia to stable from positive on July 27. The ratings company views the auto supplier’s relationship with majority shareholder Peugeot primarily as an operating challenge.
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