Faurecia First-Half Profit Falls 16% on Sluggish EuropeMathieu Rosemain
Faurecia SA, Europe’s largest maker of car interiors, reported a 16 percent drop in first-half profit on slowing auto production in its home region.
Operating profit declined to 256 million euros ($338 million) from 304 million euros a year earlier, the Nanterre, France-based company said in an e-mailed statement. Earnings beat the 248 million-euro average of six analyst estimates compiled by Bloomberg. Revenue gained 5.7 percent to 9.27 billion euros.
Faurecia, 57 percent owned by PSA Peugeot Citroen, is expanding in Asia to compensate for a six-year slump in car sales in Europe, where the company expects 2013 auto production to decline 3 percent to 4 percent. The parts-maker, working to lower costs, reduced net debt by 100 million euros in the first half to 1.7 billion euros.
“We don’t expect a rapid recovery in Europe,” Chief Executive Officer Yann Delabriere said today during an analyst conference. “We have to adjust fixed costs to the new level.”
The measures put in place will yield savings of 50 million euros this year and 100 million euros in 2014, Faurecia said. The moves will lead to 90 million euros in charges in 2013, including 39 million euros booked in the first half.
The shares fell as much as 8.1 percent to 18.73 euros and were 6 percent at 10:35 a.m. in Paris trading. The stock has surged 65 percent this year, valuing Faurecia at 2.15 billion euros.
The French manufacturer reiterated its 2013 targets which include positive net cash flow before restructuring charges of 120 million euros for 2013. Faurecia is also forecasting full-year revenue between 17.8 billion euros and 18 billion euros and an “improvement” in operating income.
Faurecia expects order intake for the year to underscore its goal to grow 6 percent to 7 percent annually over the next five years, Delabriere said today.
The French company, which last year bought Ford Motor Co.’s car-interior business in Saline, Michigan, has a goal of becoming one of the top five industry suppliers in North America with $7 billion in yearly sales there by 2016. The company plans to limit future expansion of its production network to Asia, the CEO said today, adding that the company was closing in on an agreement with China’s SAIC Motor Corp.
Ford and Wolfsburg, Germany-based Volkswagen AG are Faurecia’s two biggest customers, while controlling shareholder Peugeot ranks third. The Paris-based carmaker consumed 3 billion euros in cash last year amid falling sales. Peugeot’s turnaround efforts include reducing capacity, cutting jobs and selling assets.
The Faurecia holding, Peugeot’s largest remaining asset that it could easily dispose of, isn’t for sale, Peugeot Chief Financial Officer Jean-Baptiste de Chatillon said in February. The company is reluctant to sell the stock because of Faurecia’s contribution to profit, two people familiar with the situation said in May.