Faurecia Accelerates Margin Goal as First-Half Profit SurgesMathieu Rosemain
Faurecia SA’s first-half earnings surged 40 percent as sales growth outpaced auto-market expansion in Europe and North America, allowing the car-interior maker to push forward a profitability target by at least six months.
Operating income jumped to 424 million euros ($465 million) from 302 million euros a year earlier, Nanterre France-based Faurecia said in a statement. Revenue rose 13 percent to 10.5 billion euros. Earnings as a proportion of sales widened to 4 percent from 3.2 percent, and the company now plans to reach an operating margin of 4.5 percent to 5 percent in the second half rather than in 2016.
Faurecia, 51 percent-owned by carmaker PSA Peugeot Citroen, is expanding outside Europe to reduce reliance on its home region, while reorganizing in response to vehicle-market declines in Brazil and Russia. The parts supplier said last year that it’s forming a joint venture in Mexico, and it forecast on Friday that North American profitability growth will accelerate in 2015.
“These are very good figures,” Jose Asumendi, a London-based analyst at JPMorgan Chase & Co., said by e-mail. “It shows the confidence they have executing the industrial turnaround of the firm.”
First-half revenue jumped 26 percent in North America, 9.3 percent in Europe and 9.2 percent in Asia, with sales from outside its home market helped in part by the euro’s decline against the dollar.
Faurecia rose as much as 3.3 percent and was trading up 2.1 percent at 38.17 euros as of 9:05 a.m. in Paris. The stock has gained 23 percent this year, valuing the company at 4.76 billion euros.
The French manufacturer doubled its 2015 target for net cash flow, now forecasting it will generate more than 200 million euros versus a previous goal of at least 100 million euros. The company stuck to full-year targets of boosting sales excluding currency effects by about 5 percent and generating operating profit exceeding 4 percent of revenue.
To help free up resources for the expansion, the auto-parts manufacturer is exploring the sale of its bumpers business, people familiar with the matter said this week. Faurecia is talking to private-equity firms as well as automotive suppliers to gauge interest, the people said.
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