Faurecia lowers earnings outlook on slowing car sales in Europe
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PARIS -- Faurecia, the French supplier controlled by PSA/Peugeot-Citroen, cut its 2012 earnings outlook, saying it expects a sharp sales decline in Europe in the fourth quarter as a result of slowing automobile production.
Faurecia said third-quarter revenues rose 7.9 percent bolstered by higher demand from markets outside Europe and by the acquisition of the Ford Motor Co. plant in Saline, Michigan, and new contracts with Daimler, Volkswagen and Nissan in North America.
Sales advanced to 4.09 billion euros ($5.34 billion) from 3.79 billion euros a year earlier, the Paris-based company said on Tuesday.
North American sales surged 19 percent to 964 million euros, excluding currency and perimeter effects, offsetting a 4.2 percent slide in Europe. Asia sales rose 9.9 percent to 348 million euros.
With the exception of the main seating and interiors businesses, which posted a 4.3 percent sales gain, all other divisions reported declines. Emissions control, the catalytic converters unit, posted a 4.8 percent drop in sales, while the exteriors business fell 3.1 percent on a like-for-like basis.
Faurecia now expects 2012 operating income "above 500 million euros" for 2012, compared with earnings of 560 million euros to 610 million euros as forecast in July.
"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 a statement.
Faurecia, which is 57 percent-owned by PSA/Peugeot-Citroen, seeks to expand its activities outside Europe as the continent's car market is heading for fifth straight annual decline, with PSA, Fiat and Renault leading the drop.
Auto production in Europe is expected to fall 11 percent in the fourth quarter, Faurecia said, citing IHS Automotive estimates.
Moody's Investors Service cut its outlook on Faurecia was cut to stable from positive on July 27. The ratings company views the auto supplier's relationship with majority sharholder PSA primarly as an operating challenge, but believes that it can largely compensate shortfalls of sales to PSA by business from other carmakers.
Bloomberg and Reuters contributed to this report
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