Faurecia to cut 3,000 jobs as growth focus shifts outside Europe
PARIS (Bloomberg) -- Faurecia, Europe's largest maker of car interiors, plans to cut about 3,000 jobs in its home region, or 7.5 percent of the workforce, by the end of next year as it retrenches in lackluster European markets.
Faurecia intends to cut about 1,500 jobs next year, the same number eliminated in 2012, Chief Financial Officer Frank Imbert said.
The restructuring will lead to about 100 million euros ($127 million) in charges this year and 90 million in 2013, the company said.
"Our objective is to stop the bleeding in Europe next year," Chief Executive Officer Yann Delabriere said on Monday at a meeting with investors. "We have lost significant cash flow in Europe, and we have to adapt."
The French supplier, 57 percent-owned by PSA Peugeot Citroen, last month cut its 2012 profit outlook, forecasting a decline in fourth-quarter European sales on a "significant" slowdown in auto production. The partsmaker is seeking to expand outside Europe as the region's car market heads for a fifth straight annual decline, with carmakers PSA, Fia tand Renault leading the drop.
Faurecia rose as much as 2.4 percent to 11.75 euros and was up 1.9 percent as of 2 p.m. Monday in Paris. The stock has declined 20 percent this year, valuing the company at 1.29 billion euros.
Faurecia plans to grow by 6 percent to 7 percent per year and reach sales of 22 billion euros by 2016, Delabriere said. The company's growth strategy will focus on boosting the share of sales outside Europe to 55 percent in 2016 from 37 percent last year.
The supplier plans to lift its operating profit margin to at least 5 percent of sales by 2016, two years later than previously planned, as the sovereign-debt crisis saps demand in its home region. Faurecia said the slowdown will require additional restructuring with a "gradual" recovery not expected to start until 2014.
Industrywide European auto sales will decline 10 percent this year, the most since 1993, according to ACEA, the region's automotive-industry association. General Motors Co. said Oct. 31 it will eliminate 2,600 European jobs by the end of 2012. Ford Motor Co. will shut two plants in England next year and one in Belgium in 2014, cutting 6,200 jobs, while Peugeot is eliminating 8,000 positions and closing a factory near Paris to reduce costs.
"The very weak European environment impacted our operating margin, which resulted in a delay" of the target, Delabriere said. "We expect a further drop of the European car market next year."Contact Automotive News