Faurecia second-half profit jumps 34% on Asia growth
PARIS (Bloomberg) -- Faurecia, Europe's largest maker of car interiors, said second-half earnings rose 34 percent due to sales growth in Asia and the beginning of a recovery in its home region's automotive market.
Operating profit increased to 282 million euros ($384 million) from 211 million euros a year earlier, the supplier said in a statement Wednesday. That compares with the 283.7 million euro average of three analyst estimates compiled by Bloomberg. Revenue increased 2 percent to 8.76 billion euros.
Faurecia, 52 percent owned by PSA/Peugeot-Citroen, is expanding in Asia and North America to lower reliance on Europe, where industrywide car sales are at a two-decade low. The manufacturer outlined a target in November for operating profit to amount to 4.5 percent to 5 percent of sales by 2016, depending on European production levels. The full-year margin held steady at 3 percent in 2013, and the company is targeting growth this year, Faurecia said Wednesday.
With cash flow beating the company's forecasts and debt narrowing, Faurecia has "significantly strengthened its financial position," CEO Yann Delabriere said in the statement.
"The main positive surprise comes on the cash front, with net debt reduction higher than what consensus had forecast," Thomas Besson, a Paris-based analyst at Kepler Cheuvreux said. "The stock should react positively."
Faurecia's spending-cut measures targeted 50 million euros in reduced costs in 2013 and 100 million euros for this year, the company said in October. Charges related to the reorganization totaled 91 million euros last year, Faurecia said Wednesday.
Net cash flow was 144 million euros in 2013, versus a negative 559 million euros in 2012, while net debt as of Dec. 31 was reduced 16 percent to 1.52 billion euros. Second-half revenue from product sales rose 26 percent in Asia, 22 percent in South America and 4 percent in Europe, Faurecia said.
Asian operations were the most profitable, with the second-half operating margin widening to 9 percent of total sales, which also include revenue from research and development and tooling, from 8 percent a year earlier. The margin on that basis was 3 percent in Europe and 2 percent in North America. South American operations were unprofitable because of inflation, currency shifts and higher material costs, the company said.
The Faurecia holding is the largest remaining asset that PSA could sell easily to raise cash to fund turnaround efforts. PSA, which is holding talks with Dongfeng Motor Corp. and the French state for a potential 3 billion-euro stock sale that would dilute the founding family's controlling stake, has repeatedly said that Faurecia is not for sale.
Faurecia said on Nov. 25 that it's planning on group sales exceeding 21 billion euros in 2016, and a net cash-flow target of 300 million euros.Contact Automotive News