PARIS (Bloomberg) -- European auto-parts makers are entering a “wave of consolidation,” a leading consulting firm said on Monday, as France's Faurecia SA announced plans to add 2.2 billion euros ($2.7 billion) in sales through takeovers.
About 54 percent of the region's component suppliers were facing “financial difficulty” in 2009, compared with 22 percent a year earlier, AlixPartners LLP said in a research report. About 7 percent of European automotive suppliers have no debt and are profitable, making them potential players in a restructuring of the region's industry, the consultant said.
Faurecia, Europe's largest maker of automotive interiors, became the second major supplier in the past month to signal its interest in overseas acquisitions. Paris-based Valeo SA has hired Bank of America Merrill Lynch to evaluate options that may include takeovers, people familiar with the matter said June 4.
“Large numbers of financially distressed companies also mean outstanding opportunities for takeovers and growth,” New York-based AlixPartners said in its study of 300 suppliers and 70 car and truckmakers globally, including about 70 parts manufacturers in Europe.
Faurecia told investors today that it plans to increase sales to 16 billion euros by 2014, a 72 percent gain from the 9.3 billion euros it posted last year.
The share of sales recorded outside Europe will rise to 42 percent from 23 percent, Faurecia said. Two-thirds of the overall revenue increase will come from the improved performance of existing businesses, according to a company statement, leaving 2.2 billion euros to be generated from external growth, including acquisitions.
Faurecia rose as much as 57 cents, or 4 percent, to 14.69 euros in Paris, and traded at 14.59 euros as of 1:59 p.m., valuing the company at 1.6 billion euros. PSA/Peugeot-Citroen, which owns 57 percent of Faurecia, added 3.5 percent to 22.17 euros.
Valeo, France's second-largest car parts maker, added 42 cents, or 1.7 percent, to 25.61 euros, giving the company a market value of 2 billion euros.
The evaluation of Valeo focuses on acquisitions of rival businesses or entire companies, rather than a sale of the parts maker, people familiar with the company said June 4.
Faurecia added to its catalytic-converter lineup last year with the purchase of Troy, Michigan-based competitor Emcon Technologies. The French company also bought assets from Plastal GmbH, an insolvent German maker of plastic auto parts.
The U.S. component sector has already undergone a “massive and extensive” reorganization as global vehicle production slumped to 63.3 million vehicles last year from 69.5 million in 2007, AlixPartners said in its report.
In Europe, government-backed incentives that cushioned a slump for carmakers and parts suppliers are expiring and have “failed to solve the structural issues,” according to the report.