French supplier Plastic Omnium expects to outperform the global automotive market by an average of 5 percentage points a year and have annual free cash flow of more than 200 million euros between 2020 and 2022. This comes after its operating margin dipped to about 6 percent, from a forecast of 8.4 percent last year. The company's new boss, Laurent Favre, outlined his plans for the maker of fuel systems, body panels and front-end modules to Automotive News Europe News Editor Peter Sigal.
What is your first task at Plastic Omnium?
It's about continuing the successful growth of the company. Plastic Omnium had 1.5 billion euros in revenue in 2001, when Laurent Burelle took over the CEO position, and in 2019 we will be at more than 9 billion euros, which is a fantastic story. The automotive industry is facing many major changes, but I am convinced that there are great opportunities for Plastic Omnium. We have a very healthy balance sheet and we are a market leader in all our businesses. We have a global footprint with more than 130 factories; we have more than 20 r&d centers around the world. Our base is a perfect fit with the automotive industry.
Do you have a vision for the company in five years, or even longer term?
One of the characteristics of Plastic Omnium is that we are long-term driven, mainly because we have a very stable and solid shareholder structure. I believe that the future of mobility is clean and connected, and that is where we want to play a major role. We think we are still able to gain market share, but the next step will be to increase content per car. That means integrating functions and working with customers in more and more complex assemblies.
Could you provide an example of integrated components?
Today, Plastic Omnium is producing products; tomorrow we want to produce functions. That means integrating radar, lidar or lighting, for example, into our exterior systems. We are doing that in our cooperation with Hella for bumpers and with Brose for doors. That is really the transformation we are working on, from a product supplier to a function supplier.
How do you see the European market developing in the future?
Europe has two main challenges: First, it's saturated, so volume growth opportunities are limited. Second, because of CO2 targets and local pollution regulations, all the engine options are available, but consumers are a bit lost in this complexity. For those reasons we think the market will decline in 2020. We are adapting our cost structure, but we will continue to grow by increasing content per vehicle thanks to our innovations.
Will you be hurt by Brexit?
We have factories in the UK and Jaguar Land Rover is one of our major customers, but we produce in the UK for their UK factories and in Slovakia for the factory they have there, so we are not dependent on what is happening with Brexit. One of our strengths is that we produce where the customers are, so we can balance risks that way.
The pressure to be sustainable is rising. As a company that uses plastics, are you working on those issues?
We produce systems with functions integrated. Therefore, plastics are only 9 percent of our total purchase. On the other hand, delivering plastic components such as bumpers and tailgates is a huge contribution for automakers to lower emissions. These parts are lighter than equivalent steel parts. We have also been decisive in the area of corporate and social responsibility, and part of this is reducing CO2 emissions not only in how we produce but also in our complete supply chain.