Nanterre (France), July 21, 2017
STRONG PERFORMANCE IN THE FIRST HALF OF THE YEAR,
WHILE BUILDING MOMENTUM ON STRATEGIC PRIORITIES
UPGRADED GUIDANCE FOR THE FULL YEAR
STRONG PERFORMANCE IN H1 2017
UPGRADED GUIDANCE FOR FY 2017
The 2017 half-year consolidated financial statements have been approved by the Board of Directors at its meeting held on July 20, 2017, under the chairmanship of Michel de Rosen. These financial statements have been subject to a limited review by auditors and their report is about to be issued.
Patrick KOLLER, CEO of Faurecia declared:
"Our strong performance in the first half of the year, as regards both sales growth and profitability, reflects our strong operational performance in all regions and Business Groups. This performance, and our outlook for the second half of the year, allow us to upgrade our full-year guidance and strengthen our confidence that we are fully on track to achieve our 2018 ambitions. At the same time, we have accelerated in our strategic priorities, Sustainable Mobility, Smart Life on Board and Asia, through the establishment of important partnerships and commercial success. "
in €m | H1 2016 | H1 2017 | YoY change |
Value-added sales | 7 921,7 | 8 584,7 | +8,4% |
organic | +8,5% | ||
Operating income | 490,3 | 586,7 | +19,7% |
as % of VA sales | 6,2% | 6,8% | +60bps |
Net income (Group share) | 245,0 | 314,4 | +28,3% |
Basic earnings per share (in €) | 1,79 | 2,31 | +29,1% |
Net cash flow | 204,7 | 210,5 | +2.8% |
Net debt at the end of the period | 941,3 | 413,8 | -56.0% |
*All definitions are explained at the end of this Press release under the section "Definitions of terms used in this document"
As previously announced, since January 1, 2017, Faurecia reports only value-added sales, which are total sales less monolith sales (a table in appendix details the reconciliation between total sales and value-added sales).
Upon application of accounting rule IFRS 5, the assets and liabilities sold as well as net income (loss) from discontinued operations have been isolated in distinct lines in the consolidated balance sheet and in the income statement. As the Automotive Exteriors business was sold on July 29, 2016, the impact of IFRS 5 application concerns only 2016.
BUILDING MOMENTUM ON STRATEGIC PRIORITIES
Faurecia made significant progress on its three strategic priorities: developing a strong technology offer for Sustainable mobility and Smart life on Board and accelerating in Asia.
Sustainable Mobility
At its Investor day held on June 27 in London, Faurecia demonstrated the strong profitable growth potential of its Clean Mobility Business Group, which will show an excess of 7% CAGR over the next fifteen years to reach above €10 billion of value-added sales by 2030, with an operating margin of 15%. This will be achieved through accelerating new technologies for powertrain electrification and expanding breakthrough deNOx technologies for commercial vehicles, high horsepower and industrial applications.
During the semester, Amminex, a company acquired by Faurecia in December 2016, won a major contract with the city of Seoul, Korea, to retrofit 20,000 buses and trucks with its unique and innovative after-treatment solution. This contract follows that of Copenhagen, Denmark, and the company has also been selected as a supplier to retrofit buses in London, UK.
Faurecia's ambition to develop technologies for fuel cell vehicles has led the Group to acquire an exclusive access to the intellectual property and process know-how of composite hydrogen tanks from STELIA Aerospace Composites.
Smart Life on Board
Faurecia is uniquely positioned to develop full interiors for the connected, versatile and predictive cockpit of the future. To this end, it has signed an agreement for the gradual acquisition of Parrot Automotive (France) and has recently acquired 50.1% of Jiangxi Coagent Electronics (China). These two companies provide Faurecia with a strong global offer in hardware and software for connectivity and infotainment.
The Group has also signed an important partnership with ZF for the development of disruptive and differentiating interior and safety technologies for autonomous driving. Within this special advanced engineering partnership the two companies will identify and develop innovative safety and interior solutions linked to different potential occupant positions
Accelerating in Asia
Since the beginning of the year, in addition to the above mentioned acquisition of Jiangxi Coagent Electronics, whose sales should reach €270 million by 2019, Faurecia has signed two joint ventures with Chinese OEMs: one with Dongfeng for Clean Mobility and one with Wuling Industry for Seating. Combined, these two joint ventures should reach €400 million of sales in 2022, thus contributing to Faurecia's objective of €5 billion of value-added sales in China in 2022, of which 35% with Chinese OEMs.
GROUP OPERATING PERFORMANCE
Faurecia's value-added sales reached €8,585 million in H1 2017, up 8.4% on a reported basis and up 8.5% on an organic basis, 550bps above worldwide automotive production growth (+3.0%, source: IHS Automotive June 2017)
In H1 2017, the negative scope effect of €117 million (-1.5%), due to the divestment of the Fountain Inn (USA) plant, was broadly offset by the positive currency effect of €109 million (+1.4%). Organic growth included €191 million (2.4%), resulting from the consolidation of joint ventures (mainly JV with Chang'An in China and JV with FCA in Brazil, both related to the Interiors Business Group).
Faurecia's operating income grew by 20% to €587 million; profitability rose by 60bps, to 6.8% of value-added sales
SALES AND PROFITABILITY BY REGION
Europe (50% of Group sales): Ongoing profitability improvement, leveraging operational efficiency
Organic value-added sales growth of 2.7%, to €4,295 million; operating margin up 20bps, to 6.2% of value-added sales
They were up 2.2% on a reported basis and up 2.7% on an organic basis, outperforming automotive production in Europe (incl. Russia) (+1.2%, source: IHS Automotive June 2017).
Sales in H1 2017 were impacted by a fire disaster at a supplier plant that disrupted production for two OEMs; the negative impact on Faurecia's sales in H1 2017 was estimated at €76 million (1.8%) and it should be partially recovered in H2 2017.
North America (28% of Group sales): Strong sales momentum
Organic value-added sales growth of 10.0%, to €2,401 million; operating margin up 50bps, to 5.9% of value-added sales
Scope had a negative effect of €117 million (-5.3%), resulting from the divestment of the Fountain Inn (USA) plant. Conversely, currencies had a positive impact of €71 million (+3.2%).
Asia (16% of Group sales, incl. China for 12% of Group sales): Outstanding sales performance in China, driven by Chinese OEMs and SUVs, with high profitability
Organic value-added sales growth of 16.9%, to €1,378 million; double-digit operating margin at 11.6% of value-added sales
Organic growth in the region included €127.9 million (10.8%), resulting from the consolidation of the joint venture with Chang'An in China.
In China, organic value-added sales growth stood at 21.6%, outperforming automotive production (+4.9% source: IHS Automotive June 2017), and value-added sales to Chinese OEMs almost doubled on an organic basis (+96%). Value-added sales in China totaled €1,059.1 million in H1 2017 (vs. €888.6 million in H1 2016), of which Chinese OEMs represented €155.5 million (vs. €80.9 million in H1 2016).
South America (5% of Group sales): Dramatic turnaround in sales and profitability
Organic value-added sales growth of 56.6%, to €388 million; return to profitability with an operating profit of €6 million vs. an operating loss of €16 million in H1 2016
Organic growth included €62.8 million (28.8%), resulting from the consolidation of the joint venture with FCA (production for the Pernambuco plant).
Currency had a strong positive impact of €46.6 million (+21.4%).
SALES AND PROFITABILITY BY BUSINESS GROUP
Seating (42% of Group sales)
Organic value-added sales growth of 8.9%, to €3,633 million; operating margin up 30bps, to 5.6% of value-added sales
Value-added sales grew by 17% on an organic basis in North America and 37% in South America.
Clean Mobility (27% of Group sales)
Organic value-added sales growth of 6.6%, to €2,287 million; operating margin up 70bps, to 10.1% of value-added sales
Sales in China also grew at a sustained organic pace of 9%.
Interiors (31% of Group sales)
Organic value-added sales growth of 9.5%, to €2,664 million; operating margin up 60bps, to 5.7% of value-added sales
Sales were impacted by a negative scope effect of €117 million (-4.7%), due to the divestment of the Fountain Inn (USA) plant.
Organic growth included €191 million (7.6%), resulting from the consolidation of two joint ventures (JV with Chang'An in China and JV with FCA in Brazil).
DOUBLE-DIGIT GROWTH IN NET INCOME (GROUP SHARE), UP 28% TO €314 MILLION
Group operating income stood at €586.7 million, up 20% compared with €490.3 million in H1 2016.
Net income before minority interests and share of net income of associates was a profit of €345.5 million vs. a profit of €271.4 million in H1 2016, which included €47.6 million of net profit from discontinued operations (corresponding to the activities of Automotive Exteriors that have been disposed since then).
Share of net income of associates was a profit of €18.4 million vs. a profit of €13.2 million in H1 2016.
Net income before minority interests was a profit of €363.9 million, up 28% compared with €284.6 million in H1 2016.
Minority interest amounted to €49.5 million vs. 39.6 million in H1 2016.
As a result, consolidated net income (Group share) was a profit of €314.4 million, up 28% compared with €245.0 million in H1 2016.
SOUND FINANCIAL STRUCTURE AND NET DEBT AT €414 MILLION, DOWN 56% YoY
EBITDA stood at €938.3 million vs. 813.8 million in H1 2016.
Net cash flow stood at €210.5 million vs. €204.7 million in H1 2016.
At June 30, 2017, Group's net financial debt stood at €413.8 million, down 56% year-on-year, compared with €941.3 million at the end of June 30, 2016.
A sound financial structure:
UPGRADED GUIDANCE* FOR FULL-YEAR 2017
Based on Faurecia's strong performance in H1 2017 and outlook for H2 2017, and assuming a worldwide automotive production growth of around 2% during the year, the FY 2017 guidance that was indicated on February 9, 2017 is now upgraded as follows:
Faurecia is fully on track to achieve its 2018 ambitions:
* Main assumptions
LV vehicle (PC + LV<3.5t) production estimated to grow globally by around 2%:
Europe: at least +2%
North America: -3% to -1%
China: +1 million vehicles per year
Currencies:
USD/€ at 1.10
CNY/€ at 7.52
Faurecia's financial presentation and financial report will be available at 10:00 am today (Paris time) on the Faurecia website: www.faurecia.com.
A webcast (www.faurecia.com) will be held today at 10:30 am (Paris time).
You may follow the presentation via conference call:
No access code needed.
Calendar
September 12-24, 2017: Faurecia's presence at the IAA in Francfort
October 12, 2017: Q3 sales announcement (after market hours)
January 7-12, 2018: First presence at CES Las Vegas
February 16, 2018: FY 2017 results announcement (before market hours)
About Faurecia
Founded in 1997, Faurecia has grown to become a major player in the global automotive industry. With 330 sites including 30 R&D centers, 100 000 employees in 34 countries, Faurecia is now a global leader in its three areas of business: automotive seating, interior systems and clean mobility. Faurecia has focused its technology strategy on providing solutions for smart life on board and sustainable mobility. In 2016, the Group posted total sales of €18.7 billion. Faurecia is listed on the NYSE Euronext Paris stock exchange and trades in the U.S. over-the-counter (OTC) market. For more information, visit www.faurecia.com
Contacts | Press Eric Fohlen-Weill Head of Media Relations Tel: +33 (0)1 72 36 72 58 eric.fohlen-weill@faurecia.com | Analysts/Investors Marc Maillet VP Investor Relations Tel: +33 (0)1 72 36 75 70 marc.maillet@faurecia.com |
Definitions of terms frequently used:
Net cash-flow excluding one-off impact from discontinued activities. See table in appendices
Appendices: SEE PDF ATTACHED