Half-Year 2020 Results: Agility and Resilience

QUICK REACTION TO THE COVID-19 CRISIS WITH A FOCUS ON THREE PRIORITIES

  • Safe restart of production
  • Rigorous management of liquidity and protection of a sound financial structure
  • Resilience actions to face sharp sales drop

 

CONTINUED COMMERCIAL SUCCESS WITH STRONG ORDER INTAKE OF €12bn IN H1 AND IMPROVED CUSTOMER SATISFACTION

 

FURTHER RESILIENCE ACTIONS AND STRUCTURAL INITIATIVES IN THE NEW POST-COVID ENVIRONMENT

  • Return to solid profit and cash generation in H2 2020
    • Targeting operating margin of around 4.5% of sales and net cash flow of around €600m in the second half, with sales around €7.6bn (assuming worldwide automotive production down around 15% during the period)
  • Confirmation of 2022 ambition for profitability and cash generation with lower sales prospects
    • Ambition to reach operating margin of 8% of sales and net cash flow of 4% of sales, with sales above €18.5bn (in a global market now estimated at 82m vehicles, still below 2019)

 

KEY H1 2020 FIGURES

  • Sales of €6,170m (vs. €8,972m in H1 2019)
    • -31.2% on a reported basis
    • -35.4% at constant scope and currencies (vs. -34.4%, source IHS Markit forecast dated July 16,2020): most regions significantly outperformed their respective market, but unfavorable geographic mix resulted in a slight underperformance at Group level
  • Operating income of €(114)m (vs. €645m in H1 2019), including €(20)m of Covid-related one-offs:  drop in operating income was contained, thanks to quick resilience actions that mitigated the significant negative impact from volume
  • Net cash flow of €(1,045)m (vs. €257m in H1 2019), mostly reflecting the drop in operating income and the strong temporary impact of lower activity on working capital

 

Patrick KOLLER, CEO of Faurecia, declared: „In the current unprecedented crisis due to Covid-19, Faurecia is demonstrating agility and resilience.

Since the very beginning, we have focused on three priorities. The health of our employees and the creation of the right conditions for the safe restart of production were our top priority. Secondly, we closely managed the Group’s liquidity and implemented all the necessary measures to maintain a sound financial structure. Thirdly, we took quick actions to improve our resilience, on top of what has been achieved since mid-2018.

At the same time, we strengthened our relationships with customers, as shown by our strong order intake and numerous customer recognition awards, and we continued the deployment of our strategy. I would like to thank the whole Faurecian community for its commitment during this extremely difficult period.

The accelerated deployment of our key resilience initiatives and additional structural actions will allow us to further increase resilience and return to solid profit and cash generation in the second half of the year. In the medium term, our focus on key priorities in the new post-Covid market environment, gives us confidence in our ability to achieve our profitability and cash generation ambition for 2022.”

 

  • The 2020 half-year consolidated financial statements have been approved by the Board of Directors at its meeting held on July 24, 2020, under the chairmanship of Michel de Rosen. These financial statements have been subject to a limited review and the external auditors have issued their report.

 

  • Operating income presented as Faurecia’s main performance indicator is Operating income before amortization of intangible assets acquired in business combinations. All other definitions are explained at the end of this Press Release, under the section “Definitions of terms used in this document”.

 

  • All figures related to worldwide or regional automotive production refer to IHS Markit forecast dated July 16, 2020 (vehicles segment in line with CAAM for China).

 

STRONG IMPACT OF COVID-19 IN H1 2020

The first half of the year was strongly impacted by the globalization of the Covid-19 virus that heavily impacted the automotive industry and all sectors of the economy.

 

As a consequence of the temporary shutdown of most of its customers’ production sites around the globe, Faurecia also had to stop production in a large number of its sites during the period.

 

In line with the rapid expansion of the pandemic in the different parts of the world, Asia (19% of Group sales in H1 2019) was the first region to be impacted with a low point for sales in February and gradual recovery as from March. Since May, Faurecia’s sales in China are above last year’s levels.

 

Two months later, Europe and North America (76% of Group sales in H1 2019) faced a low point for sales in April, with gradual recovery as from May. In June, sales in Europe and North America were still respectively 22% and 14% below last year’s level.

 

As will be detailed later, Group sales in the first half of the year dropped by 35.4% at constant scope and currencies (-19.7% in Q1 – see Press Release dated April 20 – and -50.0% in Q2).

 

In the light of this unprecedented situation, Faurecia immediately implemented a strong action plan to react to the crisis with three priorities:

 

  • The first priority was the health and safety of all employees as well as the creation of the right conditions for a safe restart of production, learning from the successful experience in China,
  • The second priority was the close management of the Group’s liquidity and the protection of a sound financial structure. To this end, Faurecia has drawn €600 million out of its €1.2 billion Syndicated Credit Facility, signed a new Club Deal of €800 million and extended its factoring program to the newly integrated SAS business. In addition, the Board of Directors took the decision, approved by shareholders at the recent Annual General Meeting, to cancel the 2020 dividend,
  • The third priority was to deploy quick actions to further improve the Group’s resilience, on top of the continuous improvement since mid-2018, in order to limit the impact of the sharp sales drop on operating income.

 

As a result of this efficient action plan, Faurecia contained the drop in operating income vs. drop in sales. Through resilience actions such as flexibilization of direct and indirect labor cost, flexibilization of manufacturing costs, reduction of R&D net expenses and strict control of SG&A, Faurecia generated savings of €536 million that mitigated the €1.3 billion impact estimated from lower sales volume on operating income. Operating income stood at €(114) million in H1 2020 and included €(20) million from Covid-related one-offs.

 

The impairment test conducted as of June 30, 2020 integrated new market assumptions due to the Covid-19 impact. The test led to impairment of €150 million for Clarion Electronics while no impairment was required for Seating, Interiors and Clean Mobility.

 

KEY ACHIEVEMENTS IN H1 2020

Despite the strong focus on the action plan to overcome the peak of the crisis, Faurecia continued, in the first half, to deploy its strategy as reflected in:

 

  • Improved customer satisfaction, which was demonstrated by a strong order intake of €12 billion during the first half (including €1.4 billion for Clarion Electronics, in advance of its full-year target of €2.1 billion) and 31 customer recognition awards as well as an increase in customer average feedback from 3.8 stars in H1 2019 (out of a maximum of 5 stars) to 4.2 stars in H1 2020
  • Successful integration of SAS (fully consolidated as from February) and selective acquisitions, such as the acquisition of IRYStec (a Canadian startup specialized in display technologies) and the joint venture with the Xuyang Group (for production, assembly and sales of automotive display products as well as relevant after-sales services for OEMs)

 

Die vollständige Meldung als PDF können Sie hier herunterladen. Bildmaterial können Sie sich hier herunterladen.

 

 

Contacts

 

Press

Eric FOHLEN-WEILL

Head of Corporate Communications

Tel: +33 (0)1 72 36 72 58

eric.fohlen-weill@faurecia.com

 

 

 

 

Analysts/Investors

Marc MAILLET

Head of Investor Relations

Tel: +33 (0)1 72 36 75 70

marc.maillet@faurecia.com

 

Anne-Sophie JUGEAN

Deputy Head of Investor Relations

Tel: +33 (0)1 72 36 71 31

annesophie.jugean@faurecia.com