Earnings Release • Jul 21, 2009
Earnings Release
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Nanterre, July 21, 2009
The first six months saw an unprecedented contraction in automotive production around the world, leading to a downturn of 34% in Europe and 52% in North America. This in turn impacted Faurecia sales, leading to a sharp fall in operating income and net income.
The Challenge 2009 plan, introduced in late 2008 to offset the effects of the crisis, has been effective, producing significant results in the first half of the year.
Key successes of Challenge 2009 include:
| In million euros (EUR) | 1st half 2008 |
1st half 2009 |
|
|---|---|---|---|
| Sales | 6,601.3 | 4,380.1 | |
| % like-for-like change yr-on-yr1 | 2.7% | -29.9% | |
| Operating income | 90,3 | (187.3) | |
| as % of sales | 1.4% | 4.3% | |
| Net income (Group share) | (22.2) | (364.6) | |
| Restructuring | 30.6 | 72.4 | |
| Capital expenditure | 153.3 | 87.8 | |
| Net cash flow2 | (31.8) | (168.4) | |
| Net financial debt (at June 30) |
1,610.1 | 1,467.1 |
1 Excluding monoliths and at constant exchange rates and scope.
2 Change in net financial debt adjusted in line with changes from the sale of receivables and the rights issue.
| In million euros (EUR) | 1st half 2008 |
1st half 2009 |
Change 2009/2008 % |
|---|---|---|---|
| Automotive Seating at constant exchange rates |
2,761.5 | 1,867.5 | (32.4) (31.5) |
| Vehicle Interiors at constant exchange rates and scope |
1,795.5 | 1,247.9 | (30.5) (28.6) |
| Vehicle Interior Modules at constant exchange rates and scope |
4,557.0 | 3,115.4 | (31.6) (30.4) |
| Exhaust Systems | 1,541.8 | 855.9 | (44.5) |
| Excluding monoliths and at constant exchange rates |
701.9 | 455.9 | (35.0) (34.8) |
| Exterior Systems at constant exchange rates |
502.5 | 408.8 | (18.6) (18.7) |
| Other Modules Excluding monoliths at constant exchange rates |
2,044.3 1,204.4 |
1,264.8 864.7 |
(38.1) (28.2) (28.1) |
| Total Excluding monoliths at constant exchange rates and scope |
6,601.3 5,761.4 |
4,380.1 3,980.1 |
(33.6) (30.9) (29.9) |
Faurecia's consolidated sales for the first six months of 2009 totaled 4,380.1 million euros, down 33.6% compared to the first six months of 2008. Excluding sales of monoliths included in exhaust systems, sales totaled 3,980.1 million euros, a drop of 29.9% at constant exchange rates. Exchange rate variations had a negative impact of 1%.
After hitting a low point in February (down 43%), business began to pick up in the second quarter, down 22% in May and 16% in June.
First-half sales for 2009 by region:
were more resistant (down 37%) while sales to their US counterparts were hit hard by the shutdowns at Chrysler and General Motors;
The sharp downturn in business, particularly at the beginning of the year, led to a loss in operating income totaling 187.3 million euros in the first six months of the year (4.3% of sales). This contrasted with the positive operating income of 90.3 million euros (0.8% of sales) posted by Faurecia for the first six months of 2008.
The slowdown caused a negative impact on operating income of 683 million euros. The Challenge 2009 plan helped cut costs by 406 million euros over the first six months and offset 60% of the impact from the drop in business.
The turnaround in the second quarter, combined with the successes of the Challenge 2009 plan, helped significantly mitigate operating loss in the second quarter, which stood at 27.6 million euros, compared with a loss of 159.7 million euros in the first quarter.
Restructuring costs totaled 72.4 million euros in the first six months of 2009, mainly stemming from steps taken to adjust workforce requirements as a result of the sharp contraction in the market. These broke down as follows: 23.3 million euros in France, 13.5 million euros in North America, 12.6 million euros in Germany, 6.8 million euros in Spain and 3.9 million euros in Eastern Europe.
Financial charges totaled 62.6 million euros, compared with 49.2 million euros for the first six months of 2008.
Net income (Group share) in the first six months of 2009 reflected a loss of 364.6 million euros, compared with a net loss (Group share) of 22.2 million euros for the first six months of 2008.
Capital expenditure totaled 87.8 million euros (2% of sales), compared with 153.3 million euros in the first half of 2008.
Net cash flow, not including changes from the sale of receivables and the rights issue, led to a negative balance of 168.4 million euros in the first half of 2009.
After the high cash consumption in the first quarter (288 million euros), the second quarter showed a very strong turnaround, boosting the balance by 119.6 million euros.
Net financial debt at June 30, 2009, stood at 1,467.1 million euros (1,604.8 million euros at December 31, 2008), after taking into account net proceeds from the rights issue completed in late May 2009, totaling 446.6 million euros.
In addition, Faurecia secured financing by renegotiating financial covenants for credit lines to reflect the new economic climate and obtaining an additional loan of 213.5 million euros to finance redemption before the due date of bonds totaling 300 million euros scheduled to mature in October 2010.
CSM Worldwide forecasts (July 2009) for second-half automotive production volumes suggest a drop of 1.4% for Europe and a slip of 20% for North America.
However, the following factors should also be taken into account:
Against this backdrop, Faurecia forecasts a drop in its sales of around 10% in Europe and 35% in North America. Business is expected to experience significant growth in emerging markets, particularly in China.
Faurecia has chosen to step up its efforts to cut costs by raising the bar for the Challenge 2009 plan from 600 million to 700 million euros. The company is targeting operating income close to breakeven point in the second half of the year, along with balanced cash flow, excluding restructuring costs.
Faurecia is one of the world's leading automotive equipment suppliers, specializing in four major activities: seats, vehicle interiors, front ends and exhaust systems. In 2008, the Group posted sales of 12 billion euros. It has operations in 29 countries at 190 sites and 28 R&D centers. Faurecia is listed on the NYSE Euronext Paris stock exchange. For more information visit: www.faurecia.com
Contacts: Media Olivier Le Friec Press Relations Manager Tel: +33 (0)1 72 36 72 58 Mob: +33 (0)6 76 87 30 17 [email protected] Analysts/Investors Bruno de Chiffreville Investor Relations Tel: +33 (0)1 72 36 75 70 Mob: +33 (0)6 67 70 78 18 [email protected]
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