Industria
FIRST-QUARTER 2024 SALES
NANTERRE (FRANCE)
APRIL 18, 2024
FIRST-QUARTER 2024 SALES
Q1 2024 SALES OUTPERFORMANCE OF 390bps TO REACH €6.531bn
ROBUST ORDER INTAKE OF €6.5bn, UP €1bn vs. Q1 2023
Patrick KOLLER, Chief Executive Officer of FORVIA, declared:
“The first quarter demonstrated our capability to grow organically in a market that dropped by 0.8% during the period and characterized by the temporary slowdown in electrification in Europe. This contributed to a solid outperformance of 530bps, excluding the unfavorable geographical mix.
During the period, FORVIA recorded an order intake of €6.5 billion, an increase of c. €1 billion versus Q1 2023. It was largely driven by key awards in Asia, where the Group also signed a new major strategic partnership with Chery, a key Chinese technology-driven partner in the field of smart and sustainable cockpit designed for safe, sustainable, and customized end-user experiences.
Since the start of the year, we also made significant progresses in the execution of our second one-billion-euro disposal program with the closing of a first transaction and the signing of second one, which combined represent circa 25% of the targeted amount of cash proceeds. It highlights our unwavering commitment towards the accelerated deleveraging of the Group, our clear top priority.
From a financial point of view, leveraging on the trust on FORVIA's signature, we were able to issue new long-term debts that allowed us to repay short-term debts and extend our maturity profile.
Reflecting our strong focus on sustainability, which is core to our strategy and innovation, MATERI'ACT, our company dedicated to sustainable materials, signed two significant partnerships in the US and China.
Lastly, the Group has started to deploy its five-year EU-FORWARD project, which aims at fully restoring competitiveness in Europe.
FORVIA is fully mobilized towards the execution of its POWER25 plan and confirms its 2024 guidance.”
ROBUST ORDER INTAKE OF €6.5BN IN Q1 2024 (VS. €5.5BN IN Q1 2023)
FORVIA recorded a robust order intake in Q1 2024, totaling €6.5 billion, while pursuing its commercial selectivity aiming at generating an average operating margin above 7% with reduced upfront costs.
The Group reinforced its momentum in fast-growing segments:
CHERY AND FORVIA DEEPEN STRATEGIC PARTNERSHIP WITH A FIRST JOINT VENTURE ON SMART AND SUSTAINABLE COCKPIT
On April 11, 2024, FORVIA signed a JV agreement with the leading Chinese automaker Chery to deepen cooperation in the field of smart and sustainable cockpit.
FORVIA and Chery will establish a “Cockpit of the Future” JV in Wuhu to design, develop, manufacture, and supply the full cabin scope related systems and modules including seats, interiors and cockpit electronics with low CO emission materials and processes.
It is the first Joint Venture of that kind in China and will be consolidated by FORVIA with a sales ambition of € 1bn by 2029.
It will include an R&D center dedicated to industrial design and cockpit integration capabilities, enabling both FORVIA and Chery to offer disruptive, sustainable, and competitive consumer experiences.
The JV plans to launch two production sites in H1 2024 to support Chery fast growth.
FURTHER MILESTONES ON SUSTAINABILITY
MATERI'ACT, FORVIA's company dedicated to sustainable materials, signed two significant partnerships since the start of the year in North America and China.
This JV combines the strength of each of its parent companies, PCR Recycling bringing its capacities in feedstock access and recycling, and MATERI'ACT bringing its expertise in refining, adaptative formulations, compounding, and post processing capabilities.
It is expected to help spark demand in North America for use of recycled plastics in automotive and other industries.
MATERI'ACT and GREE Green Recycle Resources, a company of GREE Electric Appliances, will set up by the end of 2024 joint-ventures to develop, manufacture and sell recycled plastics.
The objective is to create a best-in-class sustainable material offer, with a sales target of 150,000 tons of compound by 2030. This for the automotive, home appliances and other industrial sectors.
PROGRESS IN THE EXECUTION OF THE GROUP'S SECOND €1 BILLION ASSET DISPOSAL PROGRAM
Since the start of the year, FORVIA made good progress in the execution of its second €1 billion disposal program with the closing of the disposal by FORVIA HELLA of its stake in BHTC and the signing of an agreement to sale Hug Engineering. The two transactions represent c. 25 % of total contemplated proceeds.
These transactions together represent c. €250 million of cash proceeds, representing c. 25% of the second disposal program for €1 billion that was announced by FORVIA in October 2023, designed to accelerate the Group's deleveraging and further simplifying the Group's portfolio.
The execution of the second disposal program for €1 billion will contribute to improve the Groups' Net debt/Adjusted EBITDA ratio objective beyond the below 1.5x objective, that was part of the POWER25 plan presented at the Capital Markets Day in November 2022.
ACTIVE DEBT MANAGEMENT AND EXTENSION OF GROUP AVERAGE MATURITY
The Group issued cumulated amount of €1.2 billion of new debt instruments essentially maturing in 2029 and 2031. The proceeds were used to buy back 2025 and 2026 maturities, as well as refinance a 2024 bond, thus extending the Group average debt maturity.
During the first quarter, FORVIA issued a one billion euros senior bond, consisting of €500 million 5.125% senior notes due 2029 and €500 million 5.50% senior notes due 2031. Taking into consideration the interest rate pre-hedging arrangement executed in December 2023 and January 2024, the economic yield of the new notes amounts to 4.96% for the notes due 2029 and 5.37% for the notes due 2031.
An associated tender allowed to buy back €800 million of the Group's existing maturities, consisting of c. €580 million of its 2.625% senior notes due 2025 and €220 million of its 7.250% sustainability-linked notes due 2026, which have now been cancelled. FORVIA intends to use the remaining net proceeds to repay certain outstanding indebtedness.
FORVIA HELLA also placed a €200 million Schuldschein with terms of 3, 5 and 7 years, aiming at refinancing a bond maturing in May 2024.
These transactions reflect the market's trust on FORVIA's signature and allowed FORVIA to extend its average debt maturity.
Q1 2024 MARKET ENVIRONMENT
Worldwide automotive production in Q1 was down by 0.8% at 21.2 million Light Vehicles (source: S&P dated April 2024).
In FORVIA's main regions, trends were as follows:
Q1 2024 SALES AT GROUP LEVEL
In Q1 2024, consolidated sales amounted to €6,531 million: -1.7% on a reported basis and +3.1% on an organic basis, representing an outperformance of 390bps
-4.2% of last year's sales, more than half of which being imputable to the Argentinian peso and the Turkish lira.
Out of the 390bps:
All Business Groups recorded an outperformance vs. market production.
Q1 2024 SALES BY BUSINESS GROUP
Seating posted organic growth of 1.0%, an outperformance of 180bps. Excluding the lost sales of c. €40 million due to the voluntary exit from the loss-making program in Highland Park (Michigan, USA) on September 30, 2023, the activity recorded organic growth of 3.0%, a clear outperformance vs. the market. This performance reflected:
Interiors posted organic growth of 4.8%, an outperformance of 560bps, driven by strong outperformance in China and Europe:
Clean Mobility posted an organic growth of 6.8%, an outperformance of 760bps, which reflected market share gains and the slowdown in the pace of electrification in some markets, notably in Europe.
By region, the performance reflected:
Electronics posted an organic growth of 3.1%, an outperformance of 390bps, driven by Clarion Electronics.
By geography, the activity registered:
Lighting posted an organic growth of 1.3%, representing an outperformance of 210bps. Excluding currency effect, growth stood at 9.8% thanks to the consolidation by FORVIA HELLA of HBBL, a joint venture that was previously accounted for by the equity method.
By geography, growth was driven by:
Organic growth of 1.1% mainly reflected continuous growth in the spare part business in Europe. In the commercial vehicle activity, weakness in the Agriculture and Trailer segments was partially offset by growth in the Truck and Bus segment.
Q1 2024 SALES BY REGION
In Europe excluding Russia (representing over 97% of the region), sales declined marginally by 0.3%, while automotive production was down 4.7%.
Outperformance of 440bps was mainly attributable to Interiors and, to a lesser extent, Lighting and Clean Mobility.
In North America (representing c. 90% of the region), sales grew organically by 6.8%, while automotive production was up 1.4%, i.e., an outperformance of 540bps. Organic growth was essentially driven by Seating, while Clean Mobility, Electronics and Lighting posted growth in the mid-single digits.
Strong organic growth in South America was mostly driven by inflation in Argentina.
Combined outperformance stood at 1,190bps for Americas.
In Asia, sales in local currency grew by 4.0% and were down 0.7% on an organic basis, broadly in line automotive production in Asia (-0.9%). This reflected contrasted situation between China and Rest of Asia.
In China (representing c. 80% of the region), sales in local currency grew by 3.6%, including positive scope effect from HBBL. Organically, sales were down 2.5%, while automotive production was up 4.3%. This underperformance was mainly attributable to a temporary unfavorable effect of customer mix evolution:
Difficult base of comparison that penalized FORVIA's sales growth in Q4 2023 and Q1 2024 (mostly related to BYD), should start normalizing as from the second half of the year. Sales in China in 2024 will be driven by growing business with new Chinese OEMs and international premium OEMs.
In the Rest of Asia (representing c. 20% of the region), sales were up 5.3% on an organic basis, while automotive production was down 6.3%. This strong outperformance was driven by very high growth in Japan (mainly Honda) and double-digit growth in India (mainly Suzuki and VW).
CONFIRMED 2024 GUIDANCE
This guidance is based on:
and assumes no major disruption materially impacting production or retail sales in any automotive region during the year.
It takes into consideration:
2024 guidance is on track to reach POWER25 ambition:
ON TRACK TO POWER25 AMBITION
The Group reiterates its FY2025 objectives, as presented at the Capital Markets Day held in November 2022:
These objectives were based on average 2025 currency rates of 1.05 for €/USD and of 7.00 for €/CNY and assumed no major disruption materially impacting production or retail sales in any major automotive region over the period.
These objectives, evidently, did not take into consideration any impact from the second €1 billion disposal program that was announced in October 2023.
DIVIDEND PAYMENT
At its meeting held on February 16, 2024, the Board of Directors decided to propose at the next Annual Shareholders' Meeting to be held in Nanterre (France) on May 30, 2024, the payment of a dividend of €0.50 per share to be paid in cash.
Upon the vote of the shareholders, the payment of the proposed dividend will be made according to the following calendar:
2024 CALENDAR (provisional)
A webcast will be held today, Thursday April 18, 2024, at 8:00am (Paris time).
FORVIA's Q1 2024 sales presentation will be available before the webcast on FORVIA's website: www.forvia.com
If you wish to follow the presentation using the webcast, please access the following link:
https://edge.media-server.com/mmc/p/yjapw3rs
A replay will be available as soon as possible.
You may also follow the presentation via conference call:
France: +33 1 70 91 87 04
United Kingdom: +44 1 212 818 004
United States: +1 718 705 8796
Code: 888652
About FORVIA, whose mission is: “We pioneer technology for mobility experiences that matter to people”.
FORVIA, 7 global automotive technology supplier, comprises the complementary technology and industrial strengths of Faurecia and HELLA. With over 290 industrial sites and 76 R&D centers, 157,000 people, including more than 15,000 R&D engineers across 40+ countries, FORVIA provides a unique and comprehensive approach to the automotive challenges of today and tomorrow. Composed of 6 business groups and a strong IP portfolio of over 14,000 patents, FORVIA is focused on becoming the preferred innovation and integration partner for OEMS worldwide. In 2023, the Group achieved a consolidated revenue of 27.2 billion euros. FORVIA SE is listed on the Euronext Paris market under the FRVIA mnemonic code and is a component of the CAC Next 20 and CAC SBT 1.5° indices. FORVIA aims to be a change maker committed to foreseeing and making the mobility transformation happen. www.forvia.com
DISCLAIMER
This presentation contains certain forward-looking statements concerning FORVIA. Such forward-looking statements represent trends or objectives and cannot be construed as constituting forecasts regarding the future FORVIA's results or any other performance indicator. In some cases, you can identify these forward-looking statements by forward-looking words, such as "estimate," "expect," "anticipate," "project," "plan," "intend," "objective", "believe," "forecast," "foresee," "likely," "may," "should," "goal," "target," "might," "would,", “will”, "could,", "predict," "continue," "convinced," and "confident," the negative or plural of these words and other comparable terminology. Forward looking statements in this document include, but are not limited to, financial projections and estimates and their underlying assumptions including, without limitation, assumptions regarding present and future business strategies (including the successful integration of HELLA within the FORVIA Group), expectations and statements regarding FORVIA's operation of its business, and the future operation, direction and success of FORVIA's business. Although FORVIA believes its expectations are based on reasonable assumptions, investors are cautioned that these forward-looking statements are subject to numerous various risks, whether known or unknown, and uncertainties and other factors, all of which may be beyond the control of FORVIA and could cause actual results to differ materially from those anticipated in these forward-looking statements. For a detailed description of these risks and uncertainties and other factors, please refer to public filings made with the Autorité des Marchés Financiers (“AMF”), press releases, presentations and, in particular, to those described in the section 2."Risk factors & Risk management” of FORVIA's 2023 Universal Registration Document filed by FORVIA with the AMF on February 27, 2024 under number D. 24-0070 (a version of which is available on www.forvia.com ). Subject to regulatory requirements, FORVIA does not undertake to publicly update or revise any of these forward-looking statements whether as a result of new information, future events, or otherwise. Any information relating to past performance contained herein is not a guarantee of future performance. Nothing herein should be construed as an investment recommendation or as legal, tax, investment or accounting advice. The historical figures related to HELLA included in this presentation have been provided to FORVIA by HELLA within the context of the acquisition process. These historical figures have not been audited or subject to a limited review by the auditors of FORVIA. HELLA remains a listed company. For more information on HELLA, more information is available on www.hella.com. This presentation does not constitute and should not be construed as an offer to sell or a solicitation of an offer to buy FORVIA securities.
DEFINITIONS OF TERMS USED IN THIS DOCUMENT
Sales growth
FORVIA's year-on-year sales evolution is made of three components:
As “Scope effect”, FORVIA presents all acquisitions/divestments, whose sales on an annual basis amount to more than €250 million.
Other acquisitions below this threshold are considered as “bolt-on acquisitions” and are included in “Growth at constant currencies”.
In 2021, there was no effect from “bolt-on acquisitions”; as a result, “Growth at constant currencies” is equivalent to sales growth at constant scope and currencies also presented as organic growth.
Operating income
Operating income is the FORVIA group's principal performance indicator. It corresponds to net income of fully consolidated companies before:
Adjusted EBITDA
Adjusted EBITDA is Operating income as defined above + depreciation and amortization of assets; to be fully compliant with the ESMA (European Securities and Markets Authority) regulation, this term of “Adjusted EBITDA” will be used by the Group as of January 1, 2022 instead of the term “EBITDA” that was previously used (this means that “EBITDA” aggregates until 2021 are comparable with 'Adjusted EBITDA” aggregates as from 2022).
Net cash flow
Net cash flow is defined as follow: Net cash from (used in) operating and investing activities less (acquisitions)/disposal of equity interests and businesses (net of cash and cash equivalents), other changes and proceeds from disposal of financial assets. Repayment of IFRS 16 debt is not included.
Net financial debt
Net financial debt is defined as follow: Gross financial debt less cash and cash equivalents and derivatives classified under non-current and current assets. It includes the lease liabilities (IFRS 16 debt).
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