Industria
THIRD-QUARTER 2024 SALES
NANTERRE (FRANCE)
OCTOBER 21, 2024
THIRD-QUARTER 2024 SALES
Q3 2024 SALES OF €6.4bn, AN OUTPERFORMANCE OF 420bps IN A CHALLENGING ENVIRONMENT
Patrick KOLLER, Chief Executive Officer of FORVIA, declared:
“In the third quarter, we continued to post a robust organic sales outperformance of 420 basis points vs. a worldwide automotive production that was down 4.6% year-on-year. This outperformance demonstrates our capacity to resist to a challenging environment, as flagged in our recent press release on September 27.
Uncertainty remains high in the European market, impacted by a slowdown of electrification and concerns related to the CAFE regulation, while the North American market is suffering from high level of car inventories. In both regions, we outperformed the local automotive production.
In China, conversely and as expected, we underperformed the local automotive production in the past quarter, due to customer mix evolution and SOPs delayed from 2024 to 2025. In a Chinese market that is expected to grow in 2025, we confirm that we should resume outperforming the automotive production in the country by at least 300 basis points.
The order intake signed in the past quarter brings to more than €20 billion the cumulated amount since the start of the year, with a well-balanced mix of customers and geographies, and Asia representing around 36% of this amount. While pursuing our selective approach to order intake, we are targeting €30 billion in the full year 2024.
We remain focused on maintaining our efforts and accelerating measures, such as EU-FORWARD competitiveness program in Europe and cost synergies with FORVIA HELLA, that will ensure the resilience of our performance in the rest of the year, as well as significantly improve our performance in 2025, even if the environment remains challenging. Deleveraging the company and strengthening its balance-sheet remains our top priority.”
CUMULATED ORDER INTAKE ABOVE €20bn SINCE THE START OF THE YEAR
Since the start of the year, the Group has kept reinforcing its momentum in fast-growing segments, which will contribute to secure medium-term profitable growth:
While maintaining a selective approach to order intake, both in terms of profitability and upfront costs, FORVIA is targeting c. €30 billion of order intake in the full year 2024.
In addition, BYD and FORVIA have agreed to further develop their partnership in Europe. After having awarded FORVIA/BYD Joint Venture for the launch of its first European location in Hungary, the car manufacturer has chosen FORVIA/BYD JV as supplier for its next-to-open plant in Turkey.
EU-FORWARD UPDATE
Early this year, FORVIA launched the five-year initiative EU-FORWARD, aimed at reinforcing the competitiveness and agility of the Group's operations in Europe, adapting its European manufacturing and R&D set-up to the fast-changing regional environment.
In its press release dated September 27, FORVIA announced accelerating the implementation of this initiative with the following targets:
A CHALLENGING MARKET ENVIRONMENT WITH WORLDWIDE AUTOMOTIVE PRODUCTION DOWN 4.6% YOY IN Q3 2024
Worldwide automotive production in Q3 was down by 4.6% at 21.6 million Light Vehicles (source: S&P dated October 2024).
In FORVIA's main regions, trends were as follows:
Both regions were impacted by continued slowdown of electrification, while North America remained characterized by high level of car inventories.
Q3 2024 SALES AT GROUP LEVEL
In Q3 2024, consolidated sales amounted to €6,357 million: -2.6% on a reported basis and slightly down year-on-year on an organic basis (-0.4%), representing an outperformance of 420bps.
Out of the 420bps:
Q3 2024 SALES BY BUSINESS GROUP
Seating posted organic growth of 4.9%, an outperformance of 950bps.
In Q3 2023, sales included c. €30 million of sales from the loss-making program in Highland Park (Michigan, USA), that FORVIA voluntarily ended on September 30, 2023.
Despite significantly lower volumes with Stellantis in Europe and North America, Seating strongly outperformed local automotive production in both regions:
In China, FORVIA underperformed the local automotive production that was down by around 3% in the quarter: growth with new Chinese OEMs (such as Chery and Li Auto) and with German premium carmakers did not fully offset sales drop with BYD and GM.
Interiors posted organic growth of 5.9%, an outperformance of 1,050bps, mainly driven by North America, thanks to the strong effect of the high number of SOPs and strong tooling sales.
In China, which represents a lower part of Interiors sales (11% in the quarter), sales dropped by around 15% (in a market that dropped by c. 3%), with lower sales notably with Changan and Volvo, and despite strong growth Li Auto and start of business with BYD.
Clean Mobility posted an organic drop of 10.1% in the quarter, an underperformance of 550bps.
Close to three quarters of the organic sales drop in Q3 2024 were due to Stellantis, in Europe and in North America.
In both regions, excluding this impact, FORVIA's organic sales outperformed the local automotive production evolution during the period.
In China, where electrification further advanced, sales dropped in the double-digits, primarily due to lower activity with VW, GM, FAW and SAIC.
Electronics posted an outperformance of 110bps, with an organic drop of 3.5%. In the context of a sharp slowdown in electrification, sales decline was primarily due to delays in SOPs and negative customer mix effects.
Lighting posted an outperformance of 320bps vs. worldwide automotive production, with an organic decline contained to 1.4%.
Reported growth stood at 5.1% thanks to the consolidation by FORVIA HELLA of HBBL, a joint venture that was previously accounted for by the equity method.
Lifecycle Solutions posted an organic sales drop of 9.4% in the quarter, mainly due highly demanding comparable (Lifecycle Solutions organic growth stood at 16.1% in Q3 2023), as well as weak market conditions.
The Special Original Equipment was impacted by lower investment activities in almost all customers segments, especially in the agricultural, construction machinery and trailer segment.
Q3 2024 SALES BY REGION
In Europe excluding Russia (representing over 97% of the region), sales grew by 4.5% on an organic basis, while automotive production was down 6.9% in the period.
Outperformance of 1,140bps was attributable to Seating, Interiors, Lighting and to Electronics, to a lesser extent.
In Americas, sales up 2.4% on an organic basis posted an outperformance of 480bps, combining North and South Americas.
In North America (representing close to 90% of the region), sales were broadly stable on an organic basis (+0.1%), while automotive production was down 4.7% in the period, i.e., an outperformance of 480bps.
Organic growth was essentially driven by Interiors, Seating and Electronics.
In South America , strong organic growth of 21.6% was mostly driven by inflation in Argentina.
In Asia, sales were down 9.9% on an organic basis, while automotive production in Asia dropped by 3.8% in the period. This reflected contrasted situation between China and Rest of Asia.
In China (representing close to 80% of the region), sales dropped on an organic basis by 13.5%, while automotive production in the country dropped by 2.6% in the period.
This underperformance reflected a still high base of comparison of Q3 2023 (organic growth stood at 11.8%) and delayed SOPs. Both sales with Chinese OEMs and International OEMs posted double-digit organic drops (higher for International OEMs).
It is worth mentioning that FORVIA HELLA, whose activity with Chinese OEMs has been significantly below Group average, posted an organic growth above 20% in the quarter with Chinese OEMs.
FORVIA should resume outperforming automotive production in China by at least 300bps in 2025.
In the Rest of Asia (representing more than 20% of the region), sales were up 4.5% on an organic basis, while automotive production was down 5.3%. This strong outperformance was primarily driven by Japan, which recorded strong double-digit organic growth, and by India to a lesser extent.
2024 GUIDANCE & LOOKING FORWARD INTO 2025
On September 27 (see Press Release on FORVIA's website: www.forvia.com ), FORVIA announced updating its FY 2024 guidance to reflect lower production outlook and uncertain environment.
FORVIA expects for 2024:
This guidance is based on:
and assumes no major disruption materially impacting production or retail sales in any automotive region during the year.
In this Press Release, FORVIA also announced accelerating the roll out of initiatives that will contribute to improve performance in 2025, in an environment that could remain challenging (at this stage, FORVIA assumes no growth in worldwide automotive production in 2025 vs. 2024).
As already indicated since July, the detailed 2025 guidance will be given on February 28, 2025, along with the release of FORVIA's FY 2024 results, in accordance with the Group's usual practices.
Nevertheless, FORVIA already gave the following indications for next year:
FINANCIAL CALENDAR (provisional)
A webcast will be held today, Monday October 21, 2024, at 8:00am (Paris time).
FORVIA's Q3 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/cr38c3uf
A replay will be available as soon as possible.
You may also follow the presentation via conference call:
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About FORVIA, whose mission is: “We pioneer technology for mobility experiences that matter to people”.
FORVIA, 7th 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. 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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