Industria
H1 2024 RESULTS
NANTERRE (FRANCE)
JULY 24, 2024
H1 2024 RESULTS
IMPROVED YEAR-ON-YEAR PERFORMANCE
CONFIRMED FY 2024 GUIDANCE, WITH SALES AND OPERATING MARGIN NOW EXPECTED IN THE LOWER END OF THE RANGE
CONFIRMED POWER25 DELEVERAGING TARGET
* Source: S&P Global Mobility (ex-IHS Markit) dated July 2024
H1 2024 KEY ACHIEVEMENTS: CONTINUED PROGRESS AND MAINTAINED STRONG FOCUS ON DELEVERAGING
In H1 2024, FORVIA recorded order intake of €15 billion, a high level reflecting solid momentum of both Faurecia and FORVIA HELLA.
The Group continued to reinforce its momentum in fast-growing segments, as reflected in the following figures:
It is worth mentioning:
At the end of H1 2024, cost synergies generated with FORVIA HELLA represented a cumulated net amount of €219 million vs. €190 million at the end of 2023.
This means that incremental synergies of €29 million were generated during the first half of the year, confirming that the Group is fully on track to achieve the target that was revised upward last February of more than €350 million on an annual basis at the end of 2025.
Last February, FORVIA announced the launch of “EU-FORWARD”, a five-year project aiming at reinforcing the competitiveness and agility of the Group's operations in Europe.
This project intends to adapt the Group's European manufacturing and R&D set-up to the fast-changing regional environment and will allow FORVIA to achieve a significantly higher profitability in EMEA, exceeding 7% of sales in 2028 (versus 2.5% in 2023), with EMEA representing c. 40% of sales in 2028 (versus 46% in 2023) and c. 35% of operating income (versus 22% in 2023).
The effective start of this project showed good progress in H1 2024, even if it was not rolled-out over the full semester.
In terms of savings, the impact is limited in H1 2024, but will accelerate in 2025.
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 to AUO Corporation and with the sale of Hug Engineering, its Clean Mobility business specialized in depollution systems for high horsepower engines, to Ogepar.
These two transactions together represent c. €250 million, i.e. c. 25% of the second disposal program of €1 billion that was announced by FORVIA in October 2023, designed to accelerate the Group's deleveraging and further simplifying the Group's portfolio. Out of these c. €250 million, €227 million were already cashed in at the end of H1 2024.
Ongoing progress of the rest of the program gives to the Group confidence that it should be able to finalize the second €1 billion disposal program by the end of 2025.
This contributes to secure the Groups' target to reach a Net debt/Adjusted EBITDA ratio of below 1.5x at the end of 2025, a key objective of the POWER25 plan that was presented at the Capital Markets Day in November 2022 and demonstrates the Group's focus on its top priority of deleveraging the company since the acquisition of a majority stake in HELLA.
Since the start of the year and to date, the Group has successfully issued cumulated amount of €1.9 billion of new debt instruments essentially maturing in 2029 and 2031, at an average interest rate of 5.15% (average interest rate on Group debt is 4.6%).
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.
As regards the €1.9 billion of new debt instruments, they consisted of:
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.
Since the start of the year and to date, the Group has repaid €2.27 billion of 2024 to 2026 maturities, through:
This almost entirely cleared 2024 and 2025 maturities.
These transactions allowed FORVIA to significantly extend its average debt maturity, now of 3.6 years.
H1 2024 KEY FIGURES
The worldwide automotive production stood at 43.6 million LVs in H1 2024, broadly stable (-0.2%) vs. H1 2023, with contrasted situation by geography:
The geographic mix of FORVIA's sales vs. the geographic mix of worldwide automotive production represented an unfavorable effect estimated at 170bps in H1 2024.
In H1 2024, the pace of electrification slowed down in Europe and North America, with EV production respectively down 12% and up only 4% year-on-year, while in China EV production continued to grow in the double-digits (+12% year-on-year).
H1 2024 consolidated sales of €13,534 million, slightly down (-0.6%) on a reported basis and +2.7% on an organic basis, representing an outperformance of 460bps excluding the unfavorable geographic mix effect of 170bps.
Organic growth was impacted by an unfavorable customer mix, notably as activity of Stellantis (FORVIA's number 2 customer) was poor in H1 2024, impacting sales in Europe and North America.
Seating, Interiors, Clean Mobility and Electronics (representing combined 81% of Group sales) contributed to the Group's sales outperformance.
H1 2024 consolidated operating income of €700 million, up 20bps at 5.2% of sales, despite one-off impact from Interiors North American operations.
Almost all Business Groups recorded significant improvement in operating margin with the exception of Interiors, whose North American operations recorded an operating loss in H1 2024, penalized by one-off costs of €47 million.
This one-off impact in H1 2024 is explained in detail below, in the paragraph related to the Interiors Business Group (see page 9).
Excluding this one-off impact, operating margin would have reached 5.5% in H1 2024.
The €25 million year-on-year increase in operating income, from €675 million in H1 2023 to €700 million in H1 2024, mainly reflected:
H1 2024 SALES AND PROFITABILITY BY BUSINESS GROUP
Sales
Operating income
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Operating income
Sales
Operating income
Sales
Operating income
Sales
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H1 2024 SALES AND PROFITABILITY BY REGION
Sales
Operating income
H1 2024 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
As detailed above by Business Groups and regions, operating income (before amortization of acquired intangible assets) rose by 3.8% from €675 million in H1 2023 to €700 million in H1 2024, an improvement of 20bps as a percentage of sales, from 5.0% in H1 2023 to 5.2% in H1 2024.
Income before tax of fully consolidated companies was a profit of €171 million vs. a profit of €200 million in H1 2023.
Income after tax of fully consolidated companies was a profit of €112 million vs. a profit of €85 million in H1 2023.
After:
the consolidated net income, Group share was a profit of €5 million in H1 2024 vs. a profit of €28 million in H1 2023.
H1 2024 CONSOLIDATED CASH FLOW STATEMENT
Adjusted EBITDA increased by 1.7% to €1,635 million, up 30bps as percentage of sales to 12.1% of sales (vs. €1,607 million and 11.8% of sales in H1 2023).
Net cash flow increased by 16.3% to €201 million (vs. €172 million in H1 2023); excluding change in working capital and change in factoring, net cash flow stood at €104 million vs. €7 million in H1 2023.
As a result, net financial debt at June 30, 2024 stood at €6,9 billion, representing a Net debt/Adj. EBITDA ratio of 2.0x, vs. 2.5x one year ago and vs. 2.1x at December 31, 2023.
AVAILABLE LIQUIDITY OF €6.2 BILLION AT JUNE 30, 2024
As of June 30, 2024, Group liquidity amounted to €6.2 billion, of which €4.3 billion of available cash, €1.5 billion from the fully undrawn FORVIA Senior Credit Facility and €450 million from the fully undrawn FORVIA HELLA Senior Credit Facility.
FY 2024 GUIDANCE CONFIRMED, WITH SALES AND OPERATING MARGIN NOW EXPECTED IN THE LOWER END OF THE RANGE; NET CASH FLOW AND NET DEBT/ADJUSTED EBITDA RATIO AT YEAR-END ARE UNCHANGED
Taking into consideration:
and confirming that operating margin in the second half of the year is expected to increase sequentially over the first half of the year, notably supported by:
FORVIA now expects for the full-year 2024:
and reiterates the following expectations:
This guidance assumes no major disruption materially impacting production or retail sales in any automotive region during the rest of the year.
CONFIRMED POWER25 KEY OBJECTIVE OF NET DEBT/ADJUSTED EBITDA RATIO BELOW 1.5x AT THE END OF 2025, SUPPORTED BY THE SECOND DISPOSAL PROGRAM
2025 SALES AMBITION IS REVISED MOSTLY FOR CHANGES IN CURRENCY RATES
Taking into consideration:
FORVIA now expects:
In terms of 2025 operating margin and net cash flow, FORVIA confirms further significant improvement vs. 2024.
In accordance with its usual practices for full-year guidance disclosure, all detailed objectives for 2025 will be announced on February 28, 2025, along with the full-year 2024 results.
FORVIA confirms its POWER25 key target of Net debt/Adjusted EBITDA ratio <1.5x at December 31, 2025 through net cash flow generation and the expected finalization of the second disposal program by the end of 2025. This reflects the Group's top priority to deleveraging.
This ambition assumes no major disruption materially impacting production or retail sales in any automotive region during the 2024-2025 period.
FINANCIAL CALENDAR
A webcasted conference call will be held today at 10:00am (CET).
If you wish to follow the presentation using the webcast, please access the following link:
https://www.sideup.fr/webcast-forvia-2024-hy-results/signin/en
A replay will be available as soon as possible.
You may also follow the presentation via conference call:
Confirmation code: 831 7217 8361#
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. FORVIA HELLA remains a listed company. For more information on FORVIA 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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