Now the world’s seventh largest automotive supplier with the acquisition of the German Hella, Faurecia is targeting more than 33 billion in sales in 2025. Cost synergies have been revised upwards to 250 million.
Faurecia announces more synergies with Hella | Photo credits: Faurecia
For an operation of this magnitude, it will have been carried out smoothly. Announced last August, the merger between the French equipment manufacturer Faurecia and the German Hella was completed on January 31 and the new group was officially presented to the financial community on Monday. Faurecia having, at the end of the OPA, collected only 79.5% of Hella (the Eliott activist fund notably acquired securities) for a total investment of 5.3 billion, the latter company will remain listed. Nevertheless Hella will be fully integrated into the consolidated financial statements of Faurecia starting on the 1er February. To partially finance the acquisition, the French group will launch a capital increase of 800 million in the coming months.
Seventh-largest automotive supplier in the world, Faurecia-Hella should achieve more than 33 billion in turnover in 2025, as was announced in August. Alone, Faurecia would have made only 24.8 billion billings. The operating margin should be above 8.5%, a record level (it reached a maximum of 7.3% in 2018 for Faurecia and should have been 5.5% for 2021). It is at the level of cash flow generation that the greatest improvement is expected. It should reach 1.75 billion in three years, or more than 5% of sales against 1.1 billion and 4.5% expected so far for Faurecia without Hella.
Six major professions
Cost synergies have been revised upwards: they will represent a €250 million improvement in Ebit instead of the €200 million forecast in August. They will mainly come from purchases and operations. Revenue synergies are still estimated at between 300 and 400 million euros. Hella will benefit from Faurecia’s presence in Asia and in the Americas, while Hella will allow Faurecia to further improve its collaboration with German automakers.
The new entity, called Forvia, a name very close to Faurecia, will revolve around six major businesses: seats, interior design and clean mobility, which were Faurecia’s favorite areas, lighting Hella’s specialty , electronics where everyone will contribute their skills and finally, a new area, product life cycle solutions.
The stock market reacted well to these announcements. The stock gained as much as 3.5% this morning. However, it has been declining since the beginning of the year.