PARIS (Reuters) – Faurecia on Monday revised upwards its forecast of cost synergies resulting from the acquisition for 6.7 billion euros of the German Hella which it finalized at the end of January.
The automotive supplier, which is due to unveil the new name of the combined group at a press conference at 11:00 a.m. (1000 GMT), now says it is aiming for more than 250 million euros in cost synergies against a previous target of more than 200 million.
The other financial forecasts for the new entity have been confirmed: for 2025, sales are expected to exceed 33 billion euros, operating margin above 8.5% and net cash flow at around 1, 75 billion euros.
Revenue synergies are expected to reach between 300 million and 400 million euros by 2025 and cash flow optimizations are expected to generate around 200 million euros per year on average from 2022 to 2025.
On the Paris Bourse, the Faurecia share gained 2.87% to 39.76 euros at 10:32 a.m., when the SBF 120 was practically unchanged at the same time (+0.04%).
The increased cost synergies “should allow the group to offset the difficulties that have arisen since the announcement of the agreement [en août ndlr], in particular inflation”, commented in a note the analysts of Oddo BHF, saying to maintain a positive opinion on the merger.
CRITICAL SIZE
Faced with the decline in automotive production due to a global shortage of electronic chips, Faurecia had to lower its financial targets for 2021 again in November. Hella also warned on its results the same day.
Faurecia, which will publish its annual results on February 21, expects sales of between 15 billion and 15.5 billion euros and an operating margin of 5.5% for 2021.
With Hella, the French group intends to accelerate its transformation and reach a critical size to meet the challenges posed by the electrification undertaken by car manufacturers. The group’s exposure to the internal combustion engine will be reduced to around 10% of its sales in 2025, it said in its statement on Monday.
“By combining our strengths, we will have the critical mass and the innovative technological solutions for all of our activities, making us an even more valuable partner for the automotive industry”, commented the managing director, Patrick Koller.
Hella, which will remain a listed company with its own governance, has been fully consolidated in Faurecia’s accounts since February 1.
(Report Blandine Hénault, edited by Bertrand Boucey)
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