(Update: details on activity in the first quarter)
PARIS (Agefi-Dow Jones)–Forvia, the automotive equipment manufacturer born in 2022 from the merger between Faurecia and the German industrialist Hella, confirmed on Thursday its financial objectives for 2024, after having recorded organic growth significantly higher than the evolution of global automobile production in the first quarter.
“The first quarter demonstrated our ability to generate organic growth in a market that has declined […] and which is characterized by the temporary slowdown in electrification in Europe”, indicated the general director of Forvia, Patrick Koller, quoted in a press release.
Over the period from January to March, Forvia achieved a turnover of 6.53 billion euros, down 1.7% year-on-year in published data, but up 3.1% in organic data. , or at constant exchange rates and scope.
In the first quarter, Forvia’s revenue growth outpaced the change in global automotive production by 390 basis points, which fell 0.8% over the period, according to data provided by S&P Global Mobility.
This “outperformance” of Forvia was reduced by 140 basis points due to an unfavorable regional mix. In organic data, the group’s sales increased by 12.2% in the first quarter in the America region, which represented 27.3% of activity, but stalled in Europe (+0.1%), where Forvia achieved 48% of its sales, and decreased by 0.7% in Asia.
Debt reduction will continue
For the current financial year, Forvia still anticipates a turnover of between 27.5 billion and 28.5 billion euros, an operating margin of between 5.6% and 6.4% and a net cash flow greater than or equal to that of 649 million euros generated in 2023. The group is also targeting a net debt to adjusted gross operating surplus (EBITDA) ratio of less than 1.9 at the end of 2024.
Managers’ confidence is based in particular on Forvia’s robust order-taking dynamics. In the first quarter, the manufacturer recorded 6.5 billion euros in new orders, while maintaining its commercial selectivity aimed at generating an operating margin above 7% in 2025.
Furthermore, Forvia is continuing its efforts to reduce debt. “Since the start of the year, we have made significant progress in the execution of our second billion-euro divestment program with the conclusion of a first transaction and the signing of a second operation, which together represent approximately 25% of the target amount of treasury products,” said Patrick Koller.
The execution of this second divestment program should allow Forvia to improve its net debt to adjusted Ebitda ratio, which management expects to be below 1.5 at the end of 2025.
In addition, the year 2024 should mark the launch of “EU-Forward”, a project covering the years 2024 to 2028 and aimed at strengthening Forvia’s competitiveness in Europe. Thanks to the implementation of this project, the manufacturer intends to increase the operating margin of its European activities from 2.5% in 2023 to more than 7% in 2028.
This project could affect up to 10,000 jobs over the five-year period and is expected to lead to increased restructuring costs, but it would allow Forvia to achieve around 500 million euros in savings on an annual basis in 2028.
-Dimitri Delmond, Agefi-Dow Jones; +33 (0)1 41 27 47 31; [email protected] ed: VLV
FINANCIAL RELEASES FROM FORVIA:
https://investors.forvia.com/investors/investors-analysts/financial-results
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April 18, 2024 02:34 ET (06:34 GMT)