(AOF) – Forvia has finalized the previously announced senior bond issue for an amount of one billion euros, including 500 million euros maturing in June 2029 at a rate of 5.125% and 500 million euros maturing in June 2031 at the rate of 5.50%. The automotive supplier specifies that it intends to allocate the net balance of the proceeds of the issue to the repayment of other debts of the group. The new bonds are listed on the Euronext Dublin market (Global Exchange Market). Both tranches of the new senior bonds have been rated in line with its long-term credit rating.
Forvia states that the proceeds of the issuance were mainly used to partially refinance approximately €580 million of bonds maturing in 2025 and approximately €220 million of bonds maturing in 2026 contributed as part of a buyout offer.
These operations allow the group to “effectively manage its debt and extend the average maturity of its debt”.
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Key points
– Seventh global supplier of automotive technologies, born in 2022;
– Sales of €25.5 billion, divided into 6 activities: seats for 32%, interior systems for 22%, clean mobility for 19%, electronics (sensors, automated driving, management of energy) for 14%, lighting for 12%, and vehicle life cycle solutions for 3%;
– Turnover generated at 44% in Europe, 28% in the Americas and 27% in Asia;
– Business model for positioning in growing markets: complementarity of the portfolio of activities in electronics, consolidation of the world’s No. 1 position through sustainability in interiors and seating systems, innovation and standardization in lighting and acceleration of electrification in green mobility;
– Open capital with 2 strong positions: the Hueck/Roepke family shareholders for 9% and, for 12%, the strategic shareholders -Elior (5.05%), Peugeot 1810 (3.02%), BPI France (2.16%) %) and Dongfeng (1.97%), Michel de Rosen chairing the board of 12 directors, Patrick Koller being general manager;
– Strengthening the balance sheet after the acquisition of 86.5% of HELLA, with leverage reduced to 2.6, free self-financing of €471 million and liquidity of €6.2 billion.
Challenges
– Power25 strategic plan:
– targeting around 30 billion in revenue, an operating margin above 7%, a net cash flow of 4% of turnover and a debt leverage of less than 1.5,
– via cost reductions, of €150 million in 2023 and €300 million in 2025;
– Innovation strategy: 77 R&D centers (3.8% of revenue) and portfolio of +14,000 patents:
– dedicated ecosystem supported by academic and technological partnerships,
– industrial partnerships for the group’s carbon neutrality (Schneider Electric, Engie, Artelia, KPMG), artificial intelligence (Accenture), the cloud (Microsoft), data analysis (Palantir) and cybersecurity (GuardKnox),
– transversal digitalization: integration into processes, exploitation of data, co-innovations and cybersecurity;
– “inspired to care” environmental strategy, validated by the SBTi and aiming for scope 1 and 2 carbon neutrality in 2025 and total neutrality in 2045:
– via eco-design, renewable energy and investments, for €1OO million, in sustainable technologies from 2021 to 2025,
– Materi’act sustainable materials division targeting €2 million in revenue in 2025 and supported by partnerships: Veolia (30% of interior modules made from recycled plastics in 2025), GravitHy (production of carbon-free steel in Fos-sur-Mer), SSAB (very low CO2 footprint seat structures)…,
– hydrogen solutions – battery systems, trucks and storage – offered in partnership, such as the IPCEI Hy2Use project with Symbio,
– “green” bond issues, public and private;
– Successful integration of HELLA: €300 million in cost synergies, €400 million in commercial synergies and joint order intake of €1.8 billion;
– Order intake exceeding €31 billion, with a margin of +7% in strategic and profitable activities: electronics, electric vehicles, China and premium vehicles or SUVs.
Challenges
– Impact of inflation offset by the impact on sales prices, contractual policies with suppliers and customers, energy savings;
– Achievement of the objective of €3.5 billion in turnover in hydrogen solutions;
– After a 17% increase in sales, 2023 objectives: revenues of €25.2 to €26.2 billion, operating margin of 5% to 6% of turnover and debt leverage reduced to between 2 and 2.4, via the €1 billion disposal program;
– Suspension of dividend payment for 2022.
Negotiations with manufacturers
On average, equipment manufacturers represent between 60 to 85% of the manufacturing cost price of a vehicle. According to the Federation of Vehicle Equipment Industries (Fiev) negotiations are very tense with manufacturers regarding the passing on of the increase in costs. The price increases concern electronic components, raw materials, such as steel, nickel, lithium or palladium, energy and transport. The equipment manufacturers mainly negotiate with Stellantis and Renault to set up indices to pass on the increases. They are also betting on innovation, differentiation, moving upmarket and internationalization.