Faurecia : 2019 third quarter sales

Press release

Nanterre (France), October 17, 2019

THIRD-QUARTER 2019 SALES

STRONG SALES OUTPERFORMANCE OF 290bps FOR THE FIRST NINE MONTHS OF 2019

Q3 SALES SLIGHTLY BELOW WORLDWIDE AUTOMOTIVE PRODUCTION

2019 GUIDANCE FULLY CONFIRMED

	In €m		Q3 2018			Q3 2019			YoY		9m 2018			9m 2019			YoY
						change						change
	Group sales	4,014		4,185		4.3%	13,005		13,157	1.2%
	At constant currencies and excl. Clarion							-3.7%							-3.1%

9-MONTH SALES AT €13,157m, REPRESENTING A STRONG OUTPERFORMANCE OF 290bps

Q3 SALES AT €4,185m, SLIGHTLY BELOW WORLDWIDE AUTOMOTIVE PRODUCTION

• Up 4.3% on a reported basis, including:

• 1. A scope effect of €256m due to the consolidation of Clarion
  1. A limited bolt-on contribution of €14m, vs. €164m in H1
• Down 3.7% at constant currencies and excluding Clarion, impacted by:
• 1. A peak effect of -4.5% or €179m due to the phasing of the already announced Seating EoPs (End of Production); this effect will reduce as from Q4

• 1. An effect of -0.6% or €23m due to the GM strike in the US
• Interiors and Clean Mobility significantly outperformed worldwide automotive production

2019 GUIDANCE FULLY CONFIRMED

• Sales growth outperformance of between 150 and 350bps (at constant currencies and excluding Clarion consolidation)
• Operating income increase in value and operating margin of at least 7% (including Clarion consolidation as from April 1)
• Net cash flow of at least €500m (including Clarion consolidation as from April 1)

Patrick KOLLER, CEO of Faurecia, declared:

• Since the beginning of the year, our sales posted a solid outperformance versus automotive production of close to 300 basis points. Despite the market degradation throughout the year, our resilience and agility allow us to fully confirm our guidance for the year. In addition, we are on track for a record year of order intake in 2019.

Despite current market conditions, we maintain the pace of our strategic transformation. A few days ago, we announced our project to acquire the remaining 50% stake of the SAS joint venture. This acquisition would expand our systems integration offer to cover all interior modules and strengthen our Just in Time plant network. During the quarter, we have also announced a significant cost reduction plan for Clarion, in line with our profitable growth roadmap for our new Business Group, Faurecia Clarion Electronics.

We look forward to sharing our strategy update and medium-term perspectives at our Capital Markets Day to be held in Paris on November 26."

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Press release

The Board of Directors, under the chairmanship of Michel de Rosen, met on October 16, 2019 and reviewed the present Press Release.

• Fourth new Business Group "Faurecia Clarion Electronics" reported as from January 1, 2019:

1. This new Business Group mainly regroups the operations of Coagent (consolidated as from
   January 1, 2018 and previously classified within "Interiors"), Parrot Automotive (sales

consolidated as from January 1, 2019) and Clarion (consolidated as from April 1, 2019),

• 1. Due to time constraints related to the first consolidation of Clarion, it was accounted for only two months (April and May) in the consolidated sales in Q2; therefore, it was accounted for four months (June catch-up + July to September) in the consolidated sales in Q3.
• References to IHS Markit forecast relate to data released in October 2019 - vehicles segment in line with CAAM for China.
• Sales growth definition is explained at the end of this Press Release.

Q3 GROUP SALES AT €4,185m:

• • Up 4.3% on a reported basis
  • Down 3.7% at constant currencies and excl. Clarion scope effect, reflecting market conditions and temporary impacts
• Currencies had a positive impact of €64 million, representing 1.6% of last year's sales (mostly the positive impact from the US dollar vs. the euro).
• Sales at constant currencies (excluding Clarion) were down 3.7%, reflecting market conditions (worldwide automotive production dropped by 3.1%, source IHS Markit dated October 2019) and temporary impacts:
• 
  o A negative impact, as expected, of €179 million (representing 4.5% of last year's sales) due to the end of production of complete seat programs,
  o A negative impact of €23 million from the strike at GM plants in the US (representing 0.6% of last year's sales), that started on September 16.
• Contribution from bolt-on acquisitions to Q3 sales amounted only to €14 million (Parrot Automotive) compared to a significant contribution of €164 million in H1.
• Sales included a positive scope effect of €256 million, due to the consolidation of Clarion. It was accounted for 4 months in the quarter, for the reason mentioned above.

9-MONTH GROUP SALES AT €13,157m:

• • Up 1.2% on a reported basis
  • Down 3.1% at constant currencies and excl. Clarion scope effect, representing an outperformance of 290bps vs. worldwide automotive production
  • This outperformance is fully in line with the 150bps to 350bps outperformance guided for the full-year
• Currencies had a positive impact of €146 million, representing 1.1% of last year's sales (mostly the positive impact from the US dollar vs. the euro partly offset by negative impact from the Turkish lira and the Argentine peso vs. the euro).
• Sales at constant currencies (excluding Clarion) were down 3.1%, representing an outperformance of 290bps (worldwide automotive production dropped by 6.0%, source: IHS Markit dated October 2019). They included:
• 
  o A positive effect of €178 million due to the contribution from bolt-on acquisitions (see detail in appendix), representing 1.4% of last year's sales,
  o A negative effect, as expected, of €397 million (representing 3.1% of last year's sales) due to the end of production of complete seat programs.
• Sales included a positive scope effect of €407 million, due to the consolidation of Clarion, since April 1.

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Press release

SALES BY BUSINESS GROUP

Seating (40% of Group sales)

• In Q3, sales amounted to €1,571 million (vs. €1,743 million in Q3 2018)
• • Down 9.9% on a reported basis
  • Down 10.5% at constant currencies and excl. Clarion scope effect, underperforming worldwide automotive production (-3.1%, source: IHS Markit dated October 2019)
  • Currencies had a positive impact of €12 million (+0.7% of last year's sales)

Sales in the quarter were penalized by the temporary negative impact from EoPs for a combined effect of €179 million (representing -10.3% of last year's sales) and the negative impact from the strike at GM plants in the US for €8 million (representing -0.5% of last year's sales). Sales drop was broadly in line with the previous quarter, excluding the positive impact from bolt-on contribution that favored Q2 but no longer favored Q3.

Nevertheless, over two years, sales ex-currencies and excl. Clarion scope effect were broadly stable (Q3 2018 posted strong growth of +10.3%), outperforming worldwide automotive production by c. 600bps.

The Volkswagen Chattanooga (USA) Seating business, which was transferred to Faurecia at the beginning of the year and represents €1.3 billion of lifetime sales, is not included in the above-mentioned consolidated sales figures; as a minority business, it is accounted for by the equity method (sales for this business amounted to €40 million in the quarter).

• In 9 months, sales amounted to €5,210 million (vs. €5,524 million in 9m 2018)
• • Down 5.7% on a reported basis
  • Down 6.4% at constant currencies and excl. Clarion scope effect, broadly in line with worldwide automotive production (-6.0%, source: IHS Markit dated October 2019)
  • Currencies had a positive impact of €40 million (+0.7% of last year's sales)

Growth at constant currencies included a bolt-on contribution of €106 million from the JV with BYD in Asia (in H1).

Sales in the 9 months were impacted, as expected, by the end of production of complete seat programs, for a combined negative amount of €397 million (representing 7.2% of last year's sales).

Strong order book recorded in recent years, with a positive product mix (including two major frame programs), confirms market gain and solid growth prospects for Seating, starting late 2020 and strongly accelerating as from 2021.

Interiors (30% of Group sales)

• In Q3, sales amounted to €1,198 million (vs. €1,185 million in Q3 2018)
• • Up 1.1% on a reported basis
  • Down 1.5% at constant currencies and excl. Clarion scope effect, outperforming by 160bps worldwide automotive production (-3.1%, source: IHS Markit dated October 2019)
  • Currencies had a positive impact of €31 million (+2.6% of last year's sales)

Sales in the quarter posted growth with PSA in Europe, FCA and Tesla in North America as well as Hyundai and Chinese OEMs in Asia. This growth did not fully offset challenging market conditions faced by other OEMs.

• In 9 months, sales amounted to €3,939 million (vs. €3,981 million in 9m 2018)
• • Down 1.0% on a reported basis
  • Down 2.2% at constant currencies and excl. Clarion scope effect, outperforming by 380bps worldwide automotive production (-6.0%, source: IHS Markit dated October 2019)
  • Currencies had a positive impact of €45 million (+1.1% of last year's sales)

Growth at constant currencies included a bolt-on contribution of €21 million from the JV with Wuling in Asia (in H1).

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Press release

Clean Mobility (26% of Group sales)

• In Q3, sales amounted to €1,114 million (vs. €1,061 million in Q3 2018)
• • Up 5.1% on a reported basis
  • Up 3.1% at constant currencies and excl. Clarion scope effect, outperforming by 620bps worldwide automotive production (-3.1%, source: IHS Markit dated October 2019)
  • Currencies had a positive impact of €21 million (+2.0% of last year's sales)

Sales growth in the quarter reflected outperformance in all regions: +80bps in Europe, +1,080bps in North America, +90bps in Asia and +580bps in South America. It was mainly driven by sales growth with VW, Ford, GM and Hyundai.

• In 9 months, sales amounted to €3,465 million (vs. €3,421 million in 9m 2018)
• • Up 1.3% on a reported basis
  • Down 0.4% at constant currencies and excl. Clarion scope effect, outperforming by 560bps worldwide automotive production (-6.0%, source: IHS Markit dated October 2019)
  • Currencies had a positive impact of €60 million (+1.7% of last year's sales)

Growth at constant currencies included a bolt-on contribution of €14 million from Hug Engineering in Europe (in H1).

Faurecia Clarion Electronics (4% of Group sales)

• In Q3, sales amounted to €302 million (vs. €26 million in Q3 2018)
• • In Q3 2018, this new Business Group only included sales from Coagent Electronics (consolidated since January 1, 2018).
  • In Q3 2019, sales included Coagent Electronics for €32 million, Parrot Automotive (sales consolidated since January 1, 2019) for €14 million and Clarion (4 months in Q3) for €256 million.
• In 9m, sales amounted to €542 million (vs. €80 million in 9m 2018)
• • In 9m 2018, this new Business Group only included sales from Coagent Electronics (consolidated since January 1, 2018).
  • In 9m 2019, sales included Coagent Electronics for €98 million, Parrot Automotive (sales consolidated since January 1, 2019) for €37 million and Clarion (6 months since April 1) for €407 million.

SALES BY REGION

Europe (49% of Group sales)

• In Q3, sales amounted to €1,875 million (vs. €1,858 million in Q3 2018)
• • Up 0.9% on a reported basis
  • Down 0.7% at constant currencies and excl. Clarion scope effect, underperforming regional automotive production (+0.7%, source: IHS Markit dated October 2019)
  • Currencies had a positive impact of €9 million (+0.5% of last year's sales, mainly attributable to the Turkish lira and the Russian ruble vs. the euro)
  • The positive scope effect from Clarion consolidation (4 months in Q3) represented €21 million of sales in the region

Sales in the quarter were penalized by the negative impact from Seating EoPs for €30 million (representing -1.6% of last year's sales). Sales growth with PSA and VW, as well as the contribution from Parrot Automotive (for €12 million in the quarter), did not fully offset drop with other OEMs.

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Press release

• In 9 months, sales amounted to €6,406 million (vs. €6,588 million in 9m 2018)
• • Down 2.8% on a reported basis
  • Down 2.9% at constant currencies and excl. Clarion scope effect, outperforming by 90bps regional automotive production (-3.8%, source: IHS Markit dated October 2019)
  • Currencies had a negative impact of €22 million (-0.3% of last year's sales, mainly attributable to the Turkish lira vs. the euro)
  • The positive scope effect from Clarion consolidation (6 months since April 1) represented €34 million of sales in the region

Growth at constant currencies included a bolt-on contribution of €43 million (see detail in appendix).

Sales in the nine months were penalized by a significant negative impact from Seating EoPs for €113 million (representing -1.7 of last year's sales)

North America (26% of Group sales)

• In Q3, sales amounted to €1,134 million (vs. €1,115 million in Q3 2018)
• • Up 1.8% on a reported basis
  • Down 7.4% at constant currencies and excl. Clarion scope effect, underperforming regional automotive production (-0.4%, source: IHS Markit dated October 2019)
  • Currencies had a positive impact of €48 million (+4.3% of last year's sales, mainly attributable to the
    US dollar vs. the euro)
  • The positive scope effect from Clarion consolidation (4 months in Q3) represented €54 million of sales in the region

Sales in the quarter were penalized by a significant negative impact from Seating EoPs for €91 million (representing -8.2% of last year's sales) and by the negative impact from the strike at GM plants for €23 million (or -2.1% of last year's sales), as well a negative customer mix effect.

Conversely, Clean Mobility posted a solid outperformance, with double-digit sales growth at constant currencies.

• In 9 months, sales amounted to €3,423 million (vs. €3,347 million in 9m 2018)
• • Up 2.3% on a reported basis
  • Down 6.6% at constant currencies and excl. Clarion scope effect, underperforming regional automotive production (-2.2%, source: IHS Markit dated October 2019)
  • Currencies had a positive impact of €198 million (+5.9% of last year's sales, mainly attributable to the US dollar vs. the euro)
  • The positive scope effect from Clarion consolidation (6 months since April 1) represented €101 million of sales in the region

Sales in the nine months were penalized by a significant negative impact from Seating EoPs for €226 million (representing -6.8% of last year's sales)

Asia (20% of Group sales)

• In Q3, sales amounted to €942 million (vs. €807 million in Q3 2018)
• • Up 16.8% on a reported basis
  • Down 7.0% at constant currencies and excl. Clarion scope effect, underperforming regional automotive production (-4.5%, source: IHS Markit dated October 2019)
  • Currencies had a positive impact of €13 million (+1.6% of last year's sales, mainly attributable to the
    Chinese yuan renminbi vs. the euro)
  • The positive scope effect from Clarion consolidation (4 months in Q3) represented €179 million of sales in the region

Growth in the quarter has almost not benefited from bolt-on contribution (only €2 million from Parrot Automotive), compared to the €133 million bolt-on contribution in the first-half.

Sales in the quarter were penalized by the negative impact from Seating EoP in China for €58 million (representing -7.2% of last year's sales) and by the negative impact from BYD in China, whose sales dropped by €25 million (representing -3.1% of last year's sales).

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