(News Bulletin 247) – The automotive supplier has unveiled sales up 29% over the first three months of 2023 and confirmed its objectives for the current financial year.

Forvia is off to a good start for its 2023 financial year. The automotive supplier born last year from the takeover of the German Hella by the French group Faurecia, recorded a dynamic first quarter, which led it to significantly exceed the growth in production industrial.

Over the first three months of the year, Forvia saw its sales increase by 29% in published data. This figure includes both a negative currency effect of 0.6% and a positive impact on the scope of 12% linked to the consolidation of Hella in January. The German equipment manufacturer had indeed been integrated last year from February 1.

Adjusted for these effects, organic growth reached 17.6% over the quarter. Invest Securities notes a performance “very clearly” above expectations since analysts were counting on an increase, on these same bases, of only 12%. Stifel, for his part, appreciates a publication that seems “solid” to him.

An easy basis for comparison in Europe

Over the same period, global automotive production increased by 2.7%, according to data from S&P Global Mobility, which allows Forvia to post a 14.9 percentage point outperformance compared to production.

The company’s activity was notably driven by the rebound in the EMEA (Europe-Middle East) zone, where its sales increased by 22.4% like-for-like over the quarter. Forvia benefited from an undemanding basis for comparison as the first quarter of 2022 had been penalized by the lack of availability of automotive harnesses. This shortage was caused by the outbreak of war in Ukraine, where these parts are manufactured in the west of the country.

At the division level, the “seating” activity drove the group’s growth, with like-for-like growth of 22.5% over the quarter. This increase was fueled by demand from European customers (Volkswagen, Stellantis, Daimler, BMW and the Renault-Nissan-Mitsubishi alliance) as well as Chinese (electric vehicle specialist BYD).

Confirmed goals

On the strength of this satisfactory start to the year, Forvia confirmed its objectives for the current financial year, namely sales of between 25.2 billion and 26.2 billion euros, an operating margin of between 5% and 6%, a net cash flow representing more than 1.5% of its sales and a net debt to gross operating income (Ebitda) leverage of between 2 and 2.4. In addition, Forvia has indicated that it is on track to finalize its €1 billion disposal program by the end of the year.

On the Paris Stock Exchange, Faurecia shares rose 0.6% around 10:30 a.m., the market tempering its enthusiasm, after having carried the stock up more than 3.4% at the start of the session.

The bank UBS considers that these figures “bode well for the evolution of the margins” of the company “and its deleveraging”. The balance sheet remains the main focus of the market’s attention on Forvia.

“Although we fully recognize the progress made in deleveraging over the past few months, Faurecia still remains one of the most indebted companies in our coverage in a weakened macroeconomic environment. This remains the main drag on the [thèse] investment”, underlines Barclays in a sector note published on Monday. The British bank confirmed its advice on the value to “underperform”.