Faurecia S.A. Business Report FY ended Dec. 2016
Financial Overview |
(in million EUR) |
| FY ended Dec. 31, 2016 | FY ended Dec. 31, 2015 | Rate of change (%) |
Factor | |
| Net Sales | 18,710.5 | 18,770.4 | (0.3) | 1) |
| Operating Income | 970.2 | 830.0 | 16.9 | 2) |
| Sales by Segments | ||||
| -Automotive Seating | 6,607.4 | 6,188.5 | 6.8 | 3) |
| -Clean Mobility | 7,292.2 | 7,490.3 | (2.6) | 4) |
| -Interior Systems | 4,810.9 | 5,091.6 | (5.5) | 5) |
Factors
1) Net Sales
-The Company’s sales for the fiscal year ended December 31, 2016 totaled EUR 18,710.5 million, a decrease of 0.3% from the previous year. The decrease in net sales came from a decrease in catalytic converter monolith sales, negative effects from currency translations, and the disposal of the Company’s Fountain Inn facility. These decreases were partially offset by an increase in like-for-like sales.
2) Operating Income
-In the fiscal year ended December 31, 2016, the Company’s operating income increased by 16.9% over the previous year to EUR 970.2 million. Operating income increased throughout all of the Company’s operational regions, with increases in Europe and Asia caused by increasing sales. Growth in North America was attributed towards improvements in operational efficiency.
3) Automotive Seating
-Sales in the Company’s Automotive Seating business group increased by 6.8% in the fiscal year ended December 31, 2016 to EUR 6,607.4 million. Contributing factors to the increase in sales include increased market share and the launch of new models from Renault-Nissan, Daimler, BMW and Ford.
4) Clean Mobility
-The Company’s Clean Mobility business group’s sales totaled EUR 7,292.2 million in the fiscal year ended December 31, 2016, a decrease of 2.6% from the previous year. While the segment benefited from increased sales to Renault-Nissan, Geely, Volvo and Cummins, the decrease in sales from catalytic converter monoliths offset these gains.
5) Interior Systems
-The Company’s Interior Systems business group had sales of EUR 4,810.9 million in the fiscal year ended December 31, 2016, a decrease of 5.5% from the previous year. The business group has increased sales to Renault-Nissan, though the gains were offset by lower sales to Daimler and FCA. In addition, the business group’s disposal of the Fountain Inn plant further contributed to the decrease in sales.
Restructuring
-July 2016, Plastic Omnium announced that it has completed the acquisition of the Faurecia's Exterior Systems business for an enterprise value of EUR 665 million. (From a press release on July 29, 2016)
-On October 10, 2016, the Company notified the state of Michigan that it will permanently close two Detroit-area plants as a result of the discontinuation of the Chrysler 200. The closure will affect 117 workers at the Sterling Heights Plant and 93 workers at the Masonic Plant. Two other local facilities, another Sterling Heights plant and the Fraser Plant, will remain open as both supply Ford and GM products in addition to the Chrysler 200. The Company provides seats, instrument panels, center consoles, and door panels for the 200. FCA ended production of the Dodge Dart and will end production of the Chrysler 200 in December. (from a Detroit News article on October 11, 2016)
Acquisitions
-The Company announced that it has increased its participation in the Danish company Amminex to 91.5% through a share purchase. The Company has worked closely with Amminex since mid-2009 and previously owned 42% of the company. Amminex has developed an Ammonia Storage and Delivery System (ASDS) which has demonstrated its efficiency in almost completely eliminating nitrogen oxide pollutants from diesel engines. Amminex employs 50 people at its headquarters in Soeborg, Denmark, and its 6,500-square-meter production facility in Nyborg, Denmark. (From a press release on December 13, 2016)
Joint Ventures
-The Company announced that it will establish two joint ventures in Iran. The first new company will be called Faurecia Crouse Advanced Exhaust System Co. (FCAES). The 50/50 joint venture between the Company and MAAD, itself a joint venture of Crouse and Avrand, will develop and produce emissions control systems for the Iranian automotive market. Production is scheduled to start at the end of 2017. Total sales are expected to reach EUR 50 million in 2020, representing a 25% market share. The second new company will be called AFISCO. The 50/50 Faurecia – Azin Khodro joint venture will develop and manufacture instrument panels, door panels, center consoles, acoustic and soft trim modules, with start of production ocurring in early 2018. AFISCO expects its total sales to reach EUR 50 million in 2020. (From a press release on December 2, 2016)
-The Company announced that it will establish a joint venture in China to manufacture automotive seats. The new company will be called Borgward Faurecia Auto Systems Co., Ltd. The Company will hold 51% of the joint venture, Borgward Group AG will own 46% and Borgward Automotive (China) Co., Ltd. will own the remaining 3%. Operations will take place at a new plant with approximately 800 employees located in Tianjin, China. The joint venture is expected to reach a total production volume of 400,000 car seats by 2020. Starting January 2017, the joint venture will develop and manufacture seats for the new Borgward BX5 SUV and other models assembled in China. In the future, the joint venture will supply seats to Borgward for its vehicles that will be assembled in Europe. (From a press release on November 30, 2016)
-On October 28, 2016, Faurecia (China) Holding Co., Ltd., a subsidiary of the Company, and Shandong Yinlun Heat Exchange System Co., Ltd., a subsidiary of Zhejiang Yinlun Machinery Co., Ltd., signed an agreement to establish a joint venture to manufacture and sell automotive exhaust control systems. The new company will be called Faurecia Yinlun Exhaust Control Technology (Weifang) Co., Ltd. CNY 100 million will be invested in the new business. The joint venture will be capitalized at CNY 70 million, of which 52% will be provided by Faurecia (China) and 48% will be provided by Shandong Yinlun. (From an announcement by the company on November 1, 2016)
Business Partnerships
-The Company announced that it has entered into exclusive negotiations for a strategic partnership with Parrot Automotive, a leading supplier of infotainment and connectivity solutions. The first step, expected to close in the first quarter of 2017, will be an initial 20% participation in Parrot Automotive through a reserved capital increase based on an enterprise value of EUR 100 million for 100% of Parrot Automotive. Patrick Koller, CEO of the Company, said, “This investment in Parrot Automotive would give us a solid base in electronic applications and infotainment for connected vehicles. Combined with our interiors and HMI expertise, this partnership would enable us to offer a connected user experience with outstanding perceived quality.” By 2019, the Company will subscribe to a convertible bond issued by Parrot SA, allowing the Company to increase its shareholding in Parrot Automotive to 50.01%. By 2022, the Company will be in a position to own all of the shares in Parrot Automotive. (From a press release on December 6, 2016)
Contracts
-The Company has been nominated again as strategic partner within the "Future Automotive Supply Tracks" initiative (FAST) of the Volkswagen Group. After the nomination of the Automotive Seating and Interior Systems business groups in 2015, the Emissions Control Technologies business group has now been awarded as a FAST Partner. With a sales share of around 23% with Audi, Seat, Skoda and other brands, the Volkswagen Group is the Company’s largest global customer. (From a press release on May 24, 2016)
-Major Contracts for the fiscal year ended December 31, 2016
| Car maker | Model | Products |
| Hyundai | Ioniq | -Exhaust Heat Recovery System (EHRS) |
| Renault | Scenic | -Complete front seats, Back row flat-folding seats, Seat mechanisms, Covers, Headrests, Instrument panels, Slider center consoles, Touch-opening gloveboxes, Acoustic insulation, Soft trim, Glass fiber composite spare wheel tray, Emissions control systems |
| Renault | Megane | -Composite spare wheel trays |
Awards
-The Company received the 2016 Volkswagen Group Award as one of Volkswagen Group’s best suppliers. (From a press release on June 2, 2016)
-The Company announced that it has received the Program Management Award, the Technical Cost Savings Award, and the Best Plant Award from PSA Peugeot Citroen. The Company’s five plants that received the Best Plant Award are located in Hlohovec, Slovakia; Bain Sur Oust, Crevin and St Michel sur Meurthe, France; and Porrino, Spain. (From a press release on May 30, 2016)
-The Company received an award from General Motors recognizing it as a 2015 Supplier of the Year. (From a press release on March 10, 2016)
-The Company won two 2016 Automotive News Pace awards for its adaptive valves and cover carving technology. The Company’s adaptive valves allow mufflers to be up to 30% smaller and an exhaust system to be up to 20% lighter, while cover carving technology provides new interior design options with increased durability and quality. (From a press release on April 12, 2016)
Outlook
-The Company’s outlook for the fiscal year ending December 31, 2017 is to achieve value-added sales growth, which is net sales excluding catalytic converter monolith sales, of 6%. The Company also aims to reach an operating margin between 6.4% and 6.8%.
-Strategic focuses for the Company in 2017 include the acceleration of technology in the areas of Sustainable Mobility, with cleaner and lighter vehicles, and Smart Life on Board, focusing on improving the connectivity, flexibility and predictability of a vehicle’s cockpit.
-The Company is targeting sales to Chinese OEMs to represent 20% of its sales in China by 2018 and 30% of its sales in China by 2020.
-Consolidated joint ventures with Changan and Dongfeng are expected to represent EUR 2.5 billion of the Company’s sales by 2020.
R&D Expenditure |
(in million EUR) |
| FY ended Dec. 31, 2016 | FY ended Dec. 31, 2015 | FY ended Dec. 31, 2014 *1 | |
| Overall | 1,021.5 | 924.3 | 866.9 |
| % of Sales | 5.5 | 4.9 | 5.1 |
*1: Restated according to IFRS5.
R&D Structure
-The Company has 6,000 engineers and technicians working in 30 R&D centers across 11 countries.
R&D Facilities
-The Company announced that it has enhanced the expertise of its technical center in Brieres-les-Scelles, France with the addition of CoverTech, a new expertise center for automotive seat covers. The new facility has been operational since December 2015. CoverTech aims to break new ground in the technologies and processes used to design, cut, sew and assemble automotive seat covers, selecting and implementing best practices across all Company development and production sites worldwide. (From a press release on May 11, 2016)
R&D Activities
-In 2015, the Company was involved in 72 innovation projects with 11 customers. 34 of these projects were developed in cooperation with premium brands.
Technological Alliance
-The Company announced the signing of a cooperation agreement with Renault Trucks and Exoes to test the performance of its Exhaust Heat Power Generation (EHPG) system. According to the agreement, Renault Trucks is providing a Euro VI truck that will be equipped with the Company's EHPG system, which includes an expander from Exoes. The Company is in charge of the overall system definition and integration. On-road tests will begin in 2017. This system, based on the Rankine cycle, recovers the exhaust heat to transform it into energy, therefore reducing fuel consumption and emissions for cars and trucks. (From a press release on September 14, 2016)
Patents
-The Company files approximately 500 patents per year. In 2016, the Company filed 501 new patents.
Capital Expenditure by Business Segment |
(in million EUR) |
| FY ended Dec. 31, 2016 | FY ended Dec. 31, 2015 | FY ended Dec. 31, 2014 | |
| Automotive Seating | 179.1 | 184.8 | 152.6 |
| Clean Mobility (previously Emission Control Technologies) | 215.9 | 203.4 | 139.5 |
| Interior Systems | 224.0 | 188.8 | 158.7 |
| Automotive Exterior | - | - | 45.5 |
| Other | 49.6 | 46.2 | 22.9 |
| IFRS5 reclassifications | - | - | (44.5) |
| Total | 668.6 | 623.2 | 474.7 |
Capital Expenditure by Geographic Area |
(in million EUR) |
| FY ended Dec. 31, 2016 | FY ended Dec. 31, 2015 | FY ended Dec. 31, 2014 | |
| France | 112.2 | 99.0 | 73.7 |
| Germany | 28.9 | 35.9 | 54.4 |
| Other European countries | 190.5 | 146.1 | 160.0 |
| North America | 148.2 | 154.8 | 123.0 |
| South America | 18.4 | 18.9 | 21.3 |
| Asia | 165.9 | 159.2 | 83.8 |
| Other countries | 4.5 | 9.3 | 3.0 |
| IFRS5 reclassifications | - | - | (44.5) |
| Total | 668.6 | 623.2 | 474.7 |
Investments outside France
-The Company has unveiled a EUR 57 million state-of-the-art investment in a new data-driven manufacturing facility in Columbus, Indiana, U.S. Columbus South, a 37,000-square-meter facility, will employ 450 people and produce a new, high-tech emissions control product for the commercial vehicle industry, serving its customer Cummins Emission Solutions. (From a press release on October 6, 2016)