Operating income at interiors specialists Faurecia fell to EUR 85.1m in the first half of 2006 from EUR160m the previous year due mainly to a drop in sales to French car makers.
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Including EUR107.6m for restructuring, the H1 net loss was EUR48.2m, compared to a net profit of EUR34.5m in H1 2005.
Consolidated sales rose 6.5% to EUR5,979.6m while restructuring costs rose from EUR62.4m in H1 2005 to EUR107.6m this year.
Faurecia said the group continued to grow outside Europe with sales increases of 20% in North America and 41% in Asia.
Conversely, in Europe, it posted a 10.7% drop in sales to French automakers, negatively impacting consolidated sales by 4.6%.
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By GlobalDataAutomotive seating generated sales of EUR2,480.4m in the first half, down 2.5%. Sales to French automakers were down 18.4% year on year.
Outside Europe, business increased in North America, notably due to sales to General Motors (Pontiac G6 and Chevrolet Malibu) and Chrysler; and in China with the Audi A4.
Sales of vehicle interiors reached EUR1,791.4m during the first half, an increase of 2.8%. This made gains in Europe from production ramp-ups for the Mercedes-Benz S Class and the Volkswagen Passat, from start-ups for the Audi Q7, and from sales in China (Audi A6). 21% Growth in North America was mainly due to production ramp-ups for the redesigned Volkswagen Jetta and updated Chrysler PT Cruiser, both built in Mexico.
Exhaust system sales were EUR1,346.6m in first half continuing their strong growth trend: an increase of 44% in part as a result of increased sales of catalyst monoliths. The increase in precious metal prices and the development of catalytic converters compliant with the Euro IV standard accounted for 50% of this growth.
Organic growth, excluding monoliths, was 32% in North America particularly due to sales to Ford (Fusion and Explorer).
In Asia, sales to Hyundai-Kia in South Korea, and to Ford, Mazda, PSA Peugeot Citroën and Volkswagen in China resulted in growth of 53%. In Europe, business rose 6% mainly due to the Audi A6 and Mercedes-Benz A Class and B Class programmes.
Front end modules generated H1 sales of EUR361.2m, down 7.3%, essentially because of a decline in sales to PSA Peugeot Citroën and Audi. This was partially offset by the production ramp-up for the new Renault Clio.
The 10.7% drop in business with French automakers accounted for almost 40% of Faurecia’s consolidated sales and significantly impacted the group’s operating income.
This resulted in the supplier accelerating its facility redeployment and workforce reduction programmes, leading to restructuring provisions of EUR107.6m.
However, continuing its growth strategy, particularly outside western Europe, the group is opening 15 new sites this year – seven in the United States, two in China and South Korea, and four in Central Europe – which will result in exceptionally high start-up costs over the entire year.
Faurecia noted that, despite a high rate of improvement in operational efficiency, it has been subjected to considerable pressure on selling prices whilst the price of raw materials and energy have steadily increased (propylene up 33%, gas oil up 74%, natural gas up 113%, and electricity up 67%)* creating a negative price/cost effect.
