Car-parts maker Faurecia, 71.5%-owned by PSA Peugeot Citroen, on Thursday reported a recovery in net profit, boosted by sustained demand and operating improvements, but warned that tough sector conditions would hurt margins in 2005, according to Reuters.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
Faurecia’s 2004 net profit reportedly totalled €83.7 million ($109.3 million) compared with €10.1 million in 2003 – its first profit in four years after a business-wide reorganisation. Operating profit rose to €366.3 million from €302.8 million in 2003 on previously reported sales of €10.72 billion.
“The first half of 2005 should show weak growth for Faurecia,” chairman and CEO Pierre Levi told Reuters, adding that he did not expect the company to grow any faster than vehicle production.
According to the news agency, Levi said, “Obviously the results were satisfactory but we had hoped for a little better for 2004.”
Reuters noted that car component makers are under pressure as raw material costs remain high while car makers try to resist paying more for parts, desperate to protect their own margins in the face of lack-lustre demand and cut-throat price competition.
“With declining European automotive production and the sharp rise in the cost of raw materials, Faurecia expects its operating margin to decline in the first half of 2005 compared to the prior year,” Faurecia reportedly said in a statement.
According to Reuters, the company, which makes seats, doors and exhaust systems, said the results reflected sustained activity and an improvement plan, in which it has scrutinised productivity.
It also included a net capital gain of €31 million euros from the disposal of non-core businesses in its mechanics and environment and steering columns divisions, the report added.
Reuters noted that Faurecia rival Valeo last week posted a 17% drop in 2004 net profits, partly due to the impact of high raw material prices.
