Supplier Faurecia booked a substantial improvement in operating income in 2010 with a useful contribution from new acquisitions.
It swung to a EUR456m profit (3.3% of total sales) from a loss of EUR92m in 2009; a EUR547m improvement. In the second half, operating income was EUR239m or 3.4% of total sales compared with an operating margin of 1.9% in the second half of 2009 and 3.2% in the first half of 2010.
Of the EUR547m improvement in operating income, EUR314m was attributed to higher sales while EUR188m came from industrial productivity gains. Newly integrated companies (Emcon Technologies & Plastal) dded EUR51m to group operating income.
“With sales increasing by 48% to EUR13.8bn for 2010, Faurecia has leveraged its lowered cost base and was able to post earnings exceeding all its 2010 targets,” the firm said in a statement.
Net income of EUR202m compared with a EUR434m loss in 2009.
Product sales (parts and components supplied to automakers) rose 41% to EUR10,696m, up 41% or 19% on a comparable basis. In the second half, product sales increased 30% to EUR5,341m (7% on a comparable basis).
Monoliths sales, included in exhaust catalytic converters, were up 162% or 27% on a comparable basis to EUR2,168m. In the second half of 2010, monoliths sales grew by 160% (23% on a comparable basis) to EUR1,113m.
Development, tooling and prototype sales increased 7% to EUR932m. On a comparable basis they contracted by 10% due to an unfavoirable comparison basis in the first half of 2009. In the second half of 2010, they grew 37% (22% on a comparable basis) to EUR516m.
In the second half, total sales expanded by 42% to EUR6.97bn or 10% on a comparable basis.
In Europe, product sales increased by 22%, or 9% on a comparable basis, to EUR7,043m. In the second half, product sales grew 13% equivalent to a 1% decline on a comparable basis to EUR3,425m. In 2010, Europe represented 66% of product sales versus 76% a year ago.
In North America, product sales soared by 111% (49% on a comparable basis) to EUR1,945m, largely outpacing light vehicle production (+40%). In the second half, product sales grew 77% (23% on a comparable basis) to EUR993m. In 2010, this region accounted for 18% (vs. 12% in 2009) of product sales.
In Asia, product sales surged by 80% (51% on a comparable basis) to EUR968m. In the second half, despite a less favourable comparison basis, product sales grew 70% (36% on a comparable basis) to EUR525m. 2010 product sales in China increased by 71% (47% on a comparable basis) to EUR789m largely outpacing light vehicle production (+30%). In 2010, Asia represented 9% (vs. 7% in 2009) of Faurecia’s product sales.
In South America, product sales nearly doubled (98%) to EUR557m representing 5% of group product sales (vs 4% in 2009). On a comparable basis, growth came at 23%, that is also largely above light vehicle production growth (+13%). In the second half, product sales increased to EUR304m (34% or 18% on a comparable basis).
“In 2010, Faurecia fully benefited from its reduced fixed cost base achieved in 2009. Costs have been kept stable at EUR2.0bn (on a comparable basis) despite a surge in activity,” the supplier noted.
Restructuring charges amounted to EUR117m (vs EUR130m in 2009) of which EUR59m occurred in the second half of 2010. They are attributed to the final phase of the industrial rationalisation plan in Europe and Emcon Technologies’ integration.
Net interest expenses decreased to EUR91m (vs EUR123m in 2009) thanks to lower financing cost and a lower debt level. In the second half, net interest expenses were EUR43m (vs EUR61m a year ago).
“With Faurecia now solidly anchored into profits, the board of directors has decided to propose at the next shareholder meeting, in May 2011, a dividend of EUR0.25 per share,” the company said.
Targets for 2011 are total sales between EUR14.8bn and EUR15.3bn and operating income between EUR580m and EUR640m.