Faurecia cancels dividend to save cash amid Europe slump
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PARIS (Bloomberg) -- Faurecia canceled its dividend for 2012 to conserve cash with auto demand in its home region set to decline.
Faurecia forecast "neutral" cash flow in 2013 before accounting for restructuring expenses of 120 million euros ($161 million) to 140 million euros, the France-based parts supplier said today.
Operating profit is targeted to rise this year on lower costs in Europe and higher sales in North America.
"The action plan we have under way to offset the ongoing drop in European vehicle production and focus on cash generation will enable us to see an improvement in our performance," CEO Yann Delabriere said in a statement.
Faurecia, 57 percent-owned by struggling PSA/Peugeot-Citroen, plans to cut about 3,000 jobs in its home region, or 7.5 percent of the work force, by the end of this year. Like its ailing parent company, the partsmaker is retrenching with European auto demand poised to fall for the sixth straight year in 2013.
Faurecia said vehicle sales in Europe may decline by 4 percent to 5 percent this year. Europe's car market is forecast to drop to 12.3 million vehicles in 2013, 23 percent below the pre-2008 financial crisis peak, IHS Automotive estimates.
PSA, which is scheduled to report 2012 financial results tomorrow, has sold several assets to shore up its balance sheet as cash reserves dwindle, adding uncertainty over PSA's continued interest in the supplier.
Faurecia is "ready for any outcome" of PSA's deliberations, Delabriere said today on BFW Radio. The company has been diversifying its business away from PSA and now counts Volkswagen and Ford Motor Co. as its two biggest customers. Sales in North America last year grew 41 percent to 3.65 billion euros.
"There's not much that PSA can do" with Faurecia to help its own finances, Matthias Hellstern, an analyst at Moody's Investors Services in Frankfurt, said.
2012 income down 62%
Faurecia's operating income in the second half tumbled 32 percent to 211 million euros. Sales rose 7 percent to 8.6 billion euros, as growth in North America and Asia offset a decline in Europe.
Net income for the full year in 2012 plunged 62 percent to 140 million euros, burdened by 84 million euros in restructuring charges.
Driven by further growth in North America and Asia, Faurecia expects 2013 sales to rise to between 17.5 billion euros and 17.9 billion euros, after climbing 7.3 percent last year to 17.4 billion euros. Faurecia said it booked a record 17.8 billion euros in new contracts last year.
Faurecia won't pay a dividend for 2012 after distributing 35 cents per share to PSA and other shareholders following 2011 results.
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