PARIS - French parts maker Faurecia said on Friday its net loss widened in 2002 as bad deals hurt profitability and ongoing restructuring costs hit its bottom line.
Europe's third-largest auto-part supplier by sales said the lion's share of a sweeping revamp was now done, and that cost-cutting measures would "visibly" boost its operating margin quarter on quarter this year from a slim 2.6 percent in 2002.
Faurecia posted a worse-than-expected net loss of 59.1 million euros ($64 million), compared to a pro forma loss of 52 million in 2001 due to goodwill writedowns of 113.6 million euros and a 70 million-euro charge for stepped-up restructuring measures.
Operating profit slipped to 255.6 million euros ($276.8 million) from 259.7 million, on sales up 2.7 percent to 9.866 billion euros.
Ten analysts polled by France's JCF group had forecast a net loss of 33.6 million euros and operating profit of 245 million euros. The 2001 figures were pro forma to exclude the acquisition of interior maker Sommer Allibert in 2001. The firm, which is 70-percent owned by PSA Peugeot Citroen, said sales climbed 2.7 percent as automakers seeking to woo motorists with new models bought more of its car seats, interiors and front ends.
Chairman Pierre Levi told a news conference that sales also got a boost as global car production edged higher in the second half after a dismal start to the year.
And while car production in Europe and North America was likely to sag by 4 percent to 5 percent in 2003, he bet organic sales would rise some 5 percent this year, compared to 7.8 percent excluding catalytic converters in 2002.
"We are working on the basis of less favorable conditions in 2003, but still aim to post sales growth that beats the market," Levi said at a news conference.
Suppliers like Faurecia are feeling the pinch as hard-pressed car manufacturers refuse to pay top dollar for their products, and Levi said this had been compounded with Faurecia due to bad deals made in the last few years.
He said many of the new contracts clinched between 2000 and 2002 had not been that profitable, and some had even made a loss, hurting the group's operating margin, which slipped to 2.6 percent in 2002 from 2.7 percent in 2001.
The company would remain locked into ten of these loss-making deals in 2003," Levi said, stressing that new contracts clinched this year would win the company more money. Cost-cutting measures would also help swell profit margins, the firm's top priority for 2003, said Levi, adding that Faurecia had saved 100 million euros in 2002 and would net another 150 million this year.
The company said it had been boosted by the launch of a bunch of new models, particularly GM's Opel Vectra and Ford's Expedition in the United States, and analysts said they were confident Faurecia would continue to increase its revenue.
"We are confident on growth thanks to a number of new models like the Renault Megane, the new Espace, the Peugeot 807," said analyst Corinne Jeannet of French brokerage Aurel Leven in a research note, while noting the uncertain market outlook.
The company said it would pay a dividend of 0.91 euros.