Faurecia CEO Pierre Levi says innovation will help the French supplier boost sales and profits despite weak new-car production and dropping precious metal prices that decrease revenue from catalytic converters.
Faurecia, based in Nanterre, France, is majority owned by PSA/Peugeot-Citroen.
Faurecia's results for January through June beat most analysts' expectations, with sales up 5.7 percent to $6.3 billion and operating income up 24.8 percent to $190 million.
Faurecia is the No. 9 global automotive supplier on Automotive News' list of top 100 global suppliers, with $10 billion in 2002 sales.
"The market did not go down as much as we anticipated," Levi says. "We thought production in Europe would go down at least five points, and it went down one point."
The group makes almost 30 percent of its sales to PSA/Peugeot-Citroen. Sales to PSA grew by more than 25 percent compared with last year because of new seating contracts.
The second half of the year has been weaker, Levi says, in line with Faurecia's expectations for a 7 percent decline in second-half European production.
Faurecia is growing in North America, where it is supplying content on the Cadillac SRX.
Faurecia will supply the Chevrolet Malibu in North America with seat components. It also has a major seat and seat frame contract with DaimlerChrysler.
Levi expects the group's sales in North America to grow from $1.2 billion in 2003 to $1.8 billion in 2006. He says that demand in North America is driven by the introduction of European-based vehicles and the need for North American brands "to improve perceived quality and craftsmanship" to compete with the Japanese and Europeans.
Faurecia also expects growth from diesel particulate filters.
The company has been a pioneering supplier to PSA/Peugeot-Citroen and has a leading share of the market. But Levi is cautious about the segment's short-term outlook because it is developing gradually.
Levi also is optimistic about the growth potential of the cockpit business.
Growth in outsourcing comes in waves, he says, but he is confident that it will come.
Even Toyota is talking about modules, Levi says.
Faurecia and joint-venture partner Siemens VDO have more than 75 percent of the outsourced cockpit market in Europe and expect to hold that share as the market grows by 6 percent annually from 2003 to 2010.
Currently 4 million cockpits annually are outsourced in Europe, but Levi expects that to rise to 6 million by 2010.