Faurecia Q1 sales take hit from pandemic

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Faurecia posted a major decline in sales across all markets, primarily as a result of the impact of the COVID-19 pandemic.

Faurecia on Monday joined Nemak and other global auto suppliers that are starting to report earnings during the crisis. Several other suppliers are expected to post their results over the next few weeks.

The French seating, interiors and electronics supplier said sales for the quarter plummeted 13.5 percent to $4.1 billion as a result of the crisis’ impact on the industry and supply chain.

In the first quarter in North America, which accounts for 27 percent of Faurecia sales, sales plunged more than 9 percent to $1.1 billion, Faurecia said. The company said this was a result of lower volumes and the impact of COVID-19 starting in mid-March.

The first quarter in Europe saw sales decline 13 percent to $2.1 billion.

In Asia, first-quarter sales were down 20 percent to $689 million.

Faurecia said its lower sales include a limited negative impact on currencies and positive scope effect because of the consolidation of three months of Clarion Electronics sales and two months of SAS sales.

Faurecia does not report full quarterly financials.

“Our sales in the first quarter were strongly impacted by the global COVID-19 pandemic,” CEO Patrick Koller said in a statement. “This crisis impacted China throughout the quarter, with a peak in February, and then the rest of the world from March.

“While China has effectively and safely restarted, we expect the second quarter to be tougher in Europe and North America. The second half of the year should show sequential improvement,” Koller said.

Faurecia joined most other major auto suppliers in securing cash and strengthening liquidity.

Faurecia shut down many of its production sites in Europe, North America and South America because of the ongoing impact of the crisis. Michel Favre, Faurecia’s finance director, said on a conference call the company expected its Chinese factories to return to 100 percent capacity by the end of May.

The supplier said it has been reducing costs, development expenses and investments throughout the crisis, including putting employees in all sites on temporary unemployment.

Faurecia also withdrew its 2020 financial objectives. The company previously said it was targeting more sales growth and further improvement in profitability this year to follow growth over the past few years. The supplier targeted an operating margin of above 7.2 percent of sales and net cash flow of more than $542 million.

Faurecia ranks No. 9 on the Automotive News list of the top 100 global suppliers with estimated worldwide sales to automakers of $20.66 billion in 2018.

Reuters contributed to this report.

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Saurabh Shukla

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