Faurecia Cashes in on New North America Work

PARIS – The buoyant North American market and increasing demands for improved emissions controls helped push Faurecia, the parts subsidiary of PSA Peugeot Citroen, to record growth and profits in 2011.

Group sales were up 17.4% to E16.2 billion ($21.5 million) and operating profits rose 43% to E651 million ($865 million), or 4% of sales.

Sales in North America jumped 35% year-on-year to E1.4 billion ($1.9 billion) as light-vehicle output increased 11%. Faurecia began investing in North American operations several years ago, and the overall production surge coincides with new contracts.

Regional growth was general. In Asia, the 16% rise reflected higher output, but in Europe and the rest of the world, Faurecia sales rose faster than production. In South America, where light-vehicle production fell 2%, Faurecia sales climbed 6.2%.

The supplier is concentrating its investments outside Europe, where the market is stable.

Faurecia CFO Frank Imbert says 47% of investments last year were outside the region, “which is in line with our objective of getting 50% of our sales outside Europe by 2015.”

Sales by all four Faurecia business groups improved, led by a 20.7% increase by the emissions-control-technologies group. Automotive seating saw the slowest growth at 8.3%, while sales by the exteriors unit rose 10.9% and interiors, 14.1%.

Faurecia attributes the reduction of fixed costs in Europe to much of the improved profit margin. The company says it has concluded its downsizing in Europe and the integration of Emcon Technologies acquired in 2010, resulting in smaller restructuring charges last year.

Profitability of the combined automotive-seating and interior-systems business grew from E153 million ($203 million) to E408 million ($543 million), or 4.7% of sales in 2011. Combined operating profits of emissions-control technologies and automotive exteriors grew to 5.0% of sales excluding the expensive materials used in catalytic converters, whose costs are passed on directly to auto makers.

Sales rose more slowly in the year’s second half, reflecting in particular a slowdown in European production. However, profitability was higher in the timeframe than the first half, thanks to efficiencies achieved earlier, Faurecia says.

The company won new contracts worth E13.5 billion ($18 billion) in 2011. CEO Yann Delabriere predicts Faurecia “should reach the E20 billion ($26.6 billion) sales mark in 2015.”

Faurecia predicts global production to increase 3% to 5% this year, with growth everywhere except Europe, where it anticipates a 4% to 6% decline. Delabriere says Faurecia aims for a 3% increase in worldwide sales for 2012.