(AOF) – Stifel is Buy on Faurecia with a target price of 23 euros. The automotive supplier has revised upwards its sales outlook for the full year. The group is thus counting on sales of between 24.5 and 25.5 billion euros, citing a positive exchange rate effect of 272 million euros.
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– Seventh-largest equipment supplier in the world, created in 1999 under the name Faurecia;
– Sales of €15.6 billion, broken down into 6 activities: clean mobility, lighting, interior systems, seats, electronics (sensors, automated driving, energy management) and vehicle life cycle;
– Business model aimed at becoming the preferred innovation and integration partner of global car manufacturers;
– Open capital with 2 strong positions: the Hueck/Roepke family shareholders for 9% and, for 12%, the strategic shareholders – Elior (5.05%), Peugeot 1810 (3.02%), BPI France (2.16 %) and Dongfeng (1.97%), Michel de Rosen chairing the board of 12 directors, Patrick Koller being CEO;
– Maintenance of financial solidity after the acquisition of HELLA having generated net debt of €8.4 billion at the end of June 2022: capital increase in June and refinancing provided by a banking agreement and a program of disposals of non-strategic assets of €1.5 billion by the end of 2023.
– Towards a new 2025 strategic plan expected for the fall;
– Innovation strategy: 63 R&D centers and portfolio of nearly 15,000 patents: dedicated ecosystem supported by academic and technological partnerships, industrial partnerships for the group’s carbon neutrality (Schneider Electric, Engie, Artelia, KPMG), artificial intelligence (Accenture), cloud (Microsoft), data analytics (Palantir) and cybersecurity (GuardKnox), collaboration or acquisition of startups and joint ventures (Michelin, Aptoide);
– “Inspired to care” environmental strategy, validated by the SBTi and aiming for carbon neutrality of scopes 1 and 2 in 2025 and total neutrality in 2045:
through eco-design, renewable energy and investments, for €1.1 billion, in sustainable technologies from 2021 to 2025, creation of a sustainable materials division supported by partnerships: Veolia for 30% of interior modules to recycled plastics by 2025 / SSAB (green steel) for seat structures with a very low CO2 footprint / the GravitHy conglomerate for the industrial project, in Fos-sur-Mer, for the production of carbon-free steel / hydrogen-system solutions batteries, trucks and storage – offered in partnership / public and private “green” bond issues;
– Order intake over €15 billion at the end of June, in strategic and profitable activities: electronics (€5 billion), €4.7 billion for electric vehicles, €4.1 billion for China and €8.7 billion € in premium vehicles and SUVs.
– Operational merger with HELLA, integrated since the end of January (€250m of cost savings expected for 2025);
– Impact of inflation: offset at 80% on 1
semester by the impact on sales prices and contractual policies with suppliers and customers, which will be fully effective on the 2
– Impact of energy shortage risks in Europe: safety stock of €100 million;
– After a 9% increase in sales and a net loss of €296 million on 1
semester, 2022 objectives confirmed: sales of €23 to €24 billion, operating margin of 4 to 5%, free cash flow at breakeven and debt leverage of 3;
– Suspension of the payment of the dividend for 2021.
Negotiations with builders
On average, equipment manufacturers represent between 60 and 85% of the manufacturing cost of a vehicle. According to the Federation of Vehicle Equipment Industries (Fiev), negotiations are very tense with manufacturers regarding the passing on of increased costs. The price increases concern both electronic components, raw materials, such as steel, nickel, lithium or palladium, energy and transport. Equipment manufacturers mainly negotiate with Stellantis and Renault to set up indices to pass on increases. They are also betting on innovation, differentiation, upgrading and internationalization.
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Faurecia: Stifel is Buy
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