Group financial strategy and targets Michel Favre Chief Financial Officer

Transcription

1 Group financial strategy and targets Michel Favre Chief Financial Officer

2 Cash generation is a key priority Optimize resource allocation Regional perspective Cash flow generation Debt & financing Group targets 2

3 Optimize resource allocation Limit upfront cost & optimize cash allocation Objective: Capex + capitalized R&D capped at 800m Favor contracts that require lower Capex (new footprint expansion mainly in Asia) and lower capitalized R&D More cash allocated to "asset light" operations Priority to strategic OEMs Negotiate better financing terms with OEMs Quantitative criteria Maximum cash-out limit per contract (total added value generated by contract) IRR > 15% for Europe and North America (higher for other regions) Note: upfront cost = Capex + capitalized R&D; it ranges from 20% to 40% of one year of product sales 3

4 Regional perspective Europe Tight cost control to leverage rebound (when it comes) Keep market share stable: grow in line with light vehicle production Maintain focus on capacity utilization and efficiency Standardize materials and technologies Continue to optimize and rationalize the cost base (regroup factories, continue to take advantage of LCC) In 2014, full year effect of the 100m fixed cost reduction initiated in 2012 Return to above 4.0% operating margin by

5 Regional perspective North America Step change in operational improvement Take advantage of lower market growth to speed-up our transformation plan Fixed cost base is stabilized (no significant footprint expansion) Bring Mexico to industrial maturity Ambitious HR action plan: talent sourcing, management development and Faurecia University Complete SAP deployment (close to 30% at end of 2013) All sites to be fully FES (Faurecia Excellence System) compliant Reach 5.0% operating margin by

6 Regional perspective Asia Mastered growth Mature & stable organization: very talented local management team, low employee turnover, all Chinese management Very efficient "mother/daughter" plant system Significant customer opportunities (Nissan, Hyundai, Chinese OEMs, commercial vehicles) High teens growth rate to continue Secure operating margin above 7.0% 6

7 Regional perspective South America Leverage existing platform Limited cash allocation in the period Optimize our capacity utilization after a period of rapid footprint expansion Bring our industrial footprint to maturity (team stability, quality, master new technologies, FES full deployment) Significantly increase local content and sourcing Commercial management of inflation and volatility Breakthrough in profitability and focus on cash generation 7

8 Regional perspective Better balanced portfolio Product sales by region South America & rest of world South America & rest of world Asia 12% 6% Asia 17% 7% 28% 53% Europe 26% 50% Europe North America North America 8

9 Cash flow generation All levers to be activated Operating margin breakthrough: from 3.0% to a range of 4.5% - 5.0% (i.e. 50% increase) Working capital requirement (WCR) optimization Improve inventory turns by at least 1 day ( 50m improvement) Better buying conditions: align best practices across the regions and the BGs Limit WCR change to 5m for 1% sales change Increase factoring programs to offset change in WCR Receivables: additional countries and customers Tooling and R&D: to be included in new programs Capex and capitalized R&D capped at 800m Net cash flow positive in 2014 and around 300m in

10 Upgrade cash flow generation in 2016 Tight WCR control 5m additional for 1% sales change Capex and capitalized R&D capped at 800m Significant profitability increase from 3.0% to 4.5% - 5.0% OM Free cash flow before interest and tax of at least 80% of operating income Control of financial expenses (< 200m) and taxes (around 30% tax rate) Net cash flow around 300m 10

11 Debt & financing Reduce net debt & financial expenses The potential conversion of the 211m, 2015 convertible bond (OCEANE) will reduce pre-tax, full year financial expenses and cash-out by 15m and 9m respectively Debt reduction from net cash flow generation Rating improvement Increase factoring which is the cheapest way to be financed Net debt / EBITDA ratio of around 1.0x by

12 Debt & financing Financing strategy Objective to be 100% financed by capital markets (factoring customer receivables and issuing high yield bonds) Extend and balance maturities (5 years for the syndicated credit facility, 7 years for high yield bonds) Ensure liquidity and independence through a 5 year syndicated credit facility (> 1.0bn) with a limited number of international partner banks 12

13 Financial targets by Business Group FAURECIA Guidance 2016 Group total sales (in bn) Operating margin as % of total sales % around 3.0% > % to 5.0% * ROCE ** Net cash flow (in m) 13% % positive *** > 20% around 300 Total sales (in bn) Interior Systems Automotive Exteriors Emissions Control Technologies Automotive Seating > 4.5 > 2.0 > 7.4 > 7.1 Operating margin (% of total sales) Interior Systems Automotive Exteriors Emissions Control Technologies Automotive Seating 3.0% 2.4% 2.4% 3.8% around 2.5% around 2.0% around 3.0% around 4.0% > 4.5% 4.5% - 5.0% > 4.0% > 5.0% ROCE ** Interior Systems Automotive Exteriors Emissions Control Technologies Automotive Seating * depending on South American and European volumes 13% 11% around 20% 10% 10% > 20% 14% 17% around 25% 13% 14% > 20% ** pre-tax and including goodwill *** before restructuring (estimated at 120m) 13

14 Financial targets by region FAURECIA Guidance 2016 Group total sales (in bn) > 21.0 Operating margin as % of total sales 3.0% around 3.0% 4.5% to 5.0% * Total sales (in bn) Europe > 10.7 North America > 5.4 Asia > 3.8 South America & rest of world > 1.1 Operating margin (% of total sales) Europe 2.7% > 2.5% 4.0% - 5.0% North America Asia South America & rest of world * depending on South American and European volumes 1.9% 7.8% -2.6% close to 2.5% > 7.0% -2.0% 5.0% > 7.0% Breakthrough in profitability and focus on cash generation 14

15 Financial targets ROCE to increase by 50% between 2013 and 2016 ROCE * > 20% ROCE to increase from 14% in 2013 to > 20% in % 14% Increasing operating margin (from 3.0% to 4.5% - 5.0%) Asset turn to improve by 20bp to close to 5x * Pre-tax and including goodwill 15

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