Financial strategy and targets

Transcription

Group financial strategy and targets
Michel Favre
Chief Financial Officer
Investor day • November 25, 2013
Cash generation is a key priority
Optimize resource allocation
Regional perspective
Cash flow generation
Property of Faurecia - Duplication prohibited
Debt & financing
Group targets
2
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
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 2016
4
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 2016
5
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
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
Better balanced portfolio
Product sales by region
2013
2016
South America
& rest of world
South America
& rest of world
Asia
7%
6%
12%
Asia
53%
Europe
50%
28%
North
America
17%
Europe
26%
North
America
8
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 2016
9
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
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
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Increase factoring which is the cheapest way to be financed
Net debt / EBITDA ratio of around 1.0x by 2016
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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
Financial targets by Business Group
FAURECIA
2012
2013 Guidance
2016
Group total sales (in €bn)
17.4
17.8 - 18.0
> 21.0
Operating margin
as % of total sales
3.0%
around 3.0%
4.5% to 5.0% *
ROCE **
Net cash flow (in €m)
13%
-410
14%
positive ***
> 20%
around 300
Total sales (in €bn)
Interior Systems
Automotive Exteriors
Emissions Control Technologies
Automotive Seating
4.4
1.8
6.1
5.2
4.5
1.9
6.2
5.3
> 4.5
> 2.0
> 7.4
> 7.1
Operating margin (% of total sales)
Interior Systems
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 Seating
13%
10%
14%
13%
11%
10%
17%
14%
around 20%
> 20%
around 25%
> 20%
* depending on South American and European volumes
** pre-tax and including goodwill
*** before restructuring (estimated at € 120m)
13
Financial targets by region
FAURECIA
2012
2013 Guidance
2016
Group total sales (in €bn)
17.4
17.8 - 18.0
> 21.0
Operating margin
as % of total sales
3.0%
around 3.0%
4.5% to 5.0% *
Europe
9.6
9.6
> 10.7
North America
4.5
4.7
> 5.4
Asia
2.1
2.5
> 3.8
South America & rest of world
1.1
1.1
> 1.1
Europe
2.7%
> 2.5%
4.0% - 5.0%
North America
1.9%
close to 2.5%
5.0%
Asia
7.8%
> 7.0%
> 7.0%
South America & rest of world
-2.6%
-2.0%
Breakthrough in profitability
and focus on cash generation
Total sales (in €bn)
Operating margin (% of total sales)
* depending on South American and European volumes
14
Financial targets
ROCE to increase by 50% between 2013 and 2016
ROCE *
> 20%
13%
2012

ROCE to increase
from 14% in 2013
to > 20% in 2016

Increasing operating
margin (from 3.0%
to 4.5% - 5.0%)

Asset turn to improve
by 20bp to close to 5x
14%
2013
2014
2015
2016
* Pre-tax and including goodwill
15

Financial strategy and targets

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