Forvia sees flat sales as wages and energy cost rise, eyes Asia investments
(Reuters) -Forvia, the European car parts maker born from Faurecia's takeover of Hella, on Monday forecast stable 2023 sales as higher wage and energy costs are balanced by easing raw materials prices, adding it sees opportunities for growth in the Asian market.
Following more than two years of pandemic disruptions, the automotive sector has seen continued supply chain obstacles due to Chinese lockdowns and Russia's invasion of Ukraine.
"If there is an opportunity for further growth, it will be Asian," Faurecia's chief executive Patrick Koller told reporters. Asia accounted for 27% of 2022 total sales for the group. "We cannot not consider the only region which will have a relative weight of more than 50% of the world production, which is growing. It's not a handicap, it's an advantage to be strong in Asia," Koller told analysts when asked about potential future investments in different regions.
He added that investing in Asia was not risky as long as Forvia focuses on improving its performance in Europe and in North America to reach comparable profitability in all regions, which is currently not the case.
Still, Koller does expect a good first quarter in China where COVID-19 restrictions were lifted in December.
Globally, Faurecia estimates 2023 automotive production of 82 million vehicles, in line with 2022.
While inflation alone generated more than 1 billion euros of additional costs last year compared to 2021, the group had mostly managed to pass this on to customers, and expects this hit to be "significantly lower" this year.
However, "what will be different in 2023 is that we will also have wage inflation and energy inflation," Koeller said.
Forvia, which sells seats, dashboards and fuel systems to carmakers, targets sales of 25.2 billion euros to 26.2 billion euros ($26.9-$28.0 billion) in 2023, against 25.5 billion euros last year.
It sees an annual operating margin of between 5% and 6%, compared with 4.4% last year, and a net cash flow exceeding 1.5% of sales.
($1 = 0.9355 euros)
(Reporting by Dagmarah Mackos in Gdansk; Editing by Milla Nissi and Louise Heavens)