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Forvia targets sales of around 30 billion euros in 2025

(Reuters) -Forvia, the European car parts maker born from Faurecia's takeover of Hella, said on Thursday it expected to reach around 30 billion euros ($29.5 billion) in sales in 2025, with an operating margin of over 7% of sales, as it works to reduce debt and cut costs.

The company lowered its assumption of global automotive production for 2025 to 88 million units, down by 6 million from its previous forecast, citing "tough macroeconomic conditions between 2021 and 2023".

The group sees higher energy costs for 2023, but also a continued disruption in the supply of semiconductors that will ease but not resolve, Faurecia CEO Patrick Koller said in a call with journalists.

"Uncertainty is becoming the new normal," he added.

The group is also targeting net cash flow at 4% of sales in 2025.

"At first glance the financial targets outlined for 2025 are cautious," J.P.Morgan analysts wrote in a note.

For the current financial year, the group in October forecast an operating margin of between 4% and 5% and sales between 24.5 billion and 25.5 billion euros.

Ahead of its investor day presentation, Forvia said its 2025 strategy would prioritise reducing debt and costs, along with "robust and selective" growth.

Commenting on cost cuts, Koller said the plan was "to go fast", enabled by synergies between Faurecia and Hella and a reduction in research and development spending, among others.

Faurecia, which sealed its takeover of the German automotive lighting group in January with the combined entity taking the name Forvia, is now seeking to reduce debt.

Through a mix of improved cash generation and divestments, Faurecia will cut its net debt to around 6 billion euros by the end of 2025, from 8.4 billion on June 30, it said.

Faurecia will not be paying a dividend in 2023, it added.

($1 = 1.0179 euros)

(Reporting by Valentine Baldassari; editing by Milla Nissi)