Capital Markets Day May 15, 2018 Faurecia Transformation
Agenda 1 2020 financial targets 2 Sustainable Mobility update 3 Smart Life on Board 4 2025 ambition Capital Markets Day – May 15, 2018 2
Between 2014 and 2017, Faurecia continuously increased value creation… ACCELERATED MOMENTUM IN SALES INCREASED OPERATING MARGIN €1,170m €17.0bn €595m €13.8bn 6.9% CAGR of sales +260bps 4.3% +7.2% of sales 2014 2017 2014 2017 IMPROVING NET CASH FLOW ENHANCED ROCE 28% €435m 25% 6.9% 22% €216m 2.6% of sales > 2x 16% 1.6% of sales 2014 2017 2014 2015 2016 2017 Capital Markets Day – May 15, 2018 3
…and accelerated investment in innovation whilst strengthening financial flexibility INVESTMENT IN INNOVATION (€m) STRENGHTENED NET DEBT / EBITDA RATIO Objective: innovation spend > €200m 160 1.3x 130 +23% 105 0.2x 2015 2016 2017 2014 2017 SUCCESSFUL REFINANCING DRAMATIC IMPROVEMENT IN CREDIT RATING Bonds ◼ €700m €700m Rating 2014 Currently Notch Improvement 3.1% 3.6% 2.6% S&P N/A BB+ N/A Fitch BB- BB+ + 2 Moody's B1 Ba1 + 3 2019 2020 2021 2022 2023 2024 2025 Towards investment grade from 2020 Undrawn €1.2bn bank syndicated line until June 2023 ◼ Capital Markets Day – May 15, 2018 4
Market trends and assumptions AUTOMOTIVE MEGATRENDS (CARE) AUTOMOTIVE PRODUCTION GROWTH 2018-2025 C ONNECTED A UTONOMOUS Europe c. +1% North Asia / America China c. +0.5% c. +3% South America R IDE-SHARING E LECTRIFIED c. +5% Worldwide c. +2% Currency assumptions: USD/€ @ 1.22, CNY/€ @ 7.80 from 2018 Capital Markets Day – May 15, 2018 5
Powertrain mix assumptions Light vehicles 92m 107m 113m vehicles vehicles vehicles ◼ Pure ICE powertrains drop from 95% in 2017 1% Fuel cell EV 2% 8% to 52% in 2030 4% 11% Battery EV 30% ◼ Diesel powertrain decline might accelerate further 35% Hybrid 77% ◼ Fuel cell is the unique zero emissions alternative 50% ◼ High regional variation in EV take up by 2025 43% Gasoline ◼ US around 5% ◼ China and Europe above 12% 18% 12% Diesel 9% 2017 2025 2030 Capital Markets Day – May 15, 2018 6
Autonomous vehicle assumptions AUTOMATION LEVELS 5 Full No more driver required ◼ Level 4 will be the most common automation level automation adopted by 2025 for autonomous vehicles 4 Full autonomous drive High ◼ Light vehicles are already "autonomous" in specific environments automation for 3 out of 4 passengers 3 Driver has to take control Conditional ◼ Hardware will come first, ahead of software back from car at any time automation for which over-the-air updates are possible 2 Limited autonomous drive ◼ Assumption of autonomous (levels 3 & 4) vehicles: Partial in very specific conditions automation ◼ 10% by 2025 1 ◼ 20% by 2030 Limited lateral Driver or longitudinal control Assistance Capital Markets Day – May 15, 2018 7
Our 2020 financial targets confirm our strong potential for value creation 2020 FINANCIAL TARGETS Operating Margin Net Cash Flow Sales target target target > €20bn 8% of sales 4% of sales Capital Markets Day – May 15, 2018 8
Sales growth to reach > €20bn is secured for 2020 2020 Sales target > €20bn RECORD 2015-2017 ORDER INTAKE SALES IN CHINA c. €4.5bn Record 2015-2017 order intake and current CAGR €62bn ◼ x2 +15% order book secure growth at > 7% CAGR Non €53bn €2.2bn C-OEMs €47bn Commercial vehicles CAGR > 15% ◼ C-OEMs 40% driven by regulation in China and India 16% 2013-2015 2014-2016 2015-2017 2017 2020e 15 new customers in 2017 ◼ > 95% of 2020 SALES SECURED Sales in China to double > €20bn ◼ CAGR >7% 70% CAGR with Chinese OEMs Targeted ◼ €17bn <5% Order intake represented €6.7bn in 2017 ◼ Awarded 50% addressable 2015 2017 2020 market China global 32% 43% > 60% Current 45% Chinese OEMs 25% 46% 66% 2017 2018e 2019e 2020e Capital Markets Day – May 15, 2018 9
Profitable growth driven by geographic, product and customer mix 2020 OM target 8% of sales SALES BY REGION SALES BY CUSTOMER TYPE Favorable regional mix Favorable customer mix RoW Premium & SUVs (incl. EVs) Strong growth in Asia drives ◼ €8.0bn 6% margin improvement Asia €6.7bn 17% 2017 50% Europe High technology content ◼ €17bn 2017 2020e on SUV & premium North 26% Chinese OEMs (growth accelerates from 2020) America €1.8bn Electronics and software RoW ◼ €0.4bn integration 4% Asia 2017 2020e 25% New Value Spaces Order intake for New Value ◼ 2020e €2.0bn Europe 48% Spaces represents €3.5bn >€20bn in lifetime sales €0.5bn 23% North America 2017 2020e Capital Markets Day – May 15, 2018 10
"Global R&D Power" and "Blockchain for Program Management" Improving engineering efficiency 2020 OM target 8% of sales R&D HOURLY RATE ROADMAP 30% reduction in hourly rate through best-shoring ◼ €70 +1,200 engineers in India ◼ €64 €60 €55 2018- 2020 cumulated savings of c. €100m €50 FY 2020 savings of c. €50m (vs. 2017) -20% hours/application through digital productivity ◼ 2016 2017 2018e 2019e 2020e e-Kanban and automated design ◼ Artificial Intelligence for design to cost GLOBAL BEST-SHORING MIX ◼ Reduce development time from 36 months (OEM timing) to ◼ 20-22 months (Faurecia timing) using blockchain technology 35% Increase accountability and efficiency 55% MCC + LCC ◼ through work packages 65% Transparency and trust with customers and suppliers 45% ◼ HCC 2020e Savings not included/pilot phase started 2016 2019 ◼ Capital Markets Day – May 15, 2018 11
"Operations Execution and Transformation" Increased industrial efficiency 2020 OM target 8% of sales ◼ Plant ranking and program/plant risk assessment allow short and mid-term risk management to improve anticipation and reduce need for reactivity ◼ Acceleration in digital transformation Tooling automation ◼ Manufacturing and logistics ◼ Quality control ◼ Management processes ◼ ◼ Process Control Towers to merge data analysis and process expertise to further reduce variability and improve predictive maintenance 2018- 2020 cumulated savings of c. €280m, o/w around 50% from robots and AGVs FY 2020 savings of c. €150m (vs. 2017) Capital Markets Day – May 15, 2018 12
"Global Business Services" Leaner cost structure 2020 OM target 8% of sales EUROPE Sao Joao de Madeira Poland (Portugal), Grojec (Poland) Covering 5 support functions: ◼ Finance, Purchasing Administration, NORTH AMERICA Sales administration, HR and IT Changchun Puebla (Mexico) Centralization from 34 primarily ◼ Portugal Pune HCC locations to 5 main regional operations centers in LCCs Mexico ASIA India: Global Purchasing Support ◼ Brazil Changchun (China), Platform launched in Pune Pune (India) Leverage existing SAP with 100% ◼ implementation throughout the SOUTH AMERICA Group Curitiba (Brazil) 2018- 2020 cumulated savings of c. €120m FY 2020 savings of c. €50m (vs. 2017) Capital Markets Day – May 15, 2018 13
We target an 8% operating margin in 2020, up 110bps vs. 2017, 2020 while accelerating R&D and innovation OM target 8% of sales -100 bps +25 bps +25 bps Positive contribution from +75 bps ◼ Global R&D increased volumes (+23%) Global Power NVS -35 bps Business puts us above 8% OM Services +120 bps R&D/ 8.0% Innovation Operations Flexibility Execution Our Group transformation ◼ and Transformation projects will finance our 6.9% Innovation in New Value ◼ Operating Spaces leverage Digital productivities ◼ OM OM 2017 2020 Capital Markets Day – May 15, 2018 14
We target to increase cash generation to 4% of sales 2020 Net Cash Flow 4% of sales CONVERT2CASH INITIATIVE TO STRENGTHEN CASH CULTURE Drive the cash conversion cycle ◼ At least 60% D&D paid at launch ◼ Tooling paid in full 3 months after launch +40 bps -45 bps ◼ +40 bps -35 bps Accelerate overdue collection -10 bps 4.0% ◼ +140 bps Capex WCR (< 0.5% of sales) prioritization from sales Conversion Regional growth cycle mix €800m Inventory converging to benchmark ◼ acceleration (China) 2.6% (4.7% of sales) EBITDA Increase volumes per supplier ◼ €435m increase against improved payment terms Order intake selectivity based on IRR ≥ 15% ◼ NCF NCF Review make-or-buy of cash-dilutive ◼ 2017 2020 product lines and manufacturing processes Capital Markets Day – May 15, 2018 15
Cash allocation strategy focused on bolt-on acquisitions and fair shareholder remuneration ◼ Between 2018 and 2020, Faurecia will generate c. €2bn of cumulated net cash flow ◼ Focus on bolt-on acquisitions in line with strategic priorities: ◼ New Value Spaces for Smart Life on Board and Sustainable Mobility ◼ Increased presence in fast-growing Asian markets, mainly China ◼ Strict financial criteria: − IRR ≥ 15% − EPS and cash flow accretive within 24 months ◼ Fair shareholder remuneration through increase in dividend along with increase in profits ◼ Return of excess cash to shareholders is a mid-term option Capital Markets Day – May 15, 2018 16
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