Nantes, France — Faurecia, an automotive interiors company, generated sales of EUR 6.17bn in the first half of 2020. This is a fall of 31% compared with the same period in 2019.
The company made an operating loss of EUR 114m. In the same period in the previous year operating income was EUR 645m.
The company said it was hit by coronavirus shutdowns in the North American and European automotive sectors. This disproportionately affected the business. This is because although 46% of the worlds' vehicles are made in these areas, 76% of Faurecia's sales are generated in those regions.
But in the second quarter all regions posted strong performance, said the company.
Lower sales fed through to lower profits because cutting EUR 563m from costs could not keep pace with the decline in sales. Faurecia said it laid off staff, and reduced production where possible, it cut R&D as well as sales general and administration costs.
To generate cash in the half, the company also sold more of its debt to factors, drew half of its EUR 1.2bn credit facility and took a further EUR 800m loan which it will pay for with bonds in the future.
In the company's seating business, sales fell by 38% between the first half of 2019 and 2020. They were EUR 2.27bn in the first half of 2020.
The division made an operating loss of EUR 23m in the first half of 2020.
Over the rest of the year, the company plans to reduce R&D by 10%-15%, and reduce capex by 40%. It has earmarked EUR230m to restructure its plants. These and other measures should return the company to 'solid profit and cash generation in H2 2020.'
Faurecia said it is assuming sales will be around EUR 7.6bn in the second half, and it expects an operating margin of 4.5%.
It said the global automotive market could be 64m units in 2020. This compares with 85m produced in 2019. The number of cars built could rise to 85m vehicles in 2022, forecasts before coronavirus suggested that market could be 87m vehicles in that year.