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Faurecia cancels dividend to save cash amid Europe slump

By: AUTOMOTIVE NEWS

February 19, 2013

PARIS -- Faurecia SA cancelled its dividend for 2012 to conserve cash with auto demand in its home region set to decline.

Faurecia forecast neutral cash flow in 2013 before accounting for restructuring expenses of 120 million euros ($161 million) to 140 million euros, the French parts supplier said Feb. 2. Operating profit is targeted to rise this year on lower costs in Europe and higher sales in North America.

"The action plan we have under way to offset the ongoing drop in European vehicle production and focus on cash generation will enable us to see an improvement in our performance," CEO Yann Delabriere said in a statement.

Faurecia, 57-percent-owned by struggling PSA/Peugeot-Citroen, plans to cut about 3,000 jobs in its home region, or 7.5 percent of the work force, by the end of this year. Like its ailing parent company, the part-maker is retrenching, with European auto demand poised to fall for the sixth straight year in 2013.

Faurecia said vehicle sales in Europe may decline by 4-5 percent this year. Europe's car market is forecast to drop to 12.3 million vehicles in 2013, 23 percent below the pre-2008 financial crisis peak, IHS Automotive estimates.