Second half 2004 and annual results presentation - Bourse · 307.9 1,129.6 692.9 222.7 5,198.9 Sales increase with most OEMs DaimlerChrysler PSA Peugeot Citroën Ford Toyota Others

Second half 2004 and annual results

Pierre LéviPierre-Jean Sivignon 2005

17 February

2Second half 2004 and annual resultsProperty of Faurecia - duplication prohibited

Continued improvements

2H 2004 FY 2004Organic growth continues to surpass the auto market +7.2% +7.9%

Operating margin increases +0.3 pt +0.4 pt

Net debt declines €169m €198m

Net income 51.8 83.7 (x8)

Net income, excluding capital gains 20.8 52.7 (x5)


Agenda

2nd half 2004 key events

2nd half 2004 and annual results

Presentation of 2004 resultsunder IFRS

Outlook


Agenda




Outlook


Europe

North America

South America

China

2H 1H

> Change in volume per geographic region

2004 vs. 2003

Automotive production was flat in the 2nd half 2004

2004 vs. 2003

source : Faurecia

(0.2%) 1.6% 0.7%

(1.6%) 0.1% (0.7%)

26.8% 17.3% 22.2%

(6.7%) 37.1% 13.2%


*excluding catalytic converters at comparable sales and exchange rates

+15.0%

+12.0%

+8.4%

1H 2002 2H 2002

+4.0% +4.4%

1H 2003 2H 2003 1H 2004

1.6%

(1.3%)(4.3)%

+2.2%

Faureciasales*

European automotiveproduction(1.3%)

2H 2004

+7.2%

Our sales growth continues to outpace the European market

(0.2%)


Organic growth in all business activities

(in €m) 2H2004

% Change 2H 2003

FY2004

% Change 2003

Interior vehicle modules Automotive Seating 2,309.0 8.7% 4,784.7 9.9%

- at constant exchange rates 9.4% 10.8%Vehicle Interior 1,693.3 2.0% 3,500.9 (0.1%)

- at comparable sales and exchange rates 4.3% 4.1%

Other modulesExhaust Systems 840.7 11.6% 1,714.9 8.0%

- excluding catalytic converters and 490.3 2.9% 1,020.0 5.2% at comparable sales and exchange rates 10.1% 8.9%

Front end 355.9 4.0% 719.0 6.4%- at constant exchange rates 4.0% 6.4%

Total 5,198.9 6.5% 10,719.5 5.9%- excluding catalytic converters and 4,848.5 5.3% 10,024.6 5.5%at comparable sales and exchange rates 7.2% 7.9%


European automotive production flat in the 2nd half 2004> Production evolution per OEM

2H 2004 versus 2H 2003

source: Faurecia

Toyota +2.3%

547

737

1,319

208

1,644

1,108

1,045

747

185

493

8,033

Unit production(thousands)

+18.7%BMW

DaimlerChrysler

Fiat Group

Ford Group

GM Group

VW Group

Renault Nissan

- 2.4%

- 2.3%

- 0.9%

+2.4%

+7.4%

Others- 7.5%

- 5.4%

-0.2%

- 11.5%


Pontiac G6 Land Rover Discovery

Seat / components

Instrument panel / cockpit

Door panels

Exhaust systems

Front end

Acoustic package

Ford Freestyle Nissan Teana

> Major launches in 2nd half 2004

USA

USA USA China

Citroën C4Chevrolet Cobalt Ford Focus Mercedes A Class

Growth with most automotive manufacturers


432.4

451.9

77.1

1,490.2

394.2

307.9

1,129.6

692.9

222.7

5,198.9

Sales increase with most OEMs

DaimlerChrysler

PSA Peugeot Citroën

Ford

Toyota

Others

Renault Nissan

GM

BMW

VW

+39.2%

+3.1%

+12.7%

+15.6%

+14.0%

+19.3%

+0.9%

- 0.5%

- 4.1%

> Sales evolution per OEM2H 2004 versus 2H 2003

+6.5%

Sales perOEM (in €m)

source: Faurecia


Strong sales growth outside Europe

2H 2004

FY 2004

North America

+14%

+9%

Asia

+67%

+118%

South America

+36%+27%

> Sales per geographic region (local currency)


Disposal of non-core business in 2nd half 2004

Mechanics and Environment - Steering Columns

Sales (annual basis) €170m

Employees 950

Cash impact + €82m

Net capital gain (after tax) + €31m


1. Manufacturing process and redeploying the industrial footprint

2. Purchasing plan

3. Program management

4. R&D efficiency

Continued progress on improvement plans


France 266 (14.5)

Germany 303 (12.5)

Other 220 (7.7)

Total 2H 2004 789 (34.7)

Total 1H 2004 595 (23.9)

Total 2004 1,384 (58.6)

1. Manufacturing process and industrial redeployment

P&L impact 2004 (in €m)2H 2004

> New phase of restructuring

Employees


2003+9

2004+10

Neutraubling - Germany - JIT*Sittard - Netherlands - JIT*

Gorzow - PolandWalbrzych 2 – Poland

Riverside - USAPuebla 2 - MexicoKyong Ju - KoreaWuhan 2 - ChinaKyushu - JV Japan - JIT*

Poissy - France - JIT*Rastatt - Germany - JIT*

Kosice - SlovakiaTalmaciu - Romania

Auburn Hills - USA - JIT*Lordstown - USA - JIT*Hermosillo - MexicoRosslyn – South Africa -JIT*Changchun 3 - ChinaWuxi - China

Roermond - NetherlandsSassenburg - GermanySontra - GermanyTelford - UK

-4Norfinch - Canada

-1

15

2005+9

Leipzig - Germany - JIT*

Jelcz - PolandWalbrzych - PolandTrnava - Slovakia - JIT*Hlohovec - SlovakiaLozorno - Slovakia - JIT*

Toluca - Mexico - JIT*Cleveland - USAChangchun 4 - China

* JIT: Just in Time Plant

Openings

Closures

> Redeployment of industrial footprint


Western Europe

Central Europe

Outside Europe

Second half 2004 and annual resultsProperty of Faurecia - duplication prohibited


67

36

100

48

29

2002 2003 2004

100

Safety

Quality

> Improvement in industrial practices


Index: 2002 = 100


2. Purchasing plan

Reduced number of suppliers

Increased sourcing in low-cost countries

Wider use of e-purchasing

Improved quality of purchased parts

> Key actions in 2004


3. Program management

Flat start-up costs in 2004

5

SERIES PRODUCTION

Gate Review

4SOP

Gate Review

3PRODUCTION SET-UP & PRE-SERIES

Gate Review

2PRODUCT & PROCESS DESIGN & DEVELOPMENT

Gate Review

1CUSTOMER INQUIRY

AWARD PROGRAM

PROPOSAL LAUNCH

> PMS (Program Management System)

LAUNCHTOOL

PRODUCTION PART APPROVAL


4. R&D efficiency

Opening of D&D center in Japan (Shin-Yokohama)

"1,000 ideas" initiative: 50% achieved

Key R&D Figures

5,000 engineers / technicians28 R&D / D&D centers5.6% of 2004 sales


Agenda




Outlook


Continuous improvement in operating margin

Sales 5,198.9 4,880.7 6.5%

EBITDA 330.8 308.7 7.2%% of sales 6.4% 6.3%

Operating income 165.3 141.5 16.8% % of sales 3.2% 2.9%

10,719.5 10,122.7 5.9%

706.0 637.1 10.8%6.6% 6.3%

366.3 302.8 21.0%3.4% 3.0%

Key figures (in €m) 2004 2003 % change2H 2004 2H 2003 % change


Better operating margin liftedby improved gross margin

Sales 5,198.9 4,880.7 6.5%

Gross margin 443.0 395.1 12.1%% of sales 8.5% 8.1%

R&D expensesGross 300.2 259.8 15.6%Net 126.3 105.3 19.9%% of sales 2.4% 2.2%

SG&A expenses 151.4 148.3 2.1%% of sales 2.9% 3.0%

Operating income 165.3 141.5 16.8%% of sales 3.2% 2.9%

10,719.5 10,122.7 5.9%

952.8 839.2 13.5%8.9% 8.3%

596.5 532.3 12.1%272.8 240.6 13.4%2.5% 2.4%

313.7 295.8 6.1%2.9% 2.9%

366.3 302.8 21.0%3.4% 3.0%

2004 2003 % change2H 2004 2H 2003 % changeIncome statement(in €m)


Improved operating margin in both business segments

Key figures (in €m) 2004 2003 % change2H 2004 2H 2003 % change

8,285.6 7,858.9 5.4%

7.9%3.3% 2.9%

2,433.9 2,263.8 7.5%

1,739.0 1,645.2 5.7%

7.9%3.9% 3.3%

3.4% 3.0%

Vehicle interior modules Sales 4,002.3 3,784.9 5.7%at comparable sales and exchange rates 7.2%Operating margin (%) 3.0% 2.7%

Other modulesSales 1,196.6 1,095.8 9.2% Sales excluding monoliths 846.2 818.7 3.3%at comparable sales and exchange rates 7.5%Operating margin (%) 3.8% 3.7%

TotalOperating margin (%) 3.2% 2.9%


Improved net income in the 2nd half 2004

Operating income 165.4 3.2% 141.5 2.9%Net interest expenses (40.3) (40.1)Other net income and (expenses) 13.3 (23.1)Corporate income taxes (31.5) (21.7)

Net income before amort. of goodwill 106.8 2.1% 56.6 1.2%Equity in net income of companies accounted for by the equity method 7.9 (2.9) -Amortization of goodwill (57.8) (53.6)

Net income before minority interest 56.9 1.1% 0.1 -Minority interests (5.1) (6.2)

Net income 51.8 1.0% (6.1)

Net income 20.8 0.4% (6.1) (0.1)%excluding impact from disposals

2H 2003 % change2H 2004 % changeIncome statement (in €m)


Strong rise in net income

Operating income 366.3 3.4% 302.8 3.0%Net interest expenses (74.2) (82.9)Other net income and (expenses) (17.5) (32.7)Corporate income taxes (72.4) (54.7)

Net income before amort. of goodwill 202.2 1.9% 132.5 1.3%Equity in net income of companies accounted for by the equity method 7.3 1.3 -Amortization of goodwill (114.6) (110.4)

Net income before minority interest 94.9 0.9% 23.4 0.2%Minority interests (11.2) (13.3)

Net income 83.7 10.1

Net income excluding impact from disposals 52.7 10.1

2003 %2004 %Income statement (in €m)


Improved return on capital employed

Cash flow statement (in €m)

531.8 434.53.0 (96.9)

534.8 337.6

(378.3) (344.9)(29.0) (13.3)

70.7 32.0

198.2 11.4

22.3 18.2

2004 20032H 2004

Cash flow from operations 238.2(Increase) / decrease in working capital req. 30.1

Net cash provided by operating activities 268.3

Capital expenditure (197.5)Net financial investments (4.7)Other 102.9

(Increase) / decrease in net financial debt 169.0

Cash flow from operations per share (€m) 9.9

ROCE (excluding goodwill) 11.3% 9.4%

ROIC (including goodwill) 6.4% 5.2%


31 December2002

31 December2003

31 December2004

Reduction in debt

31 December2002

1,707.1 1,695.7

31 December2003

31 December2004

Net financial debt (in €m) Gearing

0.90 0.93

0.791,497.5


Agenda




Outlook


IFRS balance sheets as of January 1, 2004 and December 31, 2004 with comparatives

2004 IFRS income statement with comparatives

French GAAP/IFRS reconciliation: shareholders’equity as of January 1, 2004 and December 31, 2004and 2004 net income

Explanatory notes on IFRS restatements

> Calendar

February 17, 2005 - Publication of:

Transition to IFRS


July 21, 2005Publication of IFRS interim financial statements ending June 30, 2005, with 2004 first-half and 2004 full-year comparatives

Transition to IFRS

> Calendar


Usual position:

Development costs recognized as intangible assets

Amortization of development costs included in EBITDA

In some cases, contractual terms require development costs to be recognized as inventory

Transition to IFRS

Order-specific development costs (IAS 38)1


Transition to IFRS

Development costs (IAS 38)

Impact on 2004 operating margin €4.5m

Impact on balance sheet as of January 1, 2004 (in €m)

Intangible assets 426.6

Inventories

3.9

(422.7)

1

Shareholders’ equity 3.9(before tax effect)

3.9


In some cases, contractual terms will require recognition in property, plant and equipment

Transition to IFRS

Order-specific tooling (IAS 16)2

No impact on 2004 net income


Property, plant & equipment 25.9

Inventories (25.9)

0


For acquisitions after January 2001

Elimination of goodwill amortization (straight line over 20 years) recognized since 2001

Restatement of goodwill

Valuation of assets and liabilities identifiable at the time of acquisition, with advice from independent expert

Amortization of identifiable intangible assets

Transition to IFRS

Business combinations (IFRS 1 & 3)3

For acquisitions prior to January 2001, eliminationof amortization from January 1, 2004


Goodwill (254.8)Contractual customer relationship

(135.4)

Transition to IFRS

Business combinations (IFRS 1 & 3)3Impact on balance sheet as of January 1, 2004 (in €m)

119.4

Impact on operating income

Amortization of contractual customer relationship: (€119.4m)

Shareholders’ equity (135.4)(before tax effect)

(135.4)

Acquisitions after January 2001:- Amortization of contractual customer relationship- Elimination of goodwill amortization €62.1m

Acquisitions prior to January 2001:- Elimination of goodwill amortization €52.5m

Impact on 2004 net income (before tax effect)

(€4.8m)

(€119.4m)


Transition to IFRS

For all acquisitions, impairment test at least once a year (IAS 36)

Impairment test on goodwill (IAS 36)4


Actuarial gains and losses offset against shareholders’ equity as of January 1, 2004

In the future, the impact of discounting and of the return on pension plan assets will be included in net interest expenses

Transition to IFRS

Retirement benefit obligations (IFRS 1 & IAS 19)5


Transition to IFRS

Retirement benefit obligations (IFRS 1 & IAS 19)5

Shareholders’ equity (125.8) (before tax effect)

Retirement benefits

Debt (7.6)

Other liabilities


Impact on 2004 net income (before tax effect) €6.6m

119.8

13.6

0



Securitized receivables moved back onto the balance sheet

Transition to IFRS

Securitization of trade receivables (SIC 12)

Net debt 193.8 26.1

January 1, 2004

December 31, 2004

Impact on balance sheet (in €m)

6


Revision of depreciation periods for property, plant and equipment, with assets split into separate components

Transition to IFRS

Property, plant & equipment and depreciation (IAS 16)7

Impact on balance sheet as of January 1, 2004

Impact on 2004 operating margin €15m

Shareholders’ equity (before tax effect) (€0.3m)


A number of contracts reclassified as finance leases- Property lease obligations- Forklift fleet

Transition to IFRS

Leases (IAS 17)


PP&E 25.9 Debt 25.9


8

Impact on 2004 net income (before tax effect) €0.4m


Impact on 2004 net financial expenses €0.3m

Transition to IFRS

Interest rate hedges (IAS 39)

The instruments currently used do not qualify under IFRS strict criteria for effective hedges of Faurecia's debt

These hedging instruments will be marked to market

Changes in value will be shown as a financial itemon a separate line in the income statement

Shareholders’ equity (before tax effect) (€8.5m)


9

Net debt €5.4m


Reclassification within shareholders’ equity: cumulative translation adjustment now part of consolidated reserves

Transition to IFRS

Translation of accounts of foreign companies (IAS 21)

Translation adjustment: €136.6m

Consolidated reserves: (€136.6m)


10


Shares allocated to stock option plans previously accounted for as current assets, will now be recognized at cost as a deduction from shareholders’ equity

Transition to IFRS

Treasury stock (SIC 16)

Shareholders’ equity (€15.1m)


11


Recognition of deferred tax assets and liabilities arising on IFRS restatements

Some deferred tax assets have been written down as their recoverability was deemed to be uncertain

Transition to IFRS

Deferred taxes (IAS 12)


Impact on 2004 net income €25.5m

12

Deferred tax assetsShareholders’ equityDeferred tax liabilities 47.0

19.4

19.4(27.6)

19.4


% sales

Transition to IFRS> Impact of IFRS on 2004 operating margin

In €m

2004 operating margin under French GAAP 366.3 3.4

Capitalization of development costs 4.5Restatement of non-current assets 15.0 Finance leases 2.1 Neutralization of actuarial gains & losses 16.4 Restatement of stock option plansMeasurement of currency hedges 1.6 Other items

2004 operating margin under IFRS beforeamortization of contractual customer relationship 402.9 3.8

Amortization of contractual customer relationship

2004 operating margin under IFRS 283.5 2.6

Impact of restatements (€82.8m)

(1.7)

(1.3)

(119.4)


2004 net income under French GAAP

Impact of restatements on operating income (82.8)Impact on other income and expensesImpact on net financial expenses

Retirement benefit obligations (9.7)Measurement of currency and interest rate instruments (3.6)Other items (2.4)Impact on income taxes

Elimination of goodwill amortizationMinority interests (0.3)

2004 net income under IFRS

Net income

Transition to IFRS

> French GAAP/IFRS reconciliation: 2004 net income

25.5114.6

130.7

83.7

5.7

(in €m)


January 1,2004

December 31,2004

> French GAAP/IFRS reconciliation: shareholders’ equity

Transition to IFRS

January 1,2004

December 31,2004

(135.4)(125.8)

(0.3)

(8.5)(27.6)(15.1)(0.3)

(140.2)(116.0)

(8.2)(1.8)

(14.1)

(in €m)

Shareholders’ equity under French GAAP 1,830.3 1,896.0

Impact of restatementsCapitalization of development costs 3.9 8.2Restatement of goodwillNeutralization of actuarial gains & losses Restatement of non-current assets 15.1 Finance leases 0.4 Measurement of interest rate hedges Deferred tax assetsTreasury stockOther items 0.3

Minority interests 0.6 0.3

Shareholders’ equity under IFRS 1,521.8 1,640.0


January 1,2004

December 31,2004

> French GAAP/IFRS reconciliation: net debt

Passage aux normes IFRS

January 1,2004

December 31,2004

Net debt under French GAAP 1,695.7 1,497.5

Impact of restatementsSecuritization 193.8 26.1Interest rate instruments 5.4 8.4Finance lease 25.9 22.6 Retirement benefit obligationsDeferred expenses

Net debt under IFRS 1,909.7 1,543.3

(7.6)(3.5)

(7.2)(4.1)

(in €m)


FrenchGAAP IFRS

> Comparison of 2004 consolidated income statements

Transition to IFRS

Sales 10,719.5 Operating expenses

Operating margin before 402.9 amortization of contractual customer relationship 3.8%

Amortization of contractual customer relationship

Operating margin after 283.5 amortization of contractualcustomer relationship 2.6%

Sales 10,719.5Operating expenses

Operating income 366.3

3.4%

(10,353.2) (10,316.6)

(119.4)

(in €m) (in €m)


FrenchGAAP IFRS

> Comparison of 2004 consolidated income statements

Transition to IFRS

(74.2)(17.5)

(11.8)(75.9)(14.0)

(46.9)

(114.6)

(11.2)

(72.4)

Operating income 366.3

3.4%

Net interest expensesOther incomes and expenses (net)

Income before tax and amortization of goodwill 274.6

Corporate income taxes

Income before amortization of goodwill 202.2

Net income from companies accounted for by the equity method 7.3

Amortization of goodwill

Net income before minority interests 94.9

Minority interests

Net income 83.7

Operating margin after 283.5 amortization of contractual customer relationship 2.6%

Other operating incomes and expensesNet interest expensesOther financial incomes and expenses

Income before tax andamortization of goodwill 181.7

Corporate income taxes

Income before amortization of goodwill 134.9

Net income from companies accountedfor by the equity method 7.3

Net income before minority interests 142.2

Net income 130.7 Minority interests 11.5

(in €m) (in €m)


FrenchGAAP

IFRS FrenchGAAP

IFRS

> Comparison of balance sheets as of January 1, 2004

Transition to IFRS

Goodwill 1,785.0 1,530.2

Contractual customer relations 119.4

Development costs 426.7

PP&E (net) 1,484.3 1,516.3

Other fixed assets 108.7 96.3

Total fixed assets 3,378.0 3,688.9

Deferred tax assets 152.5 171.9

Inventories 978.3 529.2

Other assets 2,016.9 2,174.3

Total assets 6,525.7 6,564.3

Shareholders’ equity 1,830.3 1,521.8


Reserves for retirementbenefit obligations 122.3 242.1

Other reserves & LT liabilities 190.0 170.7

Net debt 1,695.7 1,909.7

Deferred tax liabilities 80.8 127.8

Other liabilities 2,543.9 2,530.1

Total liabilities & equity 6,525.7 6,564.3

(in €m) (in €m)


Shareholders’ equity 1,896.0 1,640.0


Reserves for retirementbenefit obligations 132.4 239.9

Other reserves & LT liabilities

Net debt 1,497.5 1,543.3

Deferred tax liabilities 97.1 103.3

Other liabilities 2,643.2 2,631.2

Total liabilities & equity 6,490.9 6,365.6

FrenchGAAP IFRS French

GAAP IFRS

> Comparison of balance sheets as of December 31, 2004

Transition to IFRS

163.5 147.0

Goodwill 1,688.0 1,546.0

Development costs 514.0

PP&E (net) 1,488.6 1,534.5

Other fixed assets 100.1 84.2

Total fixed assets 3,276.7 3,678.6

Deferred tax assets 141.1 147.3

Inventories 1,023.3 490.7

Other assets 2,049.8 2,049.0

Total assets 6,490.9 6,365.6

(in €m) (in €m)


Agenda




Outlook


source: Faurecia

European automotive production should decline in 1H 2005

Europe

North America

South America

China

1H 2H2005 vs. 2004 2005 vs.

2004

(1.2%) (0.5%) (0.8%)

(2.9%) 4.3% 0.5%

3.0% 3.0% 3.0%

(4.0%) 27.0% 10.0%


Main launches in 1st half 2005 per OEM

Peugeot 1007 Peugeot 206 (China)

Citroën C6

BMW Série 3

Renault Clio

VW PassatVW Golf Plus

VW Jetta (Mexico)

Chrysler PT Cruiser (Mexico)


Carbon steel 780 4%Stainless steel 190 2%

Total steel 970 6%

Plastic 443 6%

Raw materials challenge in 2005

FY 2004 volume(thousands of tons)

Percentage of 2004 sales

> Direct and indirect purchasing

Documents

Second half 2004 and annual results presentation - Bourse · 307.9 1,129.6 692.9 222.7 5,198.9 Sales increase with most OEMs DaimlerChrysler PSA Peugeot Citroën Ford Toyota Others