Forvia trims outlook on low auto demand, eyes deals with Chinese carmakers (updated)
24/07/2024 08:51
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Forvia lowers sales, margin forecasts on sluggish auto
demand
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Flags 47 mln euro hit from supplier dispute in Mexico
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Seeks deals with Chinese carmakers setting up in Europe
(Adds details on supplier dispute paragraphs 1,4, potential
deals with Chinese carmakers in paragraphs 6-8, background
paragraph 9)
By Nathan Vifflin
July 24 (Reuters) - Forvia FRVIA.PA , the world's
seventh largest car parts supplier by revenue, cut its sales and
margin forecasts on Wednesday due to sluggish global auto demand
and a dispute with a supplier for its Mexican car interior
business, knocking its shares.
Forvia expects its sales to be at the lower end of its
guidance of between 27.5 billion and 28.5 billion euros ($29.8
billion and $30.9 billion) this year. Similarly, its operating
margin should come at the bottom end of its 5.6% to 6.4% range.
The outlook is based on the estimated worldwide automotive
production of 88.7 million vehicles this year, down 2% compared
to 2023, Forvia said in an earnings statement.
"In the first half of the year, the automotive environment
was characterized by broadly flat automotive production
year-on-year and a slowdown of the pace of electrification in
Europe," Forvia said.
Its half-year operating margin was hit by a one-off extra
cost of 47 million euros in the interiors segment due to a
dispute with a local supplier in Mexico, finance chief Olivier
Durand said during a press call.
Forvia, which supplies parts to Stellantis STLAM.MI ,
Volkswagen VOWG_p.DE and Ford F.N , and is also active in
China, is fighting to recover its margins as the automotive
sector grapples with falling auto demand and competition from
Chinese manufacturers.
But for Forvia, Chinese carmakers could pose a growth
opportunity, as Durand said the group was seeking more deals
with the manufacturers looking to set up production in Europe
and across the world.
He mentioned Chery in Spain, Leapmotor in Poland, and BYD's
002594.SZ plants in Turkey, Mexico and Brazil, without
confirming whether Forvia had concluded any contracts so far.
"I'm sure that by the end of the year you'll have other
projects materialising and a greater presence for us with these
customers. I can't say any more than that," he said.
Forvia on Tuesday said it would bring its Asian partnership
with BYD in Europe, marking the first deal of its type for the
company.
($1 = 0.9219 euros)
(Reporting by Nathan Vifflin in Gdansk; editing by Milla Nissi)
((nathan.vifflin@thomsonreuters.com; +48 58 769 67 13;))