Forvia (FRVIA) Q2 2024 earnings summary

Executive summary

• Organic sales grew 2.7% year-over-year in H1 2024, outperforming the market by 290 basis points, with outperformance of 460 basis points excluding geographic mix, and strong order intake of €15 billion, 40% from Asia.

• Operating margin improved by 20 basis points to 5.2% of sales, despite a one-off €47 million cost in North America Interiors.

• Net income was €5 million, impacted by higher restructuring and non-recurring supplier costs, but offset by capital gains from disposals.

• Net cash flow increased 16% year-over-year to €201 million, reflecting strong cash management and asset disposals.

• Deleveraging remains a top priority, with net debt/Adjusted EBITDA reduced to 2.0x and available liquidity of €6.2 billion.

Financial highlights

• H1 2024 sales at €13.5 billion, up 2.7% organically but down 0.6% reported due to currency and scope effects.

• Operating income was €700 million (5.2% of sales), up 20 basis points year-over-year; adjusted EBITDA margin at 12.1% (+30bps year-over-year).

• Net cash flow was €201 million, up 16% year-over-year, with improved quality and sustainability.

• CapEx was €419 million (3.1% of sales), down from €457.7 million; inventories reduced by €119 million.

• Net financial cost in P&L expected below €500 million for the full year.

Outlook and guidance

• FY 2024 sales and operating margin expected at the lower end of initial ranges: €27.5–28.5 billion sales, 5.6–6.4% margin.

• Net cash flow target at least €649 million; leverage ratio ≤1.9x.

• 2025 sales ambition revised to €28–28.5 billion due to currency and market conditions, with strong margin and cash flow growth expected; POWER25 target of net debt/EBITDA <1.5x by end-2025 reaffirmed.

• H2 2024 expected to see higher volumes, margin improvement, and normalization of one-off costs.