Faurecia posts 2022 earnings beat amid integration of Germany's Hella

By Scott Kanowsky 

Investing.com -- Faurecia (EPA:EPED) reported better-than-expected core earnings in 2022, as the acquisition of a controlling stake in Germany's Hella (ETR:HLE) helped the auto parts maker overcome lingering supply chain constraints and elevated input costs.

Annual adjusted income before interest, taxes, depreciation and amortization jumped by 43% compared to the prior year to €3.01 billion (€1 = $1.0690), topping Bloomberg consensus estimates of €2.83B.

The results mostly include the integration of German peer Hella, which Faurecia took over last year in a bid to boost its offering of electric vehicle supplies. Sales in 2022, which fold in eleven months of Hella's operations, expanded by nearly two-thirds year-on-year to €25.46B.

Faurecia announced that it had successfully completed a program to dispose of €1B in non-strategic assets as well. On Sunday, the company said it finally hit that target with the sale of its SAS Cockpit Modules business to India's Motherson Group (NS:SAMD) which valued the unit at €540 million.

Meanwhile, despite facing what it called an "uncertain" trading environment, Faurecia also reported free cash flow of €471M, far above expectations of €124M.

"2022, which was initially expected to be a year of recovery from the Covid crisis, turned out to be a year of continued semiconductor shortages and supply chain issues heightened by the outbreak of the war in Ukraine," said chief executive officer Patrick Koller in a statement. "The year was characterized by additional challenges, with high inflation, a surge in energy prices, rising interest rates and our disengagement from Russia."

Faurecia said it sees 2023 volumes staying at a "similar level" to the previous year, but raised its guidance for cost synergies stemming from the Hella purchase to €300M from the prior outlook of greater than €250M.

Analysts at Oddo BHF said the guidance "errs on the conservative side," but noted that the broader performance of the firm "further comforts our stance that the supplier appears to be able to begin a rebound this year."

Shares in Faurecia jumped to near the top of the pan-European STOXX 600 on Monday.