French global automotive supplier Faurecia says its customers have or will temporarily shut down most of their production in the countries impacted by the virus. Consequently, the French supplier has also had to shut down a large number of its production sites in Europe and will do the same in North and South America, respecting national recommendations.
While the unprecedented Covid 19 crisis and the subsequent lack of visibility for the automotive industry, the full-year 2020 financial objectives that Faurecia had announced earlier are no longer relevant. The Group will present its new financial objectives for 2020 as soon as the macro-economic outlook for the rest of the year is sufficiently clear.
In the light of the unprecedented situation, Faurecia has immediately implemented a crisis management plan to adapt, in real-time, its response to the impact of the pandemic on the Group’s employees, customers and suppliers. Faurecia says its first priority is the health and safety of employees and their families. The Group has also implemented drastic measures to manage its cash flow as well as strict control of expenditure and investments during the slowdown of activity.
In terms of the safety of its employees and their families, and learning from its experience in China, Faurecia has put in place all the necessary measures to ensure their protection and to prevent the propagation of the virus within its sites. The Group has also implemented an immediate and massive use of home working (all of the eligible employees are currently working from home).
As part of its financing strategy and cash management, Faurecia says it has a solid balance sheet with no significant short-term repayment and financing at a low cost. For its immediate liquidity needs, Faurecia has a syndicated credit line of 1.2 billion euros (Rs 9,920 crore - maturity June 2024) of which it recently drew down 600 million euro (Rs 4,960 crore) in anticipation of the drop in factoring of receivables. Including the undrawn 600 million euros of this syndicated credit line, Faurecia currently has more than 900 million euro (Rs 7,440 crore) of credit lines available with options to increase liquidity further in the event the pandemic extends beyond the first half of the year.
Furthermore, the company says it has taken all the necessary measures to drastically reduce, in the short term, its costs, development expenses and investments, including putting employees in all sites on temporary unemployment, according to the reduction of the activity faced by the site.
Beyond these emergency measures, Faurecia is preparing the safe restart of production as soon as this is possible, including in an environment where the virus is not completely eradicated. This ramp-up is ongoing in China, where all of the Group’s sites have now restarted production, with an average capacity utilisation rate of around 70 percent today. Based on this experience, Faurecia says it is confident in its ability to get through the crisis in other regions of the world and to be able to quickly mobilise its teams to accompany its customers as they restart production.
Patrick Koller, CEO, Faurecia said: “We are going through an unprecedented crisis of an uncertain duration, even if we are seeing positive signs of normalisation coming from China. We have immediately put in place all the necessary action plans to get through this period, and we will continue to adapt our response as the pandemic evolves. Faurecia has significantly improved its operational and financial performance in recent years and will be absolutely ready to accompany the recovery in automotive production when it comes and continue with its transformation strategy. In the meantime, all Faurecia teams are focused on the protection of our employees and their families and an efficient management of the crisis in the best interests of Faurecia and all its stakeholders.”