(AOF) – Plastic Omnium rose 1.38% to 32.32 euros on the Paris market, in the wake of its 2020 results. Last year, the automotive supplier suffered a net loss (group share) of 251 million euros, compared with a net profit of 258 million euros in 2019. Despite the Covid-19 pandemic, the operating margin remains positive at 118 million euros, or 1.7% of the turnover. business, against 511 million euros and 6% a year earlier. As for the consolidated turnover, it amounted to 7.07 billion euros, down 16.7%.
These declining annual results, however, mask the strong rebound in the second half of the year, where the group posted an operating margin of 5.7% and generated free cash flow of 606 million euros, exceeding in passing its objectives noted last November. (margin greater than 5% and free cash flow greater than 400 million euros).
“2020 has been a year of profound upheavals, which has led to an acceleration in the transformation of the group”, declared Laurent Favre, CEO of Plastic Omnium.
For the 2020 financial year, the group will propose a dividend of 0.49 euros per share, stable compared to the previous year. It will be paid out on May 3.
For the year 2021, global automobile production is expected to increase by 14% to reach 81.5 million vehicles. Plastic Omnium says it operates its business with a 5% discount compared to these forecasts.
In the end, Plastic Omnium aims for a strong rebound in its turnover for 2021, an operating margin of 6% of turnover (comparable to that of 2019), as well as a generation of free cash flow of more than 220 million euros (higher than in 2019).
The group adds that supply disruptions, especially of semiconductor components, are currently leading many car manufacturers to reduce their production.
Plastic Omnium, indirectly affected, manages the situation on a daily basis and site by site. The development of the situation will be the subject of regular information from the group.
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Key points
– “Tier 1” automotive supplier born in 1946 specializing in body parts (world number 1 in fenders, bumpers and front grille) and fuel systems (world number 1), with continued historical activity urban waste management products;
– Sales of € 9.2 billion split between production activities for 75% with Plastic Omnium Industries (99 factories in 22 countries, Intelligent Exterior Systems being dedicated to intelligent bodywork systems and Clean Energy Systems to clean energy systems) and module assembly activities with Plastic Omnium Modules (25
in 11 countries, with HBPO, dedicated to front-end modules very balanced worldwide);
– Turnover mainly in Europe (53%), ahead of America (30.5%), Asia (16% including 10% for China);
– “Po Way” business model: independence, self-financing capacity, investments to capture market growth, innovation, integration of employees;
– Capital controlled at 58.78% by the founding family Burelle and welcoming the French state (1.54%), Laurent Brunelle being Chairman of the Board and Laurent Favre Managing Director;
– Controlled financial structure with a net debt leverage of 2.1 and liquidity of € 1.9 billion.
Stakes
– Strategic plan 2019-2021, reinforced during the pandemic:
– outperformance of the automotive market, with market shares of 19% in bumpers, 25% in fuel systems and 18% in front-end modules,
– deployment of Industry 4.0, transformation of processes, generation of free cash flow of € 200 million and cost reduction of € 200 million by 2022 in the “Omega” plan;
– Innovation strategy supported by 26 R&D centers, and reinforced from April 2020, particularly in hydrogen:
– scientific partnerships or economic players (automotive door system with the German supplier Brose, concept combining exterior bodywork systems and lighting with the German supplier Hella),
– energies of the future: fuel cell and hydrogen – tanks and propulsion,
– ecosystem of innovation and investments via the APVentures and Aster funds;
– Environmental strategy “Act for all”:
– eco-design and plastic recycling (18% reduction in vehicle weight), – preservation of biodiversity
– reduction of the carbon footprint by aiming for total neutrality in 2050;
– Critical size (25th worldwide instead of 40th) in external systems since the acquisition of Faurecia;
– Achievement of 2022 ambitions – 11% of revenues in electric vehicles – and 2030 (leader in energy storage in vehicles);
– Implementation of the hydrogen mobility strategy – tanks, batteries and systems – targeting € 3 billion in revenue in 2030.
Challenges
– Deployment of the “Omega” transformation plan: after the reorganization of indirect purchases and design, annual savings of € 240 million are expected by the end of 2022;
– Return to operational balance at the American site in Greer;
– Impact of the pandemic: 21% decline in sales at the end of September ;
– Response to the pandemic: adaptation of the industrial tool to a postponement to 2025 of world market levels those of 2109 ;
– 2020 objective: moderate outperformance compared to the global market, gross operating surplus above 4% and a positive operating margin.
A movement of consolidation should occur
According to a study carried out by the Roland Berger firm and the Lazard bank with 600 companies around the world, automotive suppliers suffered heavily from the fall in the automotive market over the first six months: their operating margin (Ebit) fell. at 1.7% (compared to 5.1% last year). Their debt has increased, exceeding, most often, three times their Ebitda. According to the study, following sales of new light vehicles which should not exceed 72 million in 2020 worldwide (- 20% over one year), the revenues of subcontractors will fall from 15% to 20% . In this sharply deteriorated context, the number of merger and acquisition transactions, which should once again decline in 2020, should rebound next year. In a sector undergoing transformation, not all companies will have the means to adapt their production equipment to the electrification of engines, for example.
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