Forvia Reports FY 2023 Results After HELLA Acquisition

Forvia Reports FY 2023 Results After HELLA Acquisition

The company reported synergies with HELLA, with cumulative net cost synergies reaching over $200 million by the end of 2023.

Automotive supplier Forvia, a leading automotive supplier, reported its 2023 financial results in line with its deleveraging and Power25 objectives. The company reported sales increased by 14% organically, surpassing expectations by 430 basis points. Its operating margin also saw improvement, rising to 5.3% of sales. The company reported a strong net cash flow of €649 million ($727.28 million), equivalent to 2.4% of sales, driven by its Manage by Cash program. Notably, Forvia significantly reduced its net debt-to-adjusted EBITDA ratio to 2.1 times by the year-end, down from 3.1 times in June 2022 following the acquisition of HELLA.

The company reported ahead-of-schedule synergies with HELLA, with cumulative net cost synergies reaching €190 million (approximately $212.8 million) by the end of 2023. Forvia upgraded its cumulative net cost synergies target to over €350 million (approximately $392 million) by the end of 2025.

In terms of deleveraging, Forvia achieved close to €1 billion (approximately $1.12 billion) in net debt reduction in 2023, supported by its Manage by Cash program and the successful completion of its first €1 billion (approximately $1.12 billion) disposal program launched in the second quarter of 2022. The company is accelerating its deleveraging efforts with the launch of a second €1 billion (approximately $1.12 billion) disposal program in the fourth quarter of 2023.

Forvia also reported a strong and selective order intake of €31 billion (approximately $34.72 billion) in 2023, consistent with its Power25 targets. The company’s profitability remained aligned with its objectives, with reduced upfront costs and significant awards reflecting key market drivers.

Looking ahead, Forvia provided guidance for 2024, expecting sales between €27.5 billion and €28.5 billion (approximately $30.8 billion to $31.92 billion), with an operating margin between 5.6% and 6.4% of sales. The company aims to maintain a net cash flow at or above the 2023 level in value and achieve a net debt-to-adjusted EBITDA ratio of less than 1.9 times by December 31, 2024.

For its longer-term goals, Forvia reiterated its Power25 ambition, aiming for sales of approximately €30 billion (approximately $33.6 billion), an operating margin exceeding 7% of sales, a net cash flow of 4% of sales and a net debt-to-adjusted EBITDA ratio below 1.5x by December 31, 2025.

In addition, Forvia announced its intention to launch “EU-FORWARD,” a five-year project aimed at reinforcing the competitiveness and agility of its operations in Europe. This project will adapt the company’s manufacturing and R&D setup to the rapidly changing European environment, with a focus on achieving higher profitability and rebalancing regional sales mix.

In a statement, Forvia’s leadership expressed confidence in the company’s solid performance in 2023 and emphasized a continued focus on sustainable and profitable growth, accelerated deleveraging, and agility in response to market changes.

“We delivered on our top priority: further deleveraging the company after the acquisition of HELLA. We reduced our net debt by close to one billion euros over the year, thanks to the combination of strong cash generation and successful completion of the first one-billion-euro disposal program that was launched mid-2022,” said Patrick Koller, CEO of FORVIA. “We also achieved key milestones in different domains. We significantly improved profitability in our Seating North America, Clarion Electronics and Lighting activities. We accelerated the development of our hydrogen business by welcoming Stellantis, a major OEM, as a new partner in Symbio and inaugurating new production units for tanks and fuel cells. Regarding sustainability, which is core to our strategy and innovation, we stand one year ahead of schedule on our targets for scopes 1 and 2. The creation of Materi’Act, a company dedicated to the development of sustainable materials, will help the group reach its scope 3 objective and CO2 net-zero by 2045. Finally, we registered a strong and selective order intake of 31 billion euros, with profitability aligned with our Power25 targets and reduced upfront costs: this reflects the high attractiveness of our business, aligned with the industry megatrends. Let me thank FORVIA’s teams for all efforts they have deployed to achieve this 2023 solid performance.”

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