(Reuters) -Forvia, the European car parts maker born from Faurecia’s takeover of Hella, on Monday forecast stable 2023 sales as it expects a stronger impact from wage and energy costs even as raw material inflation eases.
Following more than two years of pandemic disruptions, the automotive sector has been facing continued supply chain snags due to Chinese lockdowns and Russia’s invasion of Ukraine.
Forvia, which sells seats, dashboards and fuel systems to carmakers, targets sales of 25.2 billion to 26.2 billion euros ($26.9 billion to $28.0 billion) in 2023, against 25.5 billion last year.
“If there is an opportunity for further growth, it will be Asian,” Faurecia’s chief executive Patrick Koller told reporters.
Still, he did not expect a good first quarter in China where COVID-19 restrictions were only lifted in December.
Faurecia’s shares gained more than 4% in early trade, as JPMorgan analysts said annual net cash flow of 471 million euros came in “well ahead of expectations in the low hundreds”.
Forvia sees annual operating margin of between 5% and 6%, compared with 4.4% last year, and a net cash flow exceeding 1.5% of sales.
The outlook is based on estimated global automotive production of 82 million vehicles this year, in line with 2022.
While inflation alone generated more than 1 billion euros of additional costs last year compared to 2021, notably from raw materials, the group said it had mostly managed to pass this on to customers.
Koller said that with the inflation having likely reached its peak, bringing on a “rather encouraging” price decline in certain raw materials, Forvia expected this hit to be “significantly lower” this year.
“What will be different in 2023 is that we will also have wage inflation and energy inflation,” he added, however.
With the sale of its SAS Cockpit Modules arm to Motherson Group announced on Sunday, Forvia said it had reached its 1-billion-euro asset disposal target to reduce debt after the Hella acquisition.
($1 = 0.9355 euros)
(Reporting by Dagmarah Mackos in Gdansk; Editing by Milla Nissi)
