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Faurecia SE EO

Rating as of

Morningstar’s Analysis

Valuation
Currency in EUR
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Faurecia Reduces 2021 Guidance; Maintaining EUR 58 Fair Value Estimate

Richard Hilgert Senior Equity Analyst

Analyst Note

| Richard Hilgert |

No-moat-rated Faurecia reduced its 2021 guidance after IHS Markit--an industry forecaster and consultancy that Faurecia says is its reference for the industry--dropped its European auto production forecast by 13% (or 1.0 million units) for the second half of the year, to roughly 6.8 million from about 7.8 million, due to the continuing microchip shortage, which has made Faurecia’s customers’ production schedules more sporadic. Although this had a minor impact on our valuation model, we are maintaining our EUR 58 fair value estimate. We continue to assume a Jan. 1, 2022, closing for the Hella acquisition. Please see our Aug. 16 Faurecia note for details on that acquisition. The 4-star-rated shares currently trade at an attractive 34% discount to our fair value estimate.

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Company Profile

Business Description

Excluding the Hella acquisition, Faurecia operates in automotive seating, interior systems, cockpit electronics, and emission control technologies. The company has a global presence, with production facilities in 33 countries, but it has about 60% of its facilities located in high-cost countries. Faurecia's five largest customers by percentage of 2020 revenue are Volkswagen at 21%, Stellantis at 18%, Ford at 13%, the Renault-Nissan-Mitsubishi Alliance at 12%, and General Motors at 5%. Geographically, Europe accounted for 48% of 2020 revenue, followed by North America at 25%, China at 18%, and all other regions at 9%.

Contact
23-27 avenue des Champs-Pierreux
Nanterre, 92000, France
T +33 172367000
Sector Consumer Cyclical
Industry Auto Parts
Most Recent Earnings
Fiscal Year End Dec 31, 2020
Stock Type
Employees 104,739