Faurecia drops dividend to save cash in auto slump

PARIS Tue Feb 12, 2013 12:29am EST

PARIS Feb 12 (Reuters) - Faurecia, the world's biggest maker of car interiors, scrapped its dividend and pledged to lift profit in 2013 by slashing costs to counter Europe's auto slump.

The manufacturer of car doors, dashboards, exhausts and body panels vowed on Tuesday to raise full-year operating income even as the region's vehicle market shrinks a predicted 4-5 percent.

Nanterre, France-based Faurecia, which is cutting at least 3,000 jobs over two years, said it would propose no dividend on 2012 financial results, published as estimates last month.

The cutbacks will help Faurecia "offset the ongoing drop in European vehicle production and focus on cash generation", Chief Executive Yann Delabriere said in a statement.

With European auto sales at a 17-year low, vehicle manufacturers and suppliers are scrambling to ramp up overseas investment and sales in more dynamic economies.

Faurecia's parent PSA Peugeot Citroen, which controls the parts maker through a 57.4 percent stake, is among the carmakers worst hit by the crisis.

North American revenue jumped 41 percent to 3.65 billion euros ($4.88 billion) last year, Faurecia said on Tuesday, and Ford displaced Peugeot as its second-biggest customer after Germany's Volkswagen.

Net income plunged 62 percent to 142 million euros on a 7.3 percent sales increase to 17.37 billion - in line with estimates published last month when the company warned about rising debt.

Europe's production slowdown swelled inventories of parts and materials, increasing net financial debt by 48 percent to 1.81 billion euros as of Dec. 31, the company confirmed.

Faurecia also predicted that this year's cash flow will be close to neutral only before deduction of restructuring costs of between 120 million and 140 million euros.

It forecast a sales gain of between 0.8 percent and 3.1 percent for 2013, but excluding currency effects such as the euro's recent rally which is likely to hurt the conversion its dollar revenues and earnings if sustained.

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