2016 half year results: Faurecia shows strong profitability improvement in first half 2016

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Nanterre (France), July 26, 2016

Faurecia: Strong profitability improvement in the first half 2016

• Total sales of €9.53 billion; organic1 growth of 3.4%;

• Operating income of €490 million, up 28%, representing 5.1% of total sales up 110bp (or 6.2% of value added2 sales up 130bp);

• Net income of €245 million, up 56%;

• Net cash flow of €205 million

  Upgrade of 2016 guidance

• Operating margin (on total sales) of minimum 5.0% (previously 4.6% to 5.0%);

• Net cash flow minimum of €300 million (previously around €300 million).

The interim fiscal 2016 accounts were approved by the Board of Directors under the Chairmanship of Yann Delabrière at its meeting on July 25, 2016. Auditors have reviewed the accounts.

Patrick Koller, CEO of Faurecia: "Faurecia's robust profitability in the first half of 2016 of 5.1% operating margin, an increase of 110bp, was driven by a strong organic growth in Europe, clearly outperforming automotive production, a profitability breakthrough in North America and robust profitability in Asia. Based on an encouraging first half and an effective execution, we are upgrading our 2016 guidance. Our order intake momentum is very significant indicating solid future growth. The expected closing this week of the Exteriors disposal will allow us to further focus on our two strategic priorities: Sustainable mobility and Cockpit of the future. I would like to take this opportunity to thank all Faurecians for their contribution to this excellent performance."

In € million	H1 2015 Restated*	H1 2016
Total sales	9,489	9,532	+0.5% +3.4% organic
Value Added2 sales	7,788	7,922	+1.7% +5.0% organic
Product sales	7,232	7,295	+0.9% +4.2% organic
Operating income	384	490	+27.6%
As % of total sales	4.0	5.1	+110 basis points
As % of value added2 sales	4.9	6.2	+130 basis points
Net income (Group share)	157	245	+55.7%
Net cash flow	312	205	2.2% of sales
Net financial debt	946**	941***	-5 million

* IFRS 5; ** at December 31, 2015; *** at June 30, 2016

1. Organic: constant currencies & scope

2. Value added sales: Total sales less monoliths sales

2016 FIRST HALF RESULTS: STRONG PROFITABILITY IMPROVEMENT The results described below are after application of IFRS 5 for both the period H1 2016 and H1 2015 (for more details see below)

Faurecia's first half consolidated (total) sales totaled €9,531.6 million, compared to €9,488.7 million for the first half of 2015. Faurecia's consolidated sales grew by 0.5% on a reported basis between the first half of 2016 and the first half of 2015. On an organic basis, sales increased 3.4% compared to 2015.

Value added sales (total sales less monoliths3 sales) were €7,921.7 million in the first half of 2016 compared to €7,788.0 million in the first half of 2015, showing an increase of 1.7% when compared to 2015 first half. On an organic basis, value added sales were up 5.0% compared to the first half of 2015.

Catalytic converter monolith sales3 reached €1,609.9 million in the first half of 2016 versus €1,700.7 million for the first half of 2015. They were down -5.3% on a reported basis and fell by -4.0% on an organic basis, driven by lower precious metal prices.

Product sales (parts and components delivered to manufacturers) were €7,294.7 million compared to

€7,231.7 million in the first half of 2015. This represented an increase in product sales of 0.9% on a reported basis and an increase of 4.2% on an organic basis.

SALES BY CUSTOMER: HIGH GROWTH WITH RENAULT-NISSAN, FORD AND CUMMINS

The most remarkable developments involved Renault-Nissan +18% (organic) comforting its position of Faurecia's third largest client and Ford +11% (organic). Sales to Cummins for commercial vehicles were up 5% (organic). Commercial vehicles now represent 9% of sales for Faurecia Emissions Control Technologies. Sales to Chinese OEMs soared 31% (organic) and now account for 12% of sales in China.

SALES BY REGION: FAST GROWTH IN EUROPE, OUTPERFORMING AUTOMOTIVE PRODUCTION BY 260 BASIS POINTS

Product sales by geographic region for the first half of 2016 were as follows:

• In Europe, product sales totalled €3,833.1 million (52.5% of total product sales) for the first half of 2016, compared to €3,612.0 million for the first half of 2015. Product sales were up 6.1% on a reported basis when compared to the first half of 2015 and increased 7.1% on an organic basis. In this same period, car manufacturers increased production in Europe by 4.5%4 (incl. Russia);

• In North America, product sales fell -3.8% on a reported basis, to €2,067.8 million (28.3% of total product sales), versus €2,148.8 million for the first half of 2015. On an organic basis, product sales dropped -3.1% compared to an increase in production of 3.3%4. FCA's decision to drastically cut production of the Chrysler 200 before discontinuing it in spring 2017 has negatively impacted Faurecia's sales by 450bp (€97 m). Sales to Renault-Nissan increased by 7% (organic) and those to Daimler soared by 20% (organic);

• In Asia, product sales fell -4.3% on a reported basis to €1,106.8 million (15.2% of total product sales), compared to €1,156.8 million in the first half of 2015. On an organic basis, product sales grew 3.8%. China showed a fall of -11.5% on a reported basis, and decreased by 3.7% on an organic basis-first half 2016 product sales were at €842.7 million. Sales to Chinese automakers were up 31% (organic), representing

  3 Precious metals and ceramics used in emission control systems. 4 Source IHS Automotive (July 2016)

  12% of sales in China. Sales to international joint ventures were affected by a negative client mix. In Asia, production increased 2.5%4 and 5.8%4 in China.

  SALES BY BUSINESS GROUP: STRONG GROWTH FOR AUTOMOTIVE SEATING +9.2% (organic)

  Product sales in the first half of 2016 were as follows:

  Automotive Seating: Product sales totalled €3,134.9 million compared to €2,938.1 million in the first half of 2015, an increase of 6.7% on a reported basis and an increase of 9.2% organic. This growth was driven by a number of launches for Nissan, Ford (close to +200%), BMW and Daimler.

  Emissions Control Technologies: Product sales reached €1,914.9 million in the first half of 2016, a decrease of -2.2% on a reported basis but an increase of 1.2% organic. Sales to Renault-Nissan increased 18% (organic) and those to Cummins 5% (organic).

  Sales for Interior Systems includes the sales from the remaining Automotive Exterior business. Product sales totalled €2,244.9 million versus €2,336.0 million for H1 2015, a decrease of -3.9% on a reported basis but stable at +0.4% organic. Product sales grew slightly as a result of the increase in sales with Renault-Nissan (+15% organic) and PSA (+5% organic). Growth was particularly impressive in Asia, where it reached 23% (organic), driven by business in China.

  STRONG GROWTH IN OPERATING RESULTS +28% Operating income (see definition below) stood at €490 million, or 5.1% of total sales (6.2% of value added sales), compared with €384 million and 4.0% of total sales (4.9% of value added sales) in 2015. It benefitted from the sales growth Europe, a significant improvement of the industrial performance in North America and a strong contribution from Asia.

  Margin growth by region was particularly impressive in Europe and in North America:

• In Europe, the increased sales allowed for an improvement in operating income of €64.0 million, bringing operating income to 4.8% of total sales or €244.6 million. This compares to 3.7% or €180.6 million for the first half of 2015;

• In North America, despite a fall in sales of -2.9% on an organic basis, operating income increased by

  €43.5 million compared to the first half of 2015 to €118.4 million, thanks to an excellent industrial performance and a better cost control. Operating income stood at 4.5% of total sales, up from 2.7% in the first half of 2015

  At the end of June, Faurecia disposed of its Fountain Inn facility (Interior Systems, turnover of approx. $95 million in H2 2016) which will be earnings enhancing;

• In Asia, operating margin reached €139.5 million or 9.9% of total sales compared to H1 2015 figures 9.7% of total sales (€146.7 million). Profitability improved in Korea and in Thailand and stayed strong in China.

  By Business Group, the profitability levels of our three Business Groups are converging:

• Operating income for Automotive Seating in the first half of 2016 was €175.4 million or 5.3% of total sales up 80bp compared to €139.2 million for the first half of 2015 (4.5% of total sales);

  • Operating income for Emissions Control Technologies for the first half of 2016 was €200.5 million equivalent to 9.6% of value added sales (or 5.4% of total sales) an increase of 140bp compared to

    €171.4 million for H1 2015 (8.2% of value added sales or 4.5% of total sales);

  • For the first half of 2016, Interior Systems had an operating income of €126.8 million or 5.0% of total sales +190bp versus €79.7 million (3.1% of total sales) for H1 2015.

    Consolidated net income (Group share) stood at €245 million, compared with €157 million in H1 2015, an increase of 56%. Key items, excluding operating income, are:

  • Restructuring costs, which stood at €58 million (compared with €31 million in H1 2015) to optimize the European industrial organization of Emissions Control Technologies;

  • Net financing costs totalled €90.9 million versus €84.3 million in the first half of 2015. The first half 2016 costs include €21 million costs for the anticipated reimbursement of 2016 bonds. Net financial expenses are on track to be reduced by close to €50 m in 2016.

NET CASH FLOW ABOVE €200 MILLION AND NET DEBT ALMOST STABLE Net cash flow (see definition below) stood at €205 million. EBITDA grew €136 million to €814 million up 20%. This strong growth came mostly from the sharp increase of

€106 m of the operating income.

Capital expenditure and capitalized R&D were up 5% at €417 million, compared to €398 million in H1 2015. Working capital requirement improved by €75 million while in H1 2015 it improved by €160 million (largely on the back of higher receivables factoring).

At the end of June 2016, the Group's net financial debt (see definition below) stood at €941 million, almost stable when compared with €946 million at the end of December 2015. Faurecia completed its successful refinancing plan in the first half of the year with the issuance in March 2016 of €700 million in bonds maturing in 2023 with a coupon of 3.625%, the early redemption in April 2016 of €490 million in bonds maturing in 2016 with a coupon of 9.375% and with the renewal and extension to 5 years of its €1,200 m syndicated facility.

2016 OUTLOOK

Based on an encouraging first half and a solid industrial performance, Faurecia has upgraded its outlook, announced in February 2016, as follows:

Full-year 2016:

• Total sales growth: +1% / +3% organic

  Unchanged

• An operating margin (on total sales) of minimum 5.0%

  Previous guidance: Between 4.6% and 5.0%

• Net cash flow of minimum €300 million

Previous guidance: Around €300 million

The proceeds from the disposal of Automotive Exteriors will almost eliminate Faurecia's net debt.