European car parts maker born from Faurecia’s takeover of German rival Halla, Forvia, fell show of half-year profit expectations which is a result of the global chip shortages, the war in Ukraine, and lockdowns in China. The group, which sealed its takeover of automotive lighting group Hella in January, reported an operating profit of 426 million euros ($434.5 million) for the first six months of 2022, corresponding to a margin of 3.7%.
Analysts polled by Visible Alpha had on average predicted an operating profit of 436 million euros with a 4% profit margin. "The context is particularly volatile," Executive Vice-President and Chief Financial Officer Olivier Durand told reporters, citing many "stop and go" periods marked by short bursts of activity with regular interruptions.
Durand said Forvia had stopped activities at most of its sites in Russia. The firm booked 87 million euros of one-off charges from its Russian operations in the period, including from stocks and receivables that could not be obtained due to international sanctions.
The combined entity sells seats, dashboards and fuel systems to carmakers which, after two years of disruptions from the coronavirus pandemic, are facing fresh supply jags due to Chinese lockdowns and Russia's invasion of Ukraine.
The escalating inflation also hit the company, with a gross impact of about 500 million euros in the first half. Forvia said it had managed to mitigate some of these charges through contractual pass-through policies on raw materials at 80% on average, and continued to negotiate with customers to further ease the impact in the second half.
"In the second half, we expect this ratio to go from 80% to 90%," Durand said. Forvia posted half-year sales of 11.62 billion euros, beating the consensus estimate of 11.02 billion, and confirmed its full-year targets.
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