Reuters (Paris) - French car parts maker Faurecia on Tuesday hiked its full-year sales and profitability targets and said it was ahead on its 2010-2014 business plan after a strong performance in the first half.
The maker of car seats and emissions control systems said it saw full-year sales of 15.7-15.9 billion euros and an operating income of 620-650 million euros, compared with previous targets of 14.8-15.3 billion euros and 580-640 billion euros.
Faurecia said it expected "steady" growth in the second half in all regions where it operates, citing a high level of new contracts.
First half total sales rose 19.4 percent to 8.15 billion euros, with product sales up 18.3 percent at 6.33 billion euros.
Product sales exclude the sales of materials that are used inside catalytic converters which are bought from suppliers and sold on to customers.
Faurecia said in a slide presentation that it expected product sales of 12.2-12.4 billion euros this year, versus a previous 11.6-12.1 billion euro estimate, while it should win 13-14 billion euros worth of new contracts this year.
Faurecia predicted full-year net cash flow of 100 million euros, halving a previous forecast, as it boosted its capital expenditure forecast for the year to 450 million euros from 350 million euros.
"Higher capex, while it underlines the company's confidence in future growth, seems to be at the expense of near-term cash generation and deleveraging," wrote JP Morgan analyst Ranjit Unnithan in a research note.
He said the results were in line with market expectations, but predicted some profit-taking after a recent strong share performance.
First half operating income rose 57 percent to 340 million euros, leaving an operating margin of 4.2 percent, thanks to "rapid growth in sales volume and a further reduction in fixed costs in Europe," Faurecia said in a statement.
A large number of new plants and programmes in North and South America and Asia increased fixed costs outside Europe, the company said.
A "significant" rise in steel and plastics prices translated to a 29 million euro impact on operating income, it added.
Faurecia, which is 57.4 percent owned by car maker PSA Peugeot Citroen , said product sales grew in all regions and it was outpacing automobile production in all regions.
