Research Update: French Auto Supplier Forvia Outlook Revised To Stable From Negative On Deleveraging Progress; 'BB' Ratings Affirmed

French auto supplier Forvia SE reported solid results in first-half 2023, with strong year-on-year revenue growth of 18.6%, improving operating margins, and free operating cash flow of €186 million. We expect further margin improvements in the second half of the year, with synergies from the Hella integration and the group's initiatives to realize further compensation for cost inflation. The group is also well on track to complete its €1 billion asset disposal program before year-end to support its deleveraging strategy. As a result, we anticipate Forvia's funds from operations (FFO) to debt and free operating cash flow (FOCF) to debt will improve toward 15% and 5%, respectively, by year-end 2023, and well above these levels in 2024. We therefore revised

...- French auto supplier Forvia SE reported solid results in first-half 2023, with strong year-on-year revenue growth of 18.6%, improving operating margins, and free operating cash flow of 186 million. We expect further margin improvements in the second half of the year, with synergies from the Hella integration and the group's initiatives to realize further compensation for cost inflation. - The group is also well on track to complete its 1 billion asset disposal program before year-end to support its deleveraging strategy. As a result, we anticipate Forvia's funds from operations (FFO) to debt and free operating cash flow (FOCF) to debt will improve toward 15% and 5%, respectively, by year-end 2023, and well above these levels in 2024. - We therefore revised our outlook on Forvia to stable from negative and affirmed our '##' long-term issuer credit and issue ratings on the company and its unsecured debt. - The stable outlook reflects our expectation that Forvia will gradually restore FFO...

Research Update