Safety. Environment. Comfort & convenience. Design & perceived quality Interim report

Transcription

1 Safety 07 Environment Comfort & convenience Design & perceived quality 2007 Interim report

2 Contents Key figures 2 Sales Stock Market information 4 Board of Directors, Executive Committee and Auditors 5 Management report 6 Consolidated financial statements 9 Faurecia 2, rue Hennape Nanterre Cedex - France Tel.: + 33 (1) Fax: + 33 (1)

3 Key figures Key figures 2007 (in millions) % % % Sales Vehicle Interior modules 4, , , Other modules 2, , , Total 6, , , Operating margin Impairment of assets (1) - - (233.5) (2.0) Restructuring costs (39.9) (0.6) (107.6) (1.8) (169.2) (1.5) Other operating income and (expenses), net Consolidated net loss (41.1) (0.6) (46.0) (0.8) (437.6) (3.7) Group share (47.4) (0.7) (48.2) (0.8) (447.9) (3.8) EBITDA (2) Cash flow Capital expenditure Capitalized development costs Gross R&D expenditure Employees (3) 68,005 64,752 65,682 June 30, 2007 June 30, Dec. 31, Shareholders equity , ,026.4 Net financial debt 1, , ,698.5 (1) Includes impairment losses on the vehicule interior business of which relates to goodwill ( 125 million) and non current assets ( 72.8 million). (2) Operating income + depreciation, amortization and depreciation in value of property, plant and equipment and intangible assets. (3) Including temporary staff. 2 Faurecia Interim report

4 Sales 2007 Sales 2007 % change (in millions) / Automotive Seating 2, , % 4,812.8 at constant exchange rates 8.6% Vehicle Interiors 1, , % 3,458.0 at constant exchange rates 1.7% Vehicle Interior modules 4, , % 8,270.8 at constant exchange rates 5.7% Exhaust Systems 1, , % 2,659.4 excluding monoliths sales % 1,278.6 at constant exchange rates 13.8% Front end modules % at constant exchange rates and on a comparable basis 19.8% Other modules 2, , % 3,377.9 excluding monoliths 1, , % 1,997.1 at constant exchange rates and on a comparable basis 15.9% Total 6, , % 11,648.7 excluding monoliths sales 5, , % 10,267.9 at constant exchange rates and on a comparable basis 7.7% Sales breakdown by customer Sales breakdown by region (1) 4.0% Chrysler 2.8% Others 2.5% Hyundai-Kia 1.9% Toyota 1.9% South America 5.8% Asia 1.7% Other countries 5.9% Daimler 6.0% GM Group 25.3% PSA Peugeot Citroën 13.8% North America 26.1% France 8.0% BMW 10.6% Ford Group 12% Renault-Nissan 21% VW Group 10.7% Other European countries 2.8% United Kingdom 13.5% Spain/Portugal 23.7% Germany (1) Sales by destination country. Sales breakdown by business 7.4% Front-end 41.2% Automotive Seating 31.2% Other modules 23.8% Exhaust systems 27.6% Vehicle Interior 68.8% Vehicle Interior Modules Faurecia Interim report 3

5 Stock Market information Stock Market information Faurecia share price evolution % change Compared Compared to 06/30/2007 to 12/31/ to 06/30/ Faurecia 18.7% 18.3% SBF % 22.6% DS Autoparts Europe 27.6% 43.1% Stock market information Stock market data 06/30/ /31/ Market capitalization at the end of the period (in M ) Share price (in ) highest lowest At period end (in ) Shareholder's equity per share (in ) Fiscal year: January 1 to December ISIN code: FR Nominal value: 7 euros Traded on the Euronext Paris SA Eurolist Stock eligible for deferred settlement (SRD) Per share data 06/30/ 06/30/ /31/2005 Earnings per share after dilution (in ) (1.98) (2.02) (18.72) Cash flow per share (in ) Ownership structure 06/30/ /31/ Number of shares at period end (in thousands) 24,298 24,259 PSA Peugeot Citroën 71.14% (83.62) 71.25% FCP Faurecia shareholders 0.28% (0.17) 0.29% Directly held 1.15% 1.25% Publicly held 27.43% (16.21) 27.21% (voting rights in brackets) Financial information available at 4 Faurecia Interim report

6 Board of Directors, Executive Committee and Auditors Board of Directors, Executive Committee and Auditors Board of Directors as of June 30, 2007 Yann Delabrière Chairman and Chief Executive Officer Directors Jean-Pierre Clamadieu Frank Esser Jean-Louis Gerondeau Jean-Claude Hanus Gérard Hauser Ross Mc Innes Robert Peugeot Thierry Peugeot Sylvie Rucar Christian Streiff Executive Committee as of June 30, 2007 Yann Delabrière Chairman and Chief Executive Officer Arnaud de David-Beauregard EVP Group Developmentt Jean-Marc Hannequin EVP Exhaust Systems Product Group Max Hodeau EVP Structures & Mechanisms Product Group Frank Imbert Chief Financial Officer Patrick Koller EVP Automotive Seating Product Group Thierry Lemâne EVP Group Communications Jacques Le Morvan EVP Group Purchasing Jacques Mauge EVP Group Customer Development Bruno Montmerle EVP Group Strategy James C. Orchard President North America Christophe Schmitt EVP Interior Systems Product Group Jean-Pierre Sounillac EVP Group Human Resources Guy Talbourdet EVP Modules & Systems Product Group Auditors Members of the Compagnie Régionale de Versailles PricewaterhouseCoopers Audit represented by Dominique Ménard 63, rue de Villiers Neuilly-sur-Seine France Ernst & Young Audit represented by Laurent Miannay Tour Ernst & Young 11, allée de l Arche La Défense Cedex France Faurecia Interim report 5

7 Management report Management report SIGNIFICANT EVENTS OF FIRST-HALF A 2.6% upturn in sales in Europe, as well as strong growth outside Europe, with North America and Asia reporting rises of 40.2% and 21.7% respectively. - Diversification of the Group s customer portfolio, with a significant increase in business with BMW, Chrysler and Hyundai. - Rapid expansion in the USA, calling for close control. - Operating income up on second-half, coming in at 62.8 million, and representing 1.0% of consolidated sales. - Net debt reduced to 1,610.1 million from 1,698.5 million at December 31,. BUSINESS REVIEW AND CONSOLIDATED SALES Faurecia s consolidated sales totaled 6,511.6 million in first-half 2007, up 8.9% on the corresponding prioryear period. Excluding catalytic converter monoliths, the like-for-like increase was 7.7% (on a constant Group structure and exchange rate basis). Currency effects had a negative 1.1% impact, and the integration of Cadence Innovation France within the Front End business had a 0.9% positive impact. In early January 2007, the Group took over part of the bumper business operated by Cadence Innovation, a company that was placed in liquidation in late. The operations concerned were located at the Nœux-les- Mines site in northern France, which supplies Renault and PSA Peugeot Citroën, and the Burnhaupt facility in the east of France, which supplies PSA Peugeot Citroën. They represent annual sales of some 80 million and employ approximately 150 people. Overall sales in Europe were up 2.6% with the impact of new vehicle launches in boosting business levels with Audi, BMW, Ford, PSA Peugeot Citroën and Skoda. Sales also continued to climb outside Europe, where North America reported a 40.2% increase, excluding catalytic converters, thanks to the ramp-up of new programs during the period, particularly for Chrysler and BMW. At the same time, sales rose once again in Asia, coming in 21.7% higher than in first-half. However, after a strong first quarter, the growth trend slowed in the second quarter of 2007, particularly in Europe. Excluding catalytic converter monoliths, like-for-like sales growth in the second quarter was 4.5% compared with 10.7% in the first quarter. SALES BY BUSINESS SEGMENT Automotive Seating reported 2,681.6 million in sales for the first half of 2007, up 8.6% on first-half based on constant exchange rates. Currency effects had a negative 0.5% impact. European sales were up 3.5%, powered by the Audi Q7, BMW Mini, Citroën C4 Picasso, Ford S-Max and Peugeot 207. Outside Europe, the star performer was North America where sales growth came to 58.6% at constant exchange rates. This rise reflected the launch of the new BMW X5 and the ramp-up of sales to Chrysler (Chrysler Sebring and Dodge Avenger), as well as the launch of the Saturn Aura by General Motors, which partially offset the impact of lower sales of other models for this customer. The increase in Automotive Seating sales in Asia came to 14.9%. Sales for Vehicle Interiors totaled 1,800.3 million, representing an increase of 0.5%, or 1.7% excluding the 1.2% negative currency impact. In Europe, Vehicle Interiors sales edged back 3.4% as the fall-off in business with Renault, and Daimler was only partially offset by an upturn in sales to PSA Peugeot Citroën (Citroën C4 Picasso and Peugeot 207), the start-up of business for the Opel Corsa and sales of the Audi Q7. Outside Europe, growth in Asia reached 39.3% and North America reported a rise of 36.2% powered by sales to Chrysler (Chrysler Sebring and Dodge Nitro), as well as the new BMW X5. 6 Faurecia Interim report

8 Rapport de gestion Overall, the Interior Modules segment posted sales of 4,481.9 million, up 5.7% on first-half excluding the currency impact. Exhaust Systems sales totaled 1,548.2 million in first-half 2007, up 13.8% excluding catalytic converter monoliths and the 3.8% negative currency impact. In Europe, sales for Exhaust Systems climbed 14.1% excluding catalytic converter monoliths, fueled by business with Ford, PSA Peugeot Citroën and Volkswagen, as well as the start-up of sales to Hyundai-Kia in Slovakia. North America reported a 10.1% increase thanks to the startup of sales to Chrysler (Chrysler Sebring, Dodge Avenger and Nitro) and the ramp-up of the Ford Edge, which offset the impact of a downturn in sales to General Motors. The 23.7% growth achieved in Asia was spurred by sales to Hyundai-Kia in Korea and to Ford, PSA Peugeot Citroën and Volkswagen in China. Sales of catalytic converters climbed 23.9% based on constant exchange rates. Front-end sales advanced 33.3% to million, including the effect of the Cadence Innovation acquisition in France from January 1, Excluding the 13.9% positive impact of changes in Group structure and the 0.4% negative currency impact, the like-for-like increase was 19.8%. Growth for this business was boosted in Europe by sales for the BMW 3 Series, the Citroën C4 Picasso and the Peugeot 207, and in the United States by the launch of the Chrysler Sebring. Altogether, the Other Modules segment posted sales of 2,029.7 million in the first half of 2007, up 15.9% on a like-for-like basis and excluding catalytic converter monoliths. RESULTS Operating income for the first six months of 2007 amounted to 62.8 million and represented 1.0% of consolidated sales, compared with operating income of 85.1 million in first-half (1.4% of sales) and an operating loss of 15.9 million for the second half of. This upturn compared with second-half which reflects both the Group s sales growth and its enhanced manufacturing performance was achieved despite continuing significant losses in North America and persistent pressure on sales prices in a period of rising raw materials costs. EBITDA stood at million, representing 4.7% of sales, versus million (5.6% of sales) in first-half. Interior Modules reported a significant improvement in operating performance and was close to operating break even in first-half The segment ended the period with an operating loss of 4.9 million (0.1% of sales) compared with an operating loss of 72.3 million in second-half and operating income of 27.8 million in the first six months of. Other Modules reported first-half 2007 operating income of 67.7 million (3.3% of sales), compared with the first-half figure of 57.3 million (3.4% of sales). This increase matches growth in the segment s sales. Gross research and development costs decreased 2.5% to million, corresponding to 4.9% of sales, compared with million (5.5% of sales) in first-half. Excluding amounts billable to customers, R&D costs totaled million or 2.1% of sales, against million (2.3% of sales) one year earlier. Selling and administrative expenses totaled million, representing 2.8% of sales, versus million (3.0% of sales) in the equivalent period of. Other operating income and expense, net which represented a net expense of 38.4 million mainly comprised 39.9 million in new restructuring provisions, which primarily concern French and Spanish sites. Claims and litigations are subject to an appraisal in the registration document and require no additional disclosure for the first six months of the year. Net finance costs stood at 49.7 million, or 0.8% of sales, up from 41.2 million in the first six months of. This increase essentially stems from the impact of higher interest rates, with the weighted average interest rate on the Group s borrowings rising to 4.2% from 3.7% one year earlier. Other financial income and expense represented net income of 6.5 million and included 8.1 million in income arising from changes in fair value of interest rate instruments, as well as a 4.5 million expense corresponding to the impact of discounting pension benefit obligations. Faurecia Interim report 7

9 Management report The tax charge for first-half 2007 was 22.3 million, compared with 11.8 million for the corresponding prior year period. This amount is primarily based on the income of profit-making subsidiaries, and no deferred tax assets are recognized for the majority of tax losses made by Group subsidiaries. Equity in net income of companies accounted for by the equity method was 0.7 million, versus 3.7 million in first-half. The Group ended the six months to June 30, 2007 with a consolidated net loss of 40.4 million, or 47.4 million after deducting minority interests of 7.0 million. This 47.4 million loss attributable to equity holders of the parent company is on a par with the first-half figure of 48.2 million. The loss per share came to FINANCIAL STRUCTURE AND NET DEBT Cash flow from operations totaled million (2.1% of sales), down 34.9 million on the prior-year figure of million (3.4% of sales). This decline is mainly attributable to the Group s lower operating income. Working capital requirement decreased by million, including the positive million impact of the Group partially changing its financing methods through an increased use of factoring. The Group continued to implement its highly selective capital expenditure strategy during first-half 2007 and capital expenditure for the period amounted to million, or 2.1% of sales, versus million, or 2.5% of sales one year earlier. Capitalized development costs were also lower in first-half 2007, coming in at 85.7 million, against million in first-half. Overall, net debt as of June 30, 2007 stood at 1,610.1 million, down 88.4 million on the December 31, figure. The gearing ratio came to OUTLOOK Faurecia expects sales to continue to grow in second-half 2007, but at a less sustained pace than in the first six months of the year. Full-year operating income should be higher in 2007 than in, and the Group intends to keep a tight control over debt. 8 Faurecia Interim report

10 CONSOLIDATED INCOME STATEMENTS (in millions) Notes 2007 Full-year Sales 4 6, , ,648.7 Cost of sales 5 (6,130.1) (5,578.6) (10,921.5) Research and development costs (137.5) (137.9) (305.0) Selling and administrative expenses (181.2) (178.0) (353.0) Operating income Other operating income and (expense), net 6 (38.4) (87.2) (386.0) Income from loans, cash investments and marketable securities Finance costs (59.0) (45.7) (97.5) Other financial income and expense (3.4) Income (loss) before tax of fully consolidated companies (18.8) (37.9) (406.8) Corporate income tax 8 (22.3) (11.8) (35.2) Net income (loss) of fully consolidated companies (41.1) (49.7) (442.0) Equity in net income of companies accounted for by the equity method Consolidated net income (loss) (40.4) (46.0) (437.6) Net income (loss) attributable to equity holders of the parent company (47.4) (48.2) (447.9) Net income attributable to minority interests Basic earnings (loss) per share (in ) 9 (1.98) (2.02) (18.72) Diluted earnings (loss) per share (in ) 9 (1.98) (2.02) (18.72) FAURECIA 2007 Interim report 9

11 CONSOLIDATED BALANCE SHEETS ASSETS (in millions) Notes June 30, 2007 Dec. 31, Goodwill 10 1, ,289.3 Intangible assets Property, plant and equipment 1, ,452.9 Investments in companies accounted for by the equity method Other equity interests Other non-current financial assets Other non-current assets Deferred tax assets Total non-current assets 3, ,453.1 Inventories, net Trade accounts receivable 12 1, ,759.4 Other operating receivables Other receivables and prepaid expenses Currency and interest rate derivatives Total current assets 3, ,700.3 Cash and cash equivalents Total assets 7, , FAURECIA 2007 Interim report

12 LIABILITIES AND SHAREHOLDERS EQUITY (in millions) Notes June 30, 2007 Dec. 31, Shareholders equity Capital stock Additional paid-in capital Treasury stock (11.8) (12.5) Retained earnings Translation adjustment Net income (loss) (47.4) (447.9) Total shareholders equity ,026.4 Minority interests Total equity 1, ,090.6 Provisions for pensions and other employee benefits Other provisions Long-term debt ,065.6 Other non-current liabilities Deferred tax liabilities Total non-current liabilities 1, ,562.0 Short-term debt 15 1, ,234.3 Prepayments from customers Trade payables 2, ,128.9 Accrued taxes and payroll costs Other payables Currency and interest rate derivatives Total current liabilities 4, ,087.4 Total liabilities and shareholders equity 7, ,740.0 FAURECIA 2007 Interim report 11

13 CONSOLIDATED CASH FLOW STATEMENTS (in millions) 2007 Full-year I - Operating activities Consolidated net income (loss) from continuing operations (40.4) (46.0) (437.6) Depreciation and amortization Deferred tax (benefits) charges 4.9 (24.1) (12.9) Increase (decrease) in provisions and other long-term liabilities (23.3) Equity in net income of companies accounted for by the equity method, net of dividends received (0.7) (2.4) (1.6) Capital (gains) losses on disposals of assets (1.0) (20.7) (20.9) Other (12.2) (17.7) (18.4) Cash flow from operations Change in inventories (27.7) (44.1) (31.5) Change in trade accounts receivable (239.6) (307.6) (24.8) Change in trade payables Change in other operating receivables and payables Change in other receivables and payables (Increase) decrease in working capital requirement (22.7) 64.6 Net cash provided by operating activities II - Investing activities Additions to property, plant and equipment (136.6) (150.8) (302.2) Capitalized development costs (85.7) (104.4) (208.3) Acquisitions of investments (9.4) (1.6) Proceeds from disposals of property, plant and equipment Proceeds from disposals of financial assets Change in investment-related receivables and payables (2.5) (42.0) (42.4) Other movements (2.7) (6.2) (15.6) Net cash used by investing activities (230.7) (263.5) (517.8) Net cash (used) provided by operating and investing activities (I)+(II) 75.8 (82.3) (122.6) III - Financing activities Issuance of shares by Faurecia and fully-consolidated companies Dividends paid by the parent company Dividends paid to minority interests in consolidated subsidiaries (8.3) (1.3) (6.2) Issuance of debt securities and increase in borrowings Repayments of debt and other financial liabilities (84.4) (170.1) (476.1) Net cash provided by financing activities (58.0) IV - Other changes in cash and cash equivalents Impact of exchange rate changes on cash and cash equivalents 0.4 (20.2) (8.0) Net increase (decrease) in cash and cash equivalents 18.2 (56.8) (59.8) Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period (note 15) FAURECIA 2007 Interim report

14 STATEMENT OF CHANGES IN CONSOLIDATED SHAREHOLDERS EQUITY (in millions) Number of shares Capital stock Additional paid-in capital Treasury stock Retained earnings Translation adjustment Total shareholders equity Minority interests Total equity Balance as of Dec. 31, 2005 before appropriation 24,233, (13.6) , ,540.3 Net loss for the period (48.2) (48.2) 2.2 (46.0) Currency translation adjustments (24.2) (24.2) (4.1) (28.3) Changes in fair value of currency hedging instruments Total income and expense recognized directly in equity (0.3) (0.3) (0.3) (48.5) (24.2) (72.7) (1.9) (74.6) Issue of share capital (1) 1, parent company losses charged against additional paid-in capital (364.5) dividend 0.0 (4.8) (4.8) Share-based payments Sales of treasury stock Changes in scope of consolidation Balance as of June 30, before appropriation 24,234, (13.5) , ,462.1 Net loss for the period (399.7) (399.7) 8.1 (391.6) Currency translation adjustments (0.2) 18.4 Changes in fair value of currency hedging instruments Total income and expense recognized directly in equity (0.5) (0.5) (0.5) (400.2) 18.6 (381.6) 7.9 (373.7) Issue of share capital (1) 24, dividend 0.0 (1.4) (1.4) Share-based payments Sales of treasury stock Changes in scope of consolidation Balance as of Dec. 31, before appropriation 24,259, (12.5) , ,090.6 Net loss for the period (47.4) (47.4) 7.0 (40.4) Currency translation adjustments (0.4) 2.9 Changes in fair value of currency hedging instruments Total income and expense recognized directly in equity (0.2) (0.2) (0.2) (47.6) 3.3 (44.3) 6.6 (37.7) Issue of share capital (1) 112, parent company losses charged against additional paid-in capital (165.2) dividend 0.0 (8.3) (8.3) Share-based payments Sales of treasury stock Changes in scope of consolidation Balance as of June 30, 2007 before appropriation 24,372, (11.8) ,051.0 (1) Shares issued on exercise of stock options. FAURECIA 2007 Interim report 13

15 NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS Faurecia S.A. and its subsidiaries form one of the world s leading suppliers of six major vehicle modules: seats, cockpits, doors, acoustics modules, front ends and exhaust systems. The Group has operations in 28 countries, spanning 160 sites. Faurecia s registered office is located in Nanterre, in the Hauts-de-Seine region in France. The Company is quoted on the Eurolist market of Euronext Paris. The interim consolidated financial statements were approved by Faurecia s Board of Directors on July 17, Note 1 Summary of significant accounting policies The interim consolidated financial statements of the Faurecia Group have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union, including International Accounting Standards (IASs) and related Interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC). They comply with IAS 34, Interim Financial Reporting, which permits entities to present condensed information. These interim consolidated financial statements should therefore be read in conjunction with the annual consolidated financial statements for the year ended December 31,. The standards and interpretations used to prepare the interim consolidated financial statements for the six months ended June 30, 2007 and comparative data for are those published in the Official Journal of the European Union (OJEU) as of June 30, 2007, and whose application was mandatory at that date. However, the Group will only apply the new standard IFRS 7, Financial Instruments: Disclosures, and the Amendment to IAS 1, Presentation of Financial Statements Capital Disclosures in its consolidated financial statements for the year ended December 31, This new standard and amendment require entities to provide more detailed disclosures on financial instruments and capital. The following new interpretations have been issued but have no impact on the Group s financial statements: IFRIC 7, Applying the Restatement Approach under IAS 29 (Financial Reporting in Hyperinflationary Economies); IFRIC 8, Scope of IAS 2 (Share-based Payment); IFRIC 9, Reassessment of Embedded Derivatives; IFRIC 10, Interim Financial Reporting and Impairment; and IFRIC 11, IFRS 2 Group and Treasury Share Transactions. 14 FAURECIA 2007 Interim report

16 Note 2 Changes in scope of consolidation 2-1 Changes in scope of consolidation in first-half 2007 During the first half of 2007 Faurecia purchased a 50% interest in Romania-based Euro Auto-Plastic Systems srl for 9.4 million. This company has been incorporated in Faurecia s Vehicle Interiors segment and was accounted for by the equity method as of June 30, Also during the period Faurecia set up a new company in the Group s Automotive Seatings segment in China Faurecia (Shanghai) Automotive Systems Co Ltd. Lastly, at the beginning of 2007, Faurecia purchased certain assets of Cadence innovation in France. 2-2 Changes in scope of consolidation in In first-half, Faurecia purchased the US assets held by the Copo Iberica group which is 50%-owned by Faurecia and accounted for by the equity method. In addition, Kwang Jin Faurecia was accounted for by the equity method for the first time in. Formed in 2005, this South Korea-based company is 50%-owned by Faurecia. 2-3 Impact on consolidated data of changes in scope of consolidation Changes in scope of consolidation did not have a material impact on the Group s interim consolidated financial statements. Note 3 Seasonal fluctuations in business levels Business levels in the automotive industry are traditionally higher in the first half of the year than in the second. FAURECIA 2007 Interim report 15

17 Note 4 Information by business segment 4-1 Key figures by business segment 2007 (in millions) Interior modules Other modules Holding companies Total Sales 4, , ,642.5 Inter-segment eliminations (24.1) (10.8) (96.0) (130.9) Consolidated sales 4, , ,511.6 Operating income (loss) (4.9) Segment income (loss) (39.3) Net financial expense Corporate income tax (22.3) Equity in net income of companies accounted for by the equity method 0.7 Net loss (49.7) (40.4) Segment assets Property, plant and equipment, net 1, ,424.4 Other 3, , ,818.0 Total segment assets 4, , ,242.4 Investments in companies accounted for by the equity method Other equity interests 1.3 Short- and long-term financial assets Tax assets (current and deferred) 87.5 Total assets 7,090.6 Segment liabilities 2, (18.3) 3,696.2 Borrowings 2,277.8 Tax liabilities (current and deferred) 65.6 Shareholders equity and minority interests 1,051.0 Total liabilities 7,090.6 Capital expenditure Depreciation of property, plant and equipment (125.9) (32.4) (1.6) (159.9) Impairment in value of property, plant and equipment FAURECIA 2007 Interim report

18 (in millions) Interior modules Other modules Holding companies Total Sales 4, , ,060.0 Inter-segment eliminations (13.6) (8.5) (58.3) (80.4) Consolidated sales 4, , ,979.6 Operating income (loss) Segment income (loss) (40.2) 46.4 (2.9) 3.3 Net financial expense (41.2) Corporate income tax (11.8) Equity in net income of companies accounted for by the equity method 3.7 Net loss (46.0) Segment assets Property, plant and equipment, net 1, ,555.6 Other 3, , ,988.4 Total segment assets 5, , ,544.0 Investments in companies accounted for by the equity method Other equity interests 1.3 Short- and long-term financial assets Tax assets (current and deferred) 90.0 Total assets 7,260.6 Segment liabilities 2, ,516.6 Borrowings 2,210.8 Tax liabilities (current and deferred) 71.1 Shareholders equity and minority interests 1,462.1 Total liabilities 7,260.6 Capital expenditure Depreciation of property, plant and equipment (132.6) (31.6) (1.1) (165.3) Impairment in value of property, plant and equipment 2.0 (0.1) 1.9 FAURECIA 2007 Interim report 17

19 Full-year (in millions) Interior modules Other modules Holding companies Total Sales 8, , ,843.7 Inter-segment eliminations (35.0) (15.7) (144.3) (195.0) Consolidated sales 8, , ,648.7 Operating income (loss) (44.5) Segment income (loss) (433.1) (320.2) Net financial expense Corporate income tax (35.2) Equity in net income of companies accounted for by the equity method 4.4 Net loss (86.6) (437.6) Segment assets Property, plant and equipment, net 1, ,452.9 Other 3, , ,509.2 Total segment assets 4, , ,962.1 Investments in companies accounted for by the equity method Other equity interests 1.3 Short- and long-term financial assets Tax assets (current and deferred) 82.2 Total assets 6,740.0 Segment liabilities 2, (1.4) 3,269.7 Borrowings 2,314.4 Tax liabilities (current and deferred) 65.3 Shareholders equity and minority interests 1,090.6 Total liabilities 6,740.0 Capital expenditure Depreciation of property, plant and equipment (262.9) (60.7) (2.8) (326.4) Impairment in value of property, plant and equipment (80.2) (3.9) (84.1) 4-2 Sales by business segment (in millions) 2007 % % Full-year % Interior modules - Automotive Seating 2, , , Vehicle Interiors 1, , , , , , Other modules - Exhaust Systems 1, , , Front End , , , Total 6, , , FAURECIA 2007 Interim report

20 Note 5 Operating expenses 5.1 Analysis by function (in millions) 2007 Full-year Cost of sales (6,130.1) (5,578.6) (10,921.5) Research and development costs (137.5) (137.9) (305.0) Selling and administrative expenses (181.2) (178.0) (353.0) Total (6,448.8) (5,894.5) (11,579.5) 5.2 Analysis by nature (in millions) 2007 Full-year Purchases used in production (4,493.9) (3,980.0) (7,808.4) External expenses (582.6) (557.8) (1,108.7) Payroll costs (1,216.1) (1,189.1) (2,303.1) Taxes other than on income (34.1) (36.2) (66.3) Other income and expense* Depreciation, amortization and provisions for impairment in value of non-current assets (241.7) (252.6) (518.3) Charges to and releases of other provisions 15.2 (6.6) (17.3) Total (6,448.8) (5,894.5) (11,579.5) * Including production taken into inventory or capitalized (development and tooling) Research and development costs (in millions) 2007 Full-year Research and development costs, gross (318.0) (326.0) (630.5) - amounts billed to customers and changes in inventories capitalized development costs amortization of capitalized development costs (77.2) (76.2) (161.5) - charges to and releases of provisions for impairment in value of capitalized development costs (3.6) (4.8) (17.6) Net expense (137.5) (137.9) (305.0) 5.4 Depreciation, amortization and provisions for impairment in value of non-current assets (in millions) 2007 Full-year Amortization of development costs (77.2) (76.2) (161.5) Amortization of other intangible assets (5.7) (6.3) (12.8) Depreciation of specific tooling (6.1) (6.4) (13.8) Depreciation of other items of property, plant and equipment (149.1) (158.9) (312.6) Provisions for impairment in value of capitalized development costs (3.6) (4.8) (17.6) Total (241.7) (252.6) (518.3) FAURECIA 2007 Interim report 19

21 Note 6 Other operating income and expense Other operating income and expense can be analyzed as follows: (in millions) 2007 Full-year Releases of (charges to) provisions for contingencies and charges and for impairment in value of non-current assets, net 0.3 (0.1) Provisions for impairment in value of goodwill and other non-current assets Vehicle Interiors (197.8) Other provisions for impairment in value of non-current assets (35.7) Reorganization expenses (39.9) (107.0) (168.7) Early-retirement costs 0.0 (0.6) (0.5) Gains (losses) on disposals of assets, net Other (0.3) 0.0 (4.1) Total (38.4) (87.2) (386.0) For full-year, these provisions concerned goodwill in the amount of 125 million, and non-current assets in the amount of 72.8 million. In first-half 2007, this item included 39.9 million in restructuring costs. In first-half it included million in restructuring costs and 1.9 million in charges to provisions for impairment in value of non-current assets ( million and 3.2 million respectively for the full year). Restructuring costs concerned 730 employees in first-half Note 7 Other financial income and expense (in millions) 2007 Full-year Impact of discounting pension benefit obligations (4.5) (4.6) (9.5) Changes in the ineffective portion of gains and losses on currency hedges 0.7 (1.2) (0.2) Changes in fair value of currency hedges on debt (0.3) Changes in fair value of interest rate instruments Other 1.9 (1.7) (1.3) Total (3.4) 20 FAURECIA 2007 Interim report

22 Note 8 Corporate income tax The effective corporate income tax charge can be reconciled with the theoretical tax charge as follows: (in millions) 2007 Full-year Income (loss) before tax of fully consolidated companies (18.8) (37.8) (406.9) Standard French tax rate (34.43%) (34.43%) (34.43%) Taxes at standard French tax rate Impact of income taxable at a reduced rate Impact on deferred taxes of changes in tax rates in certain countries Impact of different tax rates applicable to foreign subsidiaries Tax credits and exemptions Utilization of previously unrecognized tax loss carryforwards Tax loss carryforwards arising during the period for which no deferred tax asset was recognized (46.7) (68.7) (188.6) Impairment of previously recognized tax assets (1.1) (5.2) (31.2) Permanent differences (5.2) 4.3 (42.6) Effective corporate income tax charge (22.3) (11.8) (35.2) Deferred tax assets are not recognized for tax loss carryforwards that are not certain of being utilized. As of June 30, 2007, these assets amounted to 547 million, compared with million as of December 31,. Note 9 Earnings (loss) per share Full-year 2007 Number of shares outstanding at the period end 24,372,068 24,234,601 24,259,236 Adjustments: - Treasury stock (279,339) (333,554) (302,154) - Impact of share issues weighted based on the period between the date of the share issue and the period-end (93,366) (200) (24,968) Basic weighted average number of shares 23,999,363 23,900,847 23,932,114 Weighted impact of dilutive instruments (stock options) (*) 115, ,348 90,358 Weighted average number of shares after dilution 24,115,212 24,009,195 24,022,472 (*) As of June 30, 2007, 1,326,983 stock options were outstanding and exercisable, compared with 1,265,715 as of December 31, and 1,391,850 as of June 30,. Basic and diluted earnings (loss) per share (in ) Full-year 2007 Basic earnings (loss) per share (1.98) (2.02) (18.72) Diluted earnings (loss) per share (1.98) (2.02) (18.72) Basic earnings per share are calculated by dividing net income by the weighted average number of shares outstanding during the period, excluding treasury stock. FAURECIA 2007 Interim report 21

23 Note 10 Goodwill (in millions) Gross Impairment Net Net goodwill as of January 1, 1,552.9 (138.4) 1,414.5 Acquisitions and minority interest buyouts 0.0 Translation adjustment and other movements (0.2) (0.2) Impairment of goodwill (Vehicle Interiors) (125.0) (125.0) Net goodwill as of December 31, 1,552.7 (263.4) 1,289.3 Acquisitions and minority interest buyouts Translation adjustment and other movements Net goodwill as of June 30, ,553.6 (263.4) 1,290.2 Net goodwill breaks down as follows by business: (in millions) June 30, 2007 Dec. 31, Automotive Seating Vehicle Interiors Front End Exhaust Systems Total 1, ,289.3 Note 11 Investments in companies accounted for by the equity method As of June 30, 2007 (in millions) % interest (*) Group share of equity Dividends received by the Group Group share of sales Group share of total assets Vanpro Assentos Lda Teknik Malzeme Copo Iberica Sa Componentes de Vehiculos de Galicia SA Faurecia Japon NHK Kyushi Co. Ltd 50 (5.4) Faurecia Japon NHK Co. Ltd 50 (3.2) Arsed d.o.o Kwang Jin Faurecia Ltd Faurecia AD Plastik Automotive Romania SRL Total SAS Group Total (*) Percent interest held by the company that owns the shares. 22 FAURECIA 2007 Interim report

24 11.1 Change in investments in companies accounted for by the equity method (in millions) 2007 Full-year Group equity in underlying net assets at beginning of period Dividends 0.0 (1.2) (2.8) Group equity in net income Changes in scope of consolidation Capital increase Translation adjustment Group equity in underlying net assets at end of period Group equity in the net assets of companies accounted for by the equity method (in millions) June 30, 2007 Dec. 31, Non-current assets Current assets Cash and cash equivalents Total assets Shareholders equity Borrowings Other non-current liabilities Non-financial current liabilities Total liabilities Note 12 Trade accounts receivable In 2000, Faurecia and certain of its French subsidiaries entered into a one-year agreement with a Group bank providing for the sale of trade receivables. Under this agreement, which was renewable through November 2005, the bank s right of recourse was limited to the amount of the related subordinated deposit. The agreement was renegotiated in 2004 and replaced by a one-year factoring agreement renewable through December 2007, providing for the norecourse sale of receivables. In order to further diversify its financial resources, in December 2002 Faurecia entered into a second one-year renewable agreement with another Group bank, extending the receivables securitization program to other French and non-french subsidiaries in Europe, with the right of recourse. This program was continued until May 2007, when it was replaced by renewable factoring agreements with no set time period. Under these agreements, a portion of the receivables sales are carried out without the right of recourse. In 2004, a number of the Group s Spanish subsidiaries entered into a factoring agreement with their banks and in and 2007 certain of the Group s French and German subsidiaries signed additional factoring agreements with their banks. The receivables sold without recourse have been derecognized. They amounted to million as of June 30, 2007, compared with million as of December 31,. FAURECIA 2007 Interim report 23

25 Note 13 Shareholders equity 13-1 Capital stock and additional paid-in capital As of June 30, 2007 the Company s capital stock amounted to 170,604,476, divided into 24,372,068 fully paid-up common shares with a par value of 7 each. Shares which have been registered in the name of the same holder for at least two years carry double voting rights Employee stock options a) Stock subscription options The Company has a policy of issuing stock options to the management of Group companies and their over 50%-owned subsidiaries allowing them to subscribe for newly-issued Faurecia shares. As of June 30, 2007 a total of 1,326,983 stock subscription options were outstanding. Exercising these options would result in: - capital stock being increased by 9.3 million - additional paid-in capital being increased by 61.3 million. Details of the stock subscription option plans as of June 30, 2007 are set out in the table below: Date of Shareholders Meeting Date of Board Meeting Exercise price (in ) Number of options granted Of which granted to senior executive management/ Executive Committee members Start of exercise period Expiry date of exercise period Options exercised Options forfeited Number of options outstanding as of June 30, 2007 June 18, 1992 April 7, ,000 75,000 April 8, 1999 April 6, ,600-21,400 May 31, 1994 Oct. 20, ,000 30,000 Oct. 21, 1999 Oct. 19, ,000-15,000 May 31, 1994 May 3, ,000 15,000 May 4, 2000 May 2, ,000 1,000 7,000 May 3, 1995 Sept. 12, ,000 40,000 Sept. 13, 2001 Sept. 11, ,500-33,500 May 31, 1994 June 26, ,000 15,000 June 27, 2002 June 25, ,500 1,500 21,000 June 5, 1997 June 26, ,500 15,000 June 27, 2002 June 25, ,000 7,000 2,500 June 5, 1997 June 1, 2001 Feb. 22, ,700 69,500 Feb. 23, Feb. 22, ,600 99, ,800 June 1, 2001 May 14, 2002 Nov. 28, , ,000 Nov. 29, Nov. 27, ,217 96,000 92,283 May 14, 2002 April 14, , ,000 April 14, 2008 April 13, , ,000 May 25, 2004 April 19, , ,000 April 18, 2009 April 18, , ,500 May 23, 2005 April 13, , ,000 April 12, 2010 April 12, , ,500 May 23, 2005 April 16, ,500 (in process) April 17, 2011 April 16, ,500 Total 1,326, FAURECIA 2007 Interim report

26 b) Stock purchase options Between 1999 and 2001, the Company granted stock options to the management of Group companies and their over 50%-owned subsidiaries, allowing them to purchase existing Faurecia shares. As of June 30, 2007, a total of 270,755 stock purchase options were outstanding. Details of stock purchase option plans as of June 30, 2007 are as follows: Date of Shareholders Meeting Date of Board Meeting Exercise price (in ) Number of options granted Of which granted to senior executive management/ Executive Committee members Start of exercise period Expiry date of exercise period Options exercised Options forfeited Number of options outstanding as of June 30, 2007 June 1, 1999 Sept. 6, ,000 53,100 Sept. 6, 2004 Sept. 5, ,500 17, ,250 June 1, 1999 May 22, 2000 Sept. 4, ,000 54,900 Sept. 4, 2005 Sept. 3, ,495 41, ,505 May 22, 2000 April 26, ,500 40,000 April 26, 2005 April 25, ,500 5,000 22,000 Total 270,755 Note 14 Other provisions (in millions) June 30, 2007 Dec. 31, Restructuring Early-retirement Employee profit-sharing Long-term contract losses and customer warranties Claims and litigation Long-service awards Other Total Note 15 Net debt (in millions) June 30, 2007 Dec. 31, Bonds Bank borrowings Other borrowings Obligations under finance leases Sub-total Long-term debt ,065.6 Current portion of long-term debt Short-term debt 1, ,087.4 Payments issued (a) Derivatives (net) (26.6) (14.8) Total 2, ,285.1 Cash and cash equivalents (b) (628.5) (586.6) Net debt 1, ,698.5 Net cash and cash equivalents (b) - (a) FAURECIA 2007 Interim report 25

27 15.1 Eurobond and syndicated line of credit On October 5, 2005, Faurecia issued 300 million worth of bonds redeemable in October In addition, since November 2004, Faurecia has had access to a medium-term syndicated line of credit of up to 1,600 million which can be drawn down for renewable periods of one, three or six months through November As of June 30, 2007, the undrawn portion of this credit line amounted to 1,120 million. The contracts relating to these two forms of borrowings include covenants, certain of which concern financial ratios. As of June 30, 2007, the Group complied with all of these ratios, as shown in the table below: Type of ratio Contractual ceiling/floor Value as of June 30, 2007 Ratio Amount Adjusted net debt*/ebitda** 3.50 ceiling ,654.7/554.3 EBITDA**/net interest 4.50 floor /95.2 * Adjusted net debt = consolidated net debt + adjustments for certain commitments given, based on definitions provided in the credit agreement (e.g. mortgages or collateralized liabilities). ** Earnings before interest, tax, depreciation and amortization = Operating income + depreciation, amortization and provisions for impairment in value of property, plant and equipment and intangible assets Securitization and factoring programs Part of Faurecia's financing requirements is met through factoring programs (see Note 12). As of June 30, 2007, financing under these programs totaled 697 million. As of December 31, it amounted to 380 million and the Group also had million in financing from with-recourse sales of receivables under a program that was terminated in May Factoring program (in millions) June 30, 2007 Dec. 31, Initial and renewable factoring agreements - Financing Receivables sold and derecognized Securitization program (in millions) June 30, 2007 Dec. 31, Financing Subordinated deposit, deducted from the related liability Securitized receivables under this program were not derecognized. 26 FAURECIA 2007 Interim report

28 15-3 Analysis of long- and short-term debt by interest rate and currency As of June 30, 2007, 86% of the Group s borrowings were at variable rates, representing 1,928.2 million. Interest on variable-rate borrowings payable between July 2007 and December 2010 has been hedged (see Note 16.2). Borrowings (taking into account currency swaps) break down as follows by repayment currency: (in millions) June 30, 2007 Dec. 31, Euro 1, % 1, % US dollar % % Other currencies % % Total 2, % 2, % As of June 30, 2007, the weighted average interest rate on outstanding borrowings was 4.19%. Note 16 Hedging of currency and interest rate risks 16-1 Hedging of currency risks Currency risks relating to the commercial transactions of the Group s subsidiaries are managed centrally by Faurecia, principally using forward purchase and sale contracts and options as well as foreign currency financing. Subsidiaries outside the euro zone are granted inter-company loans in their operating currencies. As such loans are refinanced in euros, the related currency risk is hedged through swaps. Forward purchase and sale contracts (excluding swaps relating to the refinancing of intercompany loans) and call and put options are as follows: USD/EUR USD/CAD EUR/ZAR EUR/PLN EUR/JPY EUR/RON EUR/SKK TOTAL Forward sales Forward purchases (7.7) (7.7) Call options 0.0 Put options Hedging instruments are recorded in the balance sheet at fair value. Calculations of fair value are based on measurements confirmed by banks. (in millions) June 30, 2007 June 30, Dec. 31, Fair value of currency hedges of operating receivables and payables - Assets Liabilities (1.4) Fair value of instruments used to hedge financial assets and liabilities - Assets Liabilities FAURECIA 2007 Interim report 27

29 Changes in fair value break down as follows: 2007 Full-year Effective portion of gains and losses on hedges of commercial receivables and payables recorded under operating income 0.7 (1.1) (1.3) Effective portion of gains and losses on hedges of forecast transactions recorded in equity (0.2) (0.3) (0.8) Ineffective portion of gains and losses on hedges, recorded under other financial income and expense 0.7 (1.2) (0.2) Change in fair value of hedges of financial assets and liabilities (0.3) 1.5 (2.1) (2.6) The impact corresponding to the effective portion of gains and losses on hedges of forecast transactions was recorded in equity as of December 31,, for 3.3 million. This amount was written back to the income statement in the first half of Interest rate hedges Caps and other options in euros and US dollars have been taken out to hedge interest rate risk on the interest payable on borrowings between July 2007 and December Variable rate/fixed rate swaps in US dollars have also been set up as hedges in relation to interest payable over the same period. In addition, floors have been purchased in order to benefit from any lowering of medium-term interest rates on fixed rate debt Caps and other options 2,824 1,468 1, Variable rate/fixed rate swaps Floors Interest rate hedges are measured at market value. As these hedges do not meet the criteria in IAS 39 for hedge accounting, changes in their fair value are recorded directly in Other financial income and expense. These changes represented net income of 8.1 million in first-half The related instruments are recognized in the balance sheet as follows: (in millions) June 30, 2007 Dec. 31, Market value of interest rate instruments Premiums payable through 2009 (9.6) (11.7) Total - net FAURECIA 2007 Interim report