Covid-19 affects Faurecia and Adient. First one sees its financial reports changing tune for the worse, while the other is renegotiating a contract signed at the end of January, or the pre-pandemic area. Covid is affecting Faurecia and Adient: the two big players providing components to the automotive industry are forced to review their strategies.
Covid-19 affects Faurecia
French group expects nothing good from the near future, and as reported by Reuters, the company’s CFO Michel Favre has already warned shareholders that the future is grim. European and North American volumes will drop by between 65% and 70%. Such circumstances were slightly mitigated in Asia, where the company should close with a decrease of about 50% at constant rates. Thanks to the solid results in the January-March quarter, Faurecia’s first semester should close with a decrease of 35% on yearly basis.
The group announced on January 31st its decision to restructure the joint venture with Yanfeng Automotive Trim Systems, a Chinese supplier of auto interiors. Adient had agreed to sell 30% of ownership to the partner, but 5 months later, the partners are renegotiating the terms of the agreement. The value of the 30% ownership went from 379 million USD to 369 million. Moreover, Yanfeng promises to pay 309 million at the time of closing, while the remaining 60 million would be distributed in the form of dividend payments throughout time. The two entities are now awaiting the decision of the authorities overseeing the new deal.
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