Street Calls of the Week
Investing.com -- Forvia (EPA:FRVIA) said it remains on track to meet its 2025 guidance despite headwinds from foreign exchange, customer and geographic mix, and the normalization of tooling revenues.
The French automotive supplier gave the update during a public pre-close call ahead of its Q3-25 sales publication scheduled for Oct. 20.
The company expects a mid-single-digit reported revenue decline in Q3, with €6.1 billion in value-added revenue aligning with consensus expectations.
Management said sequential FX headwinds and continued normalization of tooling revenues “should drive mid-single-digit reported revenue decline in Q3.”
Average EUR/USD and EUR/CNY rates were 1.17 and 8.36, both up about 6% year over year, and FX is expected to weigh on results by 3% to 4% in Q3.
Global light vehicle production is forecast to grow modestly in Q3. Forvia confirmed its latest S&P Global Light Vehicle Production forecast from Sept. 16, projecting global production up 2.6% year over year, driven by 6.2% growth in China and 3% in North America, while Europe remains broadly flat.
Kepler Cheuvreux noted “S&P latest global light vehicle production estimates suggest +2.7% for Q3…somewhat more balanced as North America contributes to growth (+3.7% after -4.2% in H1) and Europe is neutral (-2.8%).” H1 growth was stronger at 3.6%.
Organic growth remains limited, affected by customer and geographic mix and tooling normalization.
Forvia said Q3 organic growth “should continue to be negatively impacted by negative geographic mix and a sharp decline in tooling revenues, continuing the H1 trend.”
Geographic mix headwinds improved sequentially to around negative 1 point in Q3 from roughly negative 4 points in H1-25, but customer mix deteriorated in Europe, particularly in Seating and Lighting, and in China for Seating. Tooling sales in Interiors reduced group-level growth by about 1.5 points or €95 million.
Business mix is developing positively, with the most profitable units, Life Cycle Solutions and Clean Mobility, growing fastest. Management also highlighted sustained top-line momentum in Electronics.
Forvia reiterated its 2025 guidance, targeting a 5.2%-6% operating margin, at least €655 million in net cash flow, and sales of €26.3 billion-€27.5 billion at constant FX.
The company confirmed a net debt-to-adjusted EBITDA ratio of up to 1.8 times at the end of December 2025, excluding disposals.
Total debt, including factoring, fell to €7.7 billion from €9.4 billion at the end of H1 2023, with leverage of 2.2x.
Management noted that P&L and financial expenses “remain a large drag on FCF generation, as their decline is slower than the decline in net debt, as average interest rates rise.”
Management said reviews are ongoing regarding portfolio reshaping, with large disposals “needed to reduce the absolute level of debt faster and support a steeper decline in net financial outflows.”
No disposals have been completed over the last 18 months. A strategy update is expected at the February 2026 capital markets day.
The positive revisions of global light vehicle production since April, slightly better H1 earnings, and active refinancing at sequentially lower rates have supported strong share price performance for Forvia and its French peers.