(Reuters) -French car parts maker Forvia on Friday posted solid organic sales growth for the third quarter, but warned that the spreading United Auto Workers strike will take a bigger bite out of revenue in October and could lead to layoffs.
The world’s seventh largest automotive supplier said the impact of the UAW strikes on its U.S. sales was about 6 million euros ($6.34 million) in the past quarter, but that should rise to around 55 million euros in the month of October.
In October 2022, its North American sales were around 600 million euros, with around half coming from Ford (NYSE:F), GM and Stellantis (NYSE:STLA).
The UAW strike has hit the one-month mark, with more than 34,000 union members working at Ford, General Motors (NYSE:GM) and Chrysler parent Stellantis out on strike, including those who went out on strike at Ford’s cash-cow Kentucky pickup truck plant last week.
“We are taking into account the new risk and large risk that is represented by the UAW strike, which is having a potentially larger impact than what was imagined before,” Forvia Chief Financial Officer Olivier Durand told analysts.
The supplier is considering temporary layoffs and other ways to cut spending to counter the impact of UAW strikes, Durand told reporters.
The company, which sells seats, dashboards, electronics, lighting and fuel systems to automakers, reported quarterly sales of 6.53 billion euros, up 10.7% organically from a year earlier and 700 basis points above global car production.
“Given the organic growth out-performance across the regions (excluding North America) and continued execution of synergies, the outlook for 2024 organic growth and margin expansion looks intact,” Citi analysts wrote in a client note.
Forvia, born from Faurecia’s takeover of Hella, also said it was starting another 1 billion euro asset disposal plan to reduce its debt and expenses amid persistent inflation and high interest rates.
It reiterated a 2023 sales forecast of 26.5 billion to 27.5 billion euros and an operating margin target of 5.2% to 6.2%.
($1 = 0.9456 euros)
Source: Economy - investing.com
