French automotive parts supplier Plastic Omnium has taken a series of cost reduction measures in response to signs that global car production is set to plunge further in the second half of the year.
In its first half financial report, the company said it expected to save €100m through cost reduction programmes, which involve workforce reductions, strict control of production costs and structural improvements.
Furthermore, Plastic Omnium expects to sell its commercial real estate assets to Sofiparc, a real estate company that is wholly-owned by Burelle SA, the holding company that also controls Plastic Omnium.
The transaction, said Plastic Omnium, is aimed at rationalising the company’s non-industrial real estate assets and strengthening its financial structure.
Despite a 6.9% decline in global automotive production during the six months to end of June, Plastic Omnium reported an 11.8% year-on-year growth in earnings (EBITDA) at €511m on a 20.7% consolidated revenue increase of €4.6bn.
The French supplier expects automotive production to decrease 4.5%, to around 87 million vehicles in 2019 versus 91.3 million in 2018.
Against this backdrop, the company expects operating income to fall slightly below the €610m achieved in 2018, while the EBITDA will show an increase compared to the 2018 figure.
During the first six months of the year Plastic Omnium said it opened six production plants and three R&D units globally. The production plants include sites in:
Kenitra, Morocco mainly to serve the PSA group;
Bhambali, India to supply products to Chevrolet;
Hlohovec, Slovakia to meet the demands of Jaguar Land Rover;
Greer, the US to serve BMW
Vaihingen, Germany to supply to Porsche;
And Saltillo, Mexico to serve Dodge
The company also opened two R&D centres in Brussels, Belgium and Wuhan, China; and an expansion on its Lyon-based Sigmatech R&D unit during the first six months of year.