Forvia SE

Patrick Koller - Chief Executive Officer Michel Favre - EVP, Chief Financial Officer Christophe Schmitt - EVP, Faurecia Clean Mobility

Alexis Albert - Barclays Gaetan Toulemonde - Deutsche Bank Jose Asumendi - JPMorgan Ashik Kurian - Jefferies Victoria Greer - Morgan Stanley

Good morning ladies and gentlemen and it’s really my pleasure to welcome you here in Pavillon Gabriel, also the phone and the web. It’s a special event for us, the 2016 results and this is the agenda that I propose.

I would start with the 2016 highlights, Michel will go more into details of our 2016 results and I’ll close the presentation with our new trajectory 2016, 2018. The 2016, highlights.

First our growth, a robust value-added sales growth of 4.3% was achieved like-for-like in 2016. This is equivalent to a growth of 2.6% on total sales and operating margin up 80 basis points to 6.2% of value-added sales, 5.2% equivalent on total sales.

And net cash flow at EUR459 million, up 52% versus last year and proposed dividend of EUR0.90 per share at 38% versus the previous year. When you look at our performance linked to our objectives we set in 2013, we exceeded on all the cases our given objectives starting with the growth with a CAGR of 5.3% versus an objective of 5%.

An operating margin at 5.2% and you see also in the different regions we exceeded the objectives we gave ourselves in Europe, in North America and in Asia. Net cash flow achieved at EUR459 million for an objective around EUR300 million and on return on capital employed of 24.6% versus ROCE above 20% as an objective.

So that’s important, we told you what we will do and we did what we set. And few achievements and a few comments about our business groups and our regions, so let me start with seating with an organic growth of 9% ,which is twice the light vehicle production growth in seating via winning significant market shares and we will be back on that.

Interior, the operating margin improved of 250 basis points since 2014 and I think we’re clearly today in a benchmark position as far as profitability is concerned. Clean Mobility, 9.4% operating margin on value-added sales, here again this is a benchmark performance.

When you look at the regions, Europe and North America leveraged operation excellence, they achieved margin improvement respectively of plus 80 basis points and plus 70 basis points. In Asia, we maintained our momentum with value-added sales 9.1%, which again is above the market growth and with an operating margin of 12.1%, up 40 basis points versus 2015 and we continue to accelerate our growth in Asia.

In South America, we enjoyed very strong growth, we had some production transfers from our competitors to us, plus 36% on an organic basis and we were able to reduce significant losses through a significant plan to reduce cost. To give you an idea about that, in the second half sadly we were still at loss, but limited to EUR7 million and we are planning to be positive in 2017.

When we look at what we did between 2008 and 2016, it’s good to have a look on that. The first thing is the group transformation is absolutely obvious and you see it here with the customers.

In 2008, our two first customers accounted for about 50% of our sales. Today, none of them is above 20%.

In fact, the first customer Volkswagen is representing 19% of our sales. We have today an American Ford in the second position.

We have European and Japanese in the third position and we have entering in our top ten Hyundai, Hyundai Kia and Cummins for commercial vehicles, so a much better balanced customer portfolio. When you look at the regions, Europe is at 50% and Europe will probably stabilize a little bit below 50% in the years to come and this is because of the growth we will continue to enjoy.

In Asia we expect to be quickly above 20% in Asia, which is remarkable considering the maturity of the market is to grow. We were able to have in North America where we were close to double our market - our sales.

But not only that, during this period of 2008, 2016, we improved our execution quality. We improved our profitability and also our financial flexibility having reduced very significantly our debt, we would see it a little bit latter and this is thanks to I think very agile and very entrepreneur teams in the company.

We have changed the culture and we see the benefits of that. I think it’s very important considering the digital transformation we’re going through to be ready to accept the changes at the speed we acquire [ph].

So I’ll let the floor now to Michel. Michel?

Good morning ladies and gentlemen. I would to start with a technical preliminary remark.

The anticipated positive consequence of the IFRS 15 norm implementation called revenue recognition and I suppose as older companies to give in 2017 the different entities to be implemented in ‘18. According to our current analysis, Faurecia has stretches of agents for [indiscernible], Faurecia being best for with no responsibility, therefore the sales would be, will be netted as a whole material consumption in 2018.

We’re giving this message for our activity, Faurecia Clean Mobility. At this stage we do not see any automated impact and we do not see any chance for the two or so business groups that means Interiors and Seating.

If you understand why from now onwards including this presentation, we will communicate on value-added sales which will become total sales in 2018. This will definitely simply our communication and give a full representation of our work performance.

I will now to make as a quick review 2016 results and to focus afterwards on the full year business. On Slide 10, you can see that value-added sales grew 3.5% organically versus 2015.

Main drivers of course were Asia plus 12.5% and our seating business plus 9.2%. Currencies were negative by 1.6%, as the trend was diverse at the end of the period.

Scope was negative by 1.7%, the consequence of the disposal of the Fountain Inn in North America. Moving to profitability on Slide 11, we confirm our momentum plus EUR54 million versus ‘15 or if you prefer plus 50 basis points in marginally.

Main divers of this improvement were Asia, again plus 110 basis points, up to 12.4% operating margin; Interiors, plus 90 basis points, up to 5.2%; Clean Mobility, plus 50 basis points, up to 9.3% operating margin. The negative operating margin in South America was significantly reduced by minus EUR7 million and is true to be compared with minus EUR22 million a year before.

And for South America we target positive operating income in ‘17. As you can see it is mentioned in the slide, our gross margin grew by 60 basis points.

This figures include refinancing of two important projects, the acceleration of R&D expenses linked with other intake and fees and with the higher number of new projects which we start in 2017 and 2018, this projects will of course feed the acceleration gross. Secondly, we have some special effort as a group projects like digital, global service implementation, this project will generates significant savings in ‘17 and the years after.

Now, I will comment on the full year results from Slide 12. Value added sales were slightly up, 1% on the reported basis, negatively impacted by ForEx mainly the Chinese renminbi, minus 2.1% as the scope minus 1.5%, it is a disposal of the plant of Fountain Inn.

Like-for-like organically the group posted 4.3% growth versus ‘15, in line with worldwide production. As you know 2016 was anticipated to be a year of lower growth for Faurecia, but please notice [indiscernible] as this has shown Faurecia goals 2015, 2016 plus 6.5%.

Faurecia will still be of organic growth. As of 2016, growth drivers were Asia entities.

Moving again to profitability for the full year on Slide 15, you will notice a significant improvement of our profitability as the total value and I think only figures accounting, plus EUR150 million in ‘16, plus EUR375 million if you compare to ‘15 and in ‘15 the exterior contribution was integrated. So it is a very significant gain in terms of the value.

As a percentage, plus 50 basis points of margin in ‘16 versus ‘15, plus 200 basis points in ‘16 versus ‘14. So it is a real above breakthrough with significant improvement in execution and Faurecia technicians, 20% on full on the additional sales.

As we see in the next slides, Europe and North America were posting margins above or around 5.5%.Our three business groups were over 5% with Faurecia Clean Mobility close to 10%. Last, as I was mentioning before, these figures integrated some investment for the future on R&D and on the global projects.

Focusing on Europe, Slide 14, sales grows at plus 3.3% was slightly above as the production grows, plus 2.8, mainly driven by new models Peugeot and Nissan. Operating margin continued to improve in ‘16, at plus EUR67 million, plus 80 basis points [indiscernible] as the improvement of our industry favorable footprint.

Faurecia will outperform the market in ‘17, thanks new models mainly SUVs, Peugeot and Nissan, PSA, Volkswagen group and Jaguar Land Rover. Moving to North America Slide 15, our sales were slightly down 0.9% due mainly to the discontinuation of the Chrysler 200 which was a very important model for us.

This discontinuation accounted for a negative EUR166 million or if you prefer 360 basis points versus ‘15. Without this impact, sales in North America would have been up 2.7% in line with the production.

We posted 5.4% operating margin, which corresponds to 5.6% on total sales with 80 basis points gain on gross margin. This is definitely the most [indiscernible] improvement of our production in North America.

Ford and Volkswagen new models and F-250 as the Audi Q5 has a new technology for Cummins called Nitro will boost our sales this year in ‘17. In Asia on Slide 16, we posted a solid growth, plus 9.2% like-for-like, boosted by the growth of production, plus 7.2% mainly coming from China.

More important with our growth is local Chinese OEMs. You know that the local Chinese OEMs are gaining significant market share, we posted plus 58% growth with these customers.

The sales with these customers we’re now representing 15% of our total Chinese sales. This percentage has almost doubled versus ‘15 and of course this is securing our goal of 20% content of sales to Chinese car makers in 2018.

Operating margin improved by 40 basis points to 12.1%, mainly taking advantage of the volume growth. 2017 sales would be boosted by ramp up of the business with Dongfeng a new plant and by the consolidation of the Chang’an JV from January 1 this year.

This JV was consolidated before in etiquette. I would now comment on the performance of our three business groups, starting with seating on Slide 17.

We posted a new year of very high goals, plus 9% versus ‘15. We are year after year over performing the market and gaining therefore significant market shares.

Operating margin improved by EUR40 million or 50 basis points despite the higher R&D expenses linked with a lot of projects and a lot of new platforms. I’ll mention for instance the new VW SUVs in Europe and the Hyundai platform in Korea.

Of course all these frontiers will boost the growth in ‘17. On Slide 18, it is shown that Interior sales were slightly down, mainly due to some end of production especially the famous Chrysler 200, mainly impacting Interiors and some decrease of volumes on flagship models.

Interiors confirmed its breakthrough momentum in profitability in ‘16, plus EUR54 million, plus 140 basis points. With respect to ‘14 we’re speaking of plus 250 basis points.

Quality of execution and footprint optimization were the main drivers of this breakthrough. Interiors will launch a lot of new models, so Jeep, PSA, Ford, Tesla model 3, then will be the consolidation of two JVs Schengen, JVs with FCA in Brazil, all of these of course will boost the sale of Interiors in ‘17.

Faurecia Clean Mobility, on Slide 19, posted another excellent year. Sales were up 2.6% driven by higher activity Peugeot and Nissan, Volvo/Geely, Cummins.

Operating margin improved by 110 basis points, up to 9.4% margin, clearly to higher gross margin. We consider that now we are probably as a benchmark.

2017 goals will be boosted by Nitro technology launched for Cummins, by Nissan and PSA new models in Europe and China as well as the Audi Q5 and Volkswagen Crossblue in North America. Now, if you allow I’ll make a quick point the famous diesel, only to highlight again that Faurecia has a minimal exposure to diesel.

Faurecia diesel is a European story as you know. Secondly, if you take the value-added sales, it amounts to roughly EUR600 million or 4% of our total value-added sales.

Of course the diesel decline, when you see the figures will have a minimal impact and it is fully integrated in our guidance. Moving now to the global profit and loss statement, Slide 22, you can see that we reached flattish reported sales with over EUR150 million operating income improvement, EUR260 million improvement of net result, if I deflect from discontinued operations, plus EUR79 million, so very significant figures.

Moreover, this figure is a net [indiscernible], a very high level of reflection is seen at EUR6 million due to one German plant closure and two plant closures in North America linked with the discontinuation of the Chrysler 200 and there’s a net financial expenses at EUR162 million, we’re including the full yearly cost of the 2011 bond, EUR23 million that we have reimbursed by anticipation. So this EUR23 million saving will be captured this year.

Faurecia’s alliance, please notice that for the corporate income tax at 27%, that was including some activation of process going forward in France, this will continue as you know we have huge number of losses going forward. At this we secure 26%, 27% corporate tax paid for the next year, ‘17 included of course.

This continued operation profit was composed on two things, EUR58 million contributions of the first seven months and on closing of the sale and EUR149 million net profit means after goodwill, transaction cost tax, covered cost, we have some significant covered costs and some provisions. I remind you that we sold this business for an enterprise value of EUR665 million.

Excluding the discontinued operation contribution, net equivalent results amounted to EUR450 million, up 55% or EUR3.28 per share. This confirms the target that we have of EPS of EUR5 for 2018.

On Slide 23, cash generation [indiscernible] amounted to EUR459 million. As we are indicating this figure was boosted by some one-off elements linked with the set of exteriors, the main one is the transfer of liner, EUR190 million from discontinued operations to continued operation.

So it is why we consider that figure that we have called adjusted is accounted for EUR50 million, this figure to be compared to ‘15 or of course with our future achievements ‘17 onwards. EBITDA increased by EUR197 million, financing EUR115 million, additional CapEx and activated R&D expenses.

[indiscernible] due to the numerous projects we have and of course the acceleration of [indiscernible] that we are anticipating for ‘17, ‘18. Coming to the EBITDA improvement and despite some additional CapEx and tax cash out, the group target is clearly to overtake EUR250 million in cash flow in ‘17.

Slide 24, [indiscernible] that we have completed our refinancing plan that we started in ‘14. We have eliminated two expensive bonds.

We successfully issued two bonds ‘15 and ‘16 at a cost of 3% plus, seven year maturity. We have [indiscernible] maturity of above EUR1.2 million in equity line which is ongoing of course.

So as a consequence we’re taking advantage of an un expensive financing with very long maturity, five years or above. [indiscernible] you have some four indicators on this slide.

You have the three year rolling order intake, this addition of order intake of Faurecia. It is important, underlined by Patrick, 11% CAGR of course on this.

This is clearly as a construction, as a building of our growth over the next two, five years. Second - and it is clearly - we have built our target to over-perform the market by at least 500 basis points.

Second, you have the profitability breakthrough already detailed. Third, you see the big reduction of debt, EUR1.2 billion reduction in the last few years.

We have almost debt EUR500 million, so we have a huge financial flexibility, plus and at least because I like to close this financial better with the indicator, which ROCE. ROCE is the indicator for the valuation.

I think the figures are speaking by themselves from 15% to 24.6% to be precise, when you take our guidance for ‘18, [indiscernible] with target to be close to 50%. I will now hand over to Patrick for the new trajectory 2016, 2018 and the conclusion.

Thank you, Michel. So, in this last part I’ll more focus on our products and our strategy.

But to start with the profitable growth will accelerate in 2017 and in the years to come. The growth is secured.

We just spoke about 11% and you see our order intake. We will keep this momentum in 2017 in order to continue to fuel our organic growth for the years to come.

Where is it coming from? It’s coming from mainly the customers and the fast growing customers, our premium customers, we have extended our perimeter with a JLR, with Tesla, with Volvo, I could also add Cadillac, Infinity.

We by the way have an order intake of about EUR1 billion for electric cars and that’s significant. We are positioning ourselves I think quite well on this.

Commercial vehicles with sales growing 80%, this is a CAGR between 16 and 20, so we will have some additional potential in the years to come. In China, we are on track, we said it previously to achieve our 20% in ‘18 and our 30% in 2020.

We believe that the market share of the Chines OEMs will stabilize around 15% so it’s important to have the right market share with them and it’s the only point which is important also, the sales percentage you do with SUVs is key and we here target to be at 50% in 2020 in China. We clearly have the forecast to over-perform the market in China, which is supposed to grow about 5% between ‘16 and 2020.

Michel also spoke about some group initiatives we have launched to reduce our cost. It’s linked to global business services and we will consolidate our activities on fewer platforms worldwide and we will outsource part of it.

We will invest in robotics for all the transactional part. We are working on R&D efficiency on both sides, on the hourly rate and also on the R&D efficiency and we will continue and with the high speed to transform the group from a digital point of view and especially in our manufacturing area.

Cumulated until 2019, we forecast to save about EUR250 million net. But let us speak about our strategic priority and our new trajectory.

You see here our new tagline inspiring mobility with our two main priorities, sustainable mobility and smart life on board. With these ones we have perfectly aligned with the automotive market trends.

You see here that the market growth potential combined of these two priorities is at around EUR65 billion until 2025. So, it’s really very significant.

Before continuing this presentation, to give you a little bit more flair about our new logo and this new trajectory, I propose to see a short video. Video: Major trends are reshaping the automotive industry and accelerating the technology’s revolution.

Faurecia is uniquely positioned to provide innovative solutions for smart life on board and sustainable mobility. A new trajectory, technology leadership, exciting opportunities, the Faurecian community is ready to inspire the future.

Faurecia is inspiring mobility. So, let us start with sustainable mobility.

The sustainable mobility growth is driven by regulations, by powertrain technologies and by emissionized off-road vehicles and high horsepower solutions and we are on these markets. We have developed a product portfolio to cover these one.

Let me start with lightweight and energy recovery solutions. They will accelerate with the acceleration of electrification.

Composites will become a key technology and you know that we have here invested and we are one of the drivers of the false consumption which will allow us to have - to produce carbon fibers for the automotive industry at a very lower level on the existing carbon fibers and this will come on the market around 2022. Faurecia is also developing system for electric vehicles and especially battery thermal management solutions and also for fuel cell systems.

We are looking at, not only the tank, but the stack also. And we are considering new markets, which are opening up for Faurecia, certainly India and China for commercial vehicles with the new regulations starting in 2020.

High horsepower with ASDS, Ammonia Storage and Delivery System, you know this is the alternative to AdBlue. The only difference is this system is working at low temperatures and its volume is about five times smaller than the equivalent AdBlue system.

So, this is a very good solution for trucks, for buses, but also for vessels in the future where the quantity, the volume of AdBlue you will have to have on board in order to emissionize your vessels will be considerable and will impact the loading volume. Real-time data management and electric-heated catalysts are also significant innovations on which we are working.

And we are very much on components and systems. We will also now think about artificial intelligence.

Think about we are measuring in real time pollutants, we will send these pollutants to the cloud at the cloud level with an algorithm that we would be able to predict in summary is what’s the pollution level will be or will become. With this information, we will be able to send back to the cars some informations for example, through proposed specific routes to the GPS system in order to avoid the specific areas where the pollution will peak.

We can also deal with other systems which will be provided the car maker, for example, the parking slot systems in order to avoid the car to turn around. We will always be able to provide some information about additional passengers who could allow you if you take them onboard to take a speed line and to avoid the new rules, which might add some miles to your used route.

So, you see we are thinking about different systems. We are looking at an additional layer in our system integration jobs.

System integration, which is also valid of course for cockpit of the future is our D&A. This is what we do.

So, let us look at what it means for - I’m a little bit too quick. I want to just speak about cockpit of the future, but I have to spend a little bit of time on this after-treatment systems.

On this graph, you see the evolution of the powertrains. We believe that in 2030, we will not have more than 10% of vehicles sold with electric fuel, electric powertrains.

And then we will have close to 50% of the vehicles being electrified, it means including hybrid powertrains. In this graph you see that diesel will be reduced to about 5% and maybe even a little bit less, but gasoline will stay a significant percentage of the powertrains.

What will also happen on gasoline, gasoline will become GDIs, so direct injected a gasoline engines and these will need some additional devices in order to depollute them. On the slide here, you see the evolution of costs linked to the EUR5 to the EUR6d regulation in 2020 and what it means.

For gasoline we will have an increasing price between - from EUR120 per vehicle to EUR280 per vehicle. For diesel engines we will grow from EUR360 to EUR580.

And on hybrid, we will grow from the gasoline, this is the reference, two to EUR370 per vehicle. So, what does it mean for diesel?

The increase in the relative weight of that will eliminate diesel engines from the smaller engine size. It’s already the case for engines below 1.4 liters.

It might also become the case for 1.6, 1.8 liters. For 2 liters and upwards, we will continue to have diesel engines and this is because of the CO2 performance these diesel engines have.

Now, when you do the mix of powertrains with the cost increase, the result is that we will benefit from an average equipment increase from EUR225 in 2016 to EUR315 in 2025, which means plus 40%. All of that, we decided to invite you to an Investor Day in London in June in order to go much more into details and to give you the plans we have and also the innovations and technologies we would like to introduce in the coming years, which will provide to us the growth we expect.

But very importantly here, the message is, yes, we will have a reduction of diesel. Yes, we will have an increase, a significant increase of electrification, but this increase of electrification is not at all negative.

It’s positive. It’s creating a value through the depollution system but also through the energy recovery solutions we provide.

So, now let us go to cockpit of the future. So, I would like to tell you a little bit how it works cockpit of the future.

So we have decided to put a dedicated team together. It’s a team with people from the interior business group and also people from seating and also people having electronic and software backgrounds.

These people today with our customers and with also some end customers involved, are trying to define what are the use cases for autonomous driving. For the moment we are concentrated on Level 4 autonomous driving, which is full automated driving, but in specific environments.

The Level 5, which is the ultimate one being full automation all circumstances, it’s the case where you even do not need to have a steering wheel in the car. In the industry in the moment nobody is speaking about Level 5.

The industry is concentrated on Level 4. We will have the first launches of Level 4 cars between ‘21, 2021 and 2022, so it’s something which is concrete.

So, these guys will extend the teams in Yokohama and in the Silicon Valley. With these three location we will have all the specificities, the market specificities included in our studies.

When you have defined the value - the use cases, sorry, which really make value, makes sense for the customers when you associate to them, technology packages. These technology packages include clearly the HMI interfaces, human machine interfaces.

Here we are speaking about different technologies like displays to be integrated. We are speaking about head up displays.

We are speaking about movement recognition. We are speaking about the voice recognition.

We are speaking about combination of all of that. You understand but this needs an, we call it, an HMI brain in order to deal with the different possibilities and make it easy to the consumers.

Integration is key. We will go to what we call Faurecia smart surfaces, which is the integration in the existing surfaces which are the ones we provide to the market today of these displays and these new technologies.

Very important, when you will have to do something else in the car, you will need to have a versatile architecture and we call that the transformers. We will have to drive out with adequate cinematics, largest screens for example, if you want to look at the movie.

We will have to position differently the driver, maybe no more parallel to the road. We will have to think in this case about a lot of new technologies, safety technologies, but also airflow technologies and ambience and comfort technologies.

Safety will be key and will stay absolutely key because you will have for a very long period of time on the road autonomous cars and non-autonomous cars. Comfort is absolutely key and nobody will compromise on that.

And finally the perceived quality is the third one which we have to very much focus on. Now, you have all of that.

But you also have data. You have data you collect, not only from your system from the car, also data which are made available from the outside world.

It makes sense to consider this data with artificial intelligence in order to anticipate, to predict what will happen in the moments to come, the moments you have in front of you. It is also important considering the scope of the possibilities to know who is in the car.

Knowing who is in the car will allow you to provide the expected, the exact expectations to the different consumers. Another thing which is motion sickness, when you will no more be parallel to the road and when you will do other things than looking out, you have the high risk to be sick.

And we have to take care of that and to change the positions adequately, in order to make sure that in no cases you will have to fear motion sickness. So, these are the technologies.

These are the innovations on which we are working. These are our strategic priorities.

By the way artificial intelligence as I explained it, is valid not only for the cockpit of the future but also for sustainable mobility. It is not only valid for these ones.

It’s also valid for the way we operate, including in manufacturing. So, electronic, software, artificial intelligence are enablers which will have a transversal significant role in the company in the years to come and these are our investment priorities, sorry.

So, now the guidance, just to remind you what - where our objectives for 2018, we proposed a CAGR of 6% with 400 basis points growth above the market and 7% operating income on value-added sales, and net cash flow above 500 million and earnings per share at EUR5. We proposed for 2017 the following guidance, 6% growth, 400 basis points above the market, and operating margin between 6.4% and 6.8%, and net cash flow about 450 million and an EPS around EUR4.

So, here we want to pass you the message that we are perfectly on track and that we fully confirm our 2018 objectives. This is the end of my presentation.

Thank you very much and again I would like to reiterate my invitation for June in London for our Investor Day dedicated to sustainable mobility. Thank you.

Questions?

Hi. It’s [indiscernible].

I have four questions please. I ask them one by one.

Firstly, can you qualify your guidance? Give us some indications.

So, where are you seeing the biggest potential upside in terms of region and division compared with what you’ve said and how much you assume that you might be able to impact your margins, that’s the first question?

So, to guidance, in Europe we believe in a growth for about 1%, 1% to 1.5%. In America we believe that the market will stay at the level we enjoyed in 2015.

In China, we believe in a growth between 3% to 5%, this is resulting in global production volume worldwide of about 93 million vehicles. In other words, about a little bit less, 2% market growth.

We believe that we will continue to grow and this is - we believe we have it in our books, sorry, with seating and maybe I’ll make a comment on interior and on clean mobility. You remember we said it last year on clean mobility after the Emcon acquisitions, we were very dominant in some markets and with some of the customers.

So, we had to deal with some market share adjustments. But we are back.

We are recovering these in market shares and we are adding to our business, the commercial growth which was completely where we were completely absent from it. Interior, three years ago, we had a profitability, which was not acceptable considering our standards.

So, we decided at the time to be much more selective and it worked. I told you that we have improved since 2014 by 250 basis points, our operating margin of interiors.

But here again we are back. We now open again our growth possibilities on interior and on these two you will see a significant difference in 2017.

Raw materials, mainly steel and plastics as far as we are concerned, the total amount of increase, of cost increase we see is about EUR140 million. I remind you that we have passed through rules and mechanisms which are protecting us at about 70%.

So, the remaining risk would be - maximum risk would be 40 million. The estimated risk we take into account inside the company is half of that, 20 million.

Great, thank you. Moving on to second question, can you talk about capital allocation?

You have done what you had said on the balance sheet. Net debt is the lowest I’ve seen at Faurecia ever.

So, congratulations. Can you remind us what you plan to do in terms of bolt-on acquisitions?

Dividend has been increased but it’s still relatively smaller. What do you want to do for that?

Do you eventually intend to buy back shares at one point? So, what kind of leverage ratio would you be comfortable with for Faurecia at the end of the planning 2018?

So, strategy first of all, you know, and I would like to start with the last part, which is the share buyback. My opinion is that you do that when you don’t have a solution and other alternative solution.

We are not there. We want to invest.

We want to grow externally. I told you what are the priorities we have set, clearly we need opportunities.

We are looking at the possibility to buy small or medium companies in order to limit as much as possible obsolete technologies and risks related to that. We also would like to deploy our new technologies into different regions and we have again some different alternatives to consider and we are really working on this and this on both, sustainable mobility and smart life on board.

Dividends, actually the good policy in dividends is to have the progression year-after-year. I remind you that in 2015, the dividend was $0.65 in 2016 paid in ‘17, it is $0.90 and our clear target is to continue to increase the dividends year-after-year.

In terms of bolt-on, I told you we are not willing to consolidate our businesses, but we have value spaces and we are ready to invest in these value spaces to create value. It might be covers, for example, in Asia.

It might be some plastic very specific knowledge and know-how in order to serve and better integrate displays or other technologies, so what we call, mechatronic, yeah, plastronic - sorry, mechatronic is another area in which we are looking for opportunities. This is true for mechanism.

This is true for the cinematics. I spoke about for the transformer solutions we have in the cockpit of the future.

Dividends is the same as we have indicated at each investor day [indiscernible], so one-time net debt on EBITDA.

Third question, there seemed to be a few stranded amount in your numbers, at least some that I would want explanations in the second half, please. Can you explain whether you’ve been composited as a whole for the 200 Chrysler interruption or not yet and how you’ve been coping with that?

Second, in North America, I think you had another relative one-off in H2 with seating contract. That explains where the profitability of seats declined in H2.

Can you talk about that and whether it’s - how much basically it’s impacted your H2 numbers? And finally, can you explain why the European margins in the second half of ‘16 were not higher, given the improvements in top line?

So, the drop-through was far from abusing that region in the second half, so these three small things that I wanted to discuss.

So, the launch in North America, yes, it was slightly difficult, because the employment market in this part of the U.S. was very difficult.

We are in the turnaround, which - turnover, sorry, which was very high. But we fixed it very quickly.

We fixed it within three months and it, yes, cost us some money but nothing as significant of the material. This is one thing.

The other case, the Chrysler 200, I told you before that it will be in combination and it was a combination between some one-off compensations and the world of new businesses, but which we’ll start in 2018 and 2019, which are very interesting for us, because we are speaking here about SUV businesses and especially the brand, which is the most valuable grant of this year.

Follow-up, [indiscernible] I’m sorry, but we have six months of activities in the first half, five months in the second half due to this famous months of August [indiscernible]. So, it is the first explanation.

The second one, don’t forget that we are accelerating our projects. So, if I can use this word, burden of R&D, many of the famous VW platform SUVs is in Europe.

So, Europe has this one-off negative that is representing a good figure and we’ll take advantage of this plan in the near future.

Not to forget that the sales figures in Europe in the second half have dropped significantly.

Okay, last question very easy. Can you just guide us on CapEx as a percentage of sales in ‘17, ‘18?

In respect to value-added sales, because it will be our guidance, something like 4%.

Good morning, Alexis Albert from Barclays. I have two questions.

First one is on Mexico. I know it’s difficult to assess exactly the risk from Mexico because we have a lot of noises coming around regarding border tax or no border tax.

But I think the latest project we’ve heard is to tax on the cost of goods sold in the U.S. on revenues in the U.S.

So, my own assumption would be that Faurecia is slightly above 3 billion of sales in the US, firstly U.S. and I would assume that the margin if I just take cost of goods sold from the U.S., it would then be above North American margin for Faurecia.

So, would that mean an increase of the tax paid by Faurecia in the U.S.?

So, let me - before we precisely answer your question, come back to what it means. So, the first thing is we will understand that the installed capacity cannot move out of Mexico, yeah?

So, the actual amount of exports from Mexico to the U.S. will be kept.

So, this tax regulation, a new regulation issue will not be only related to Mexico by the way. It will have the consequence to increase to prices of the cars significantly.

I’ve heard about figures around $2000 to $3000 in average of a car. Yeah, this would have a negative impact on the sales in North America.

And I’m not sure that this would be good for North America. This side coming closer to us our sales exported from Mexico to the U.S.

are about 1.2 billion. Fifty percent of these sales are intragroup sales.

The volumes we import from the US to Mexico are corresponding to $750 million. So, it means that our intragroup sales would be more than covered by this balance.

And normally it’s up to the buyer to pay the taxes, the import taxes, yeah. So, again, when we look at the materiality of that for us, our exposure, maximum exposure in terms of sales would be 400 million and here, I have not considered in the intragroup, I’m just making the net.

So, our exposure is any would be around EUR20 million to EUR30 million and this would then depend also on negotiations we would do with the customer. This would be in the full year and we will not have a full year in 2017.

Yeah, so I think we are speaking here about speculations. We are speaking about uncertainties we will see.

It might impact us but in this case it would be far less impact Faurecia than its competitors who are very big in the U.S. and especially in Mexico.

I understand that we are talking about speculations and you were talking about tariffs which would increase the prices of cars. But if we just don’t talk about tariffs and just talk about the facts, what is the - could you share with us the revenues of Faurecia just in the United States?

Is 3 billion a fair number, total revenues of Faurecia in the United States?

No, no, four billion, four billion.

You have it in your -

Because in the slide deck, this is North America, so the reason why I said 3 billion is because…

The sales we generate in Mexico is 1.9 billion, okay, and 1.2 exported to the U.S. The difference is domestic sales, 750 million being imported from the U.S.

to Mexico.

Okay. When you said you are staying in Mexico, this is assuming your customers stay in Mexico obviously?

Yeah, but you cannot - I think when you think about a plant, an automotive plant, you will not transfer that plant, it will cost you an absolute fortune, so you might consider the new investments and you might decide not to put the new investments in Mexico, but you believe that Audi just starting the plant will make a decision to move.

And again I’m not speculating. I just knew that [indiscernible] and they said a couple of weeks ago that if it’s really forced to do it, you might think about it.

But we’ll see this is for a long time. My second question is regarding electric vehicles.

You are speaking about a billion of order intake coming from EVs. So, I suppose this is coming from Tesla mainly and the one you are referring in the slide deck.

Would you share with us what is your assumption on Tesla’s volumes?

I will not comment Tesla’s volumes. We are considering the ones which were part of the RFQ and I have no information whatsoever to tell me that these volumes have to be reconsidered, yeah.

But you are right. It’s - Tesla is inside the 1 billion.

It’s only one. We have other customers who are asking us to collaborate on the electric vehicles.

I just would like to finish on Mexico. Just keep in mind that the agility of suppliers is by far higher from a manufacturing point of view than the agility of our customers.

Okay. Thank you.

If I just might add one. It was one I was keeping for you Michel.

What about the tax rate for ‘17 and contribution for working capital in the free cash flow guidance. Thank you.

Tax rate, 26% to 27%, take 27% as a cautious figure and for the working capital, now we would like to limit our working capital consumption to maximum 40 million, 50 million, because we have a working capital increase of course, we have to be careful.

We have said around EUR1 billion of factoring. We are at 1.5-ish, yeah.

So, it’s limited so no increase.

Okay. So, 350 million plus this free cash flow?

Yes, factoring stable.

Okay, perfect. Second question regarding this year, I remember that you have reasonably optimistic regarding China.

You confirmed that the order of magnitude of revenue growth is approximately 20% this year in China. And linked to that, do you expect that the operating margin will remain more or less the same in China?

We have said this on an Investor Day in China early September, we have said above 15% and this will depend on the volumes and I think it will be 3%, 5%, so there is still some uncertainty but China is up starting quite well and Faurecia operating margin yes. We wanted to have 2017 operating margin.

Last question, can you tell us a little bit more about these ASDS situation which is the AdBlue which would work in cold temperature for the buses for, I think you have some order in Seoul [ph]. Do you have other order, can you give us a little bit about naïve about what could be present in coming years in terms of additional revenues.

Thank you.

I think the easiest way to answer this question, Christophe will ask you to answer it, Christophe is in charge of Clean Mobility within the group and he is very much involved in all these ASDS projects.

Thank you, Patrick. Yes, as you know we have acquired Amminex, we were basically 42% shareholder, so we have now taken to majority at 91.5% of this [indiscernible] in Denmark.

So yes we have some contracts, we have some two contracts in Asia, one of them in Korea and the other one in China and we are waiting to start the business basically by 2018. I will not give you further information on other news because it was contract of course are confidential but we are looking to expand so basically this business and technology through a series.

We are currently in discussion with London, we are currently having some business which are basically gripped by this technology and we strongly believe basically and the value of this ASDS which has strong performance in the core drive replacing the CD drive. So this is a great value add for us forward.

Again the two main improvements versus the AdBlue system is first it works at low temperature which in real drive emission measurement system counts quite a lot which was not the case previously. And the second one is the volume; it is a factor of five between AdBlue volume and ASDS.

You mentioned it in Europe we have, we have Copenhagen but we are quite advanced in London because we have busses on the road in London to close a trial and I hope that’s soon we will have conclusions of that. We also maybe, because we give here, the impression that we are completely focused on commercial vehicles and maybe also on high horse power but we also consider ASDS for passenger cars here with cartridges.

Your forecasted volume on European addition of light vehicles this year, you are forecasting more gross of between 1% and 1.5%. Don’t you see this forecast is too much pessimistic as suppose a case for the last two years?

And I would like to know this is your own forecast or is the forecast of a club of users in Europe.

The forecast I give you are our forecast. Of course we use information available in the market IHS and others.

Why 1% to 1.5% in Europe, it's because we also have included in this forecast a drop which is linked to the Brexit. We have considered that in the UK we will have the drop of about 10% of the volumes and UK are representing 15% of the production volumes in Europe.

So it means about 300,000 cars which we have deducted. And remaining growth we expected to come mainly from the South European countries.

Do we have questions from the web?

Thank you, Patrick. You developed a very ambitious R&D plans for the autonomous vehicle and how many of the actors are in the same shield of research so how legitimate are you considered by the car manufactures in this field now?

Just to be clear, we are not working on making the car autonomous, and you are right, you have lot of actors which are working on this. We are working on the consequences of an autonomous car and especially considering the interior of this car.

And here you don’t have many actors. Are we legitimate?

I think so; we have signed already three predevelopment contracts with major OEMs to develop level four interiors. And we have six ongoing discussions with additional OEMs for further contracts.

OEM CS capable because of our DNA, I spoke about our system integration mid-year to do this, we have all the major components; we own all the surfaces you have in the interior of a car today. And we showed capabilities in integrating displays, HMI devices in these surfaces.

Adding to them the function part; adding to the functional part the decoration part. We know how to deal with safety, yeah.

When you look at the seats, it's one of the main systems which has to absorb energy in the case of a crash. But we are also ready to partnership with some other companies, at least two companies, major ones to be able to provide unfool system.

When I say two major ones, I have in mind, people capable to do safety components air bags and so on and a company which is specialized in air flow. Because you understand also that the traditional air conditioning system in the car will move out of it is current place and that if you are no more parallel to the road you cannot have an air flow which will stay from the font to the rear.

So we will have to rethink this. So one thing, the logo we have changed it because the logo in an [indiscernible] in a cage.

This is no more corresponding to Faurecia. We wanted to open up.

We will work in eco systems. The system we will have to integrate and deal with will be very complex in the future.

So we need to have also some partners to work with us on that and to provide the best possible solutions.

Okay, now maybe we are going to take a question from the conference call, operator would you be kind enough to take the first question? Thank you.

Hello, hi. Thanks for taking my question; most of them have been answered.

I just have one clarification; the net debt number that you reported seems to be slightly lower than what I was expecting even though the cash flow came in line. Just wondering whether the impact on the net debt from the disposal has been 665 million or are there any other factors that make the net debt for ‘16 maybe a bit higher than what was expected?

As I indicated, it was an enterprise value of EUR665 million in sizes, there is as usual pension funds so pension funds inside, business EUR22 million. So as a net debt of division, it is EUR645 million to be precise.

Second thing, I think probably some people anticipating the fact that we have dividends towards our shoulders as well dividends to minorities which is traditional in Faurecia, we have some minorities this is EUR70 million, EUR80 million cash out traditionally and this will continue in the next years because we want the cash inside the company. So we don't want to keep cash inside.

May we take another question from the call please.

Thank you very much, couple of items please. The first one we’re into February already.

Can you talk a bit about the momentum the sentiment in the Brazilian car market and where you're seeing a rebound there also anything to bear in mind of currency into 2017? Second block bit more strategic you know we look at your margin in 2018 is this pretty much the structural ceiling in terms of margin potential for the company or has there been anything in the past two years or possibly has been influence in this margin target could be think many of our product mix that could surprise positively during in the course of 2017, I’m just trying to think about where the 7% is the absolute structural ceiling or not?

And the third item Patrick please, is your understanding still the Tesla considers Faurecia’s noncore asset and obviously increasing the free flow Faurecia is still an option for your shareholder? Thank you.

So Brazil, what we see - what we have seen at the end of last year is the kind of stabilization of the volumes better that very low levels, so what we are considering in fact is our growth which is into market shares and much more than due to the market itself. So we will continue to grow and it's a double digit growth in Brazil and we will also continue to grow in Argentina.

And as I said we expect to be positive in operating income and positive in cash in 2017 in South America. 7%, no 7% is not the best we believe we can achieve it’s the one step, into 2018 step, where is improvement coming from, I told you from our operations.

I very much believe in the digital transformation. We see considerable possibilities in our manufacturing, but not only in manufacturing in many other domains.

Our cost structures, our SG&A when you looked at the figures I showed you between 2008 and 2016 our growth was very significant and especially considering shifts the geographical shift. So we are not a benchmark in these fields.

We have a lot to do and this is why we have launched this group initiative of global business services. I said that we expect at least cumulated until 2019 EUR250 million net from that, and I think that we would have significant acceleration on the digital productivity in the years to come.

Finally the technology, the innovation, we set internally a new target in order to boost innovation and especially to make sure that our efforts are focused on the right parts to fastest growing parts of our business to house and growth ratio on our new patent filed of 25% per year, so and this again should fuel our future profitability. The last one PSA, so you know it's always the same answer the best and the best way would be to ask this question.

I can only answer what I’ve heard like you did which is that PSA is not considering us as core business. But unchanged would only be needed or suitable for PSA if they would have a need.

So maybe an event in the future would trigger and change from this point of view.

Okay, maybe you again take one last question from the call, then we will return to the floor. Operator please?

Good morning. Yes just three please.

Firstly on your 2017 guidance if I take the midpoint of your sales and EBIT and you know I get to about EUR1.1 billion of EBIT for 2017 which is ahead of our consensus is right now. But of course, we're already at four years of EPS, so what are we missing there please to get to from the higher EBIT to the same EPS?

And second on electric vehicles and the thermal management systems you’ve talked about in particular perhaps it's related somewhat I guess to the airflow point that you made, but what is your advantage there in thermal versus today's Tier 1 thermal suppliers, but also versus the battery specialists who today do a lot of that thermal management, and in your one billion of order intake for EVs, is there any thermal and that number today or do you have any discussions on thermal there? And thirdly on diesel scene of course that you host them you have included that in your guidance how much many decline have you assumed in your guidance for diesel.

And also I just thinking I guess about negative operational gearing if you are losing volumes there. Can you do any offsets with capacities those Asia and your conversions of capacity to offset some of the top line decline?

I would answer on EPS, so on the result as you have seen, we have one off as one off is, so net results is it profit did increase to discontinued operations were not at EUR88 million. So it is a significant number of course is this when you integrate that we’re already [indiscernible] we’re building a particular net profit, so you have to 3.28 which is our EPS on recurring net profit.

We say would be at far, so we would offset or almost offset in fact this gap of one off, we say well organic important. And I remind you what I said before we have the EUR23 one of cost [indiscernible] bond variables.

So this will net gain to after tax to needless, but it will be net gain. On the restructuring we have EUR86 million, this figure we go back this year to a figure of EUR50, EUR60.

So we have already two big flows coming from the lines below the operating margin and you have I think detailed as a big improvement of operating margins that we are guiding today and to the market.

Okay do you think consensus today is too optimistic on below the line options or how does that work, because the EBIT guidance as ahead on the EPS in line for ‘17?

For 2017 and 2018 what we seen under consensus is that until now is the consensus has not taken our guidance that we have technical that we have, so consensus today is not in line with our guidance. So I bet that we saw we have 2016 figures how we are detailing, we are building our improvement consensus really important.

Okay consensus is already up four years of EPS for 2017?

Sorry.

But your consensus EPS for 2017 is already up for euros?

For EPS I am not sure, but okay I take your point, so it is good, it is in operating, that in line for our goals, but at the end [indiscernible] perfect. As you know consensus of EPS is not very easy thing to understand, because on the way to see the EPS.

Okay, thank you.

Thermal management, we legitimate, yes we are. We - what are our key competence is in the field of clean mobility, it’s out flows and thermal management this is what we do.

We deal with gases which are at very high temperature and we try to deal with air flows and to manage these air flows to have them design should of purposes they are made for. So yes, and the systems we are working on our new systems, we're speaking about innovations we are not catching up.

We are not trying to copy what is existing. We are working on new generations of innovations in this field.

Diesel, just two things you know about diesel, first of all engines and I spoke about the small engines which will no more be proposed in diesel and in this case you know we haven’t drop, but which is predictable and which is given to us by the OEMs with sometime in advance and when you have and then you have the reduction which is linked to the market attractivity and this is also taken into account of course in our forecasts. The last question I couldn’t catch it, could you please repeat your last, the fourth one?

It was just on guidance on thermal and on diesel, but on diesel what are you seeing in terms of charge offs from volumes for ‘17, are you seeing diesel volumes coming down?

Yes, we see volumes going down, we saw volumes going down in ‘16, we see volumes going down in ‘17, they’re aligned with what we told you. The reduction the world reduction which will finally be at about 5% of diesel engines worldwide in 2030, we are perfectly aligned with that.

It’s linear - not exactly linear because of the engines, but it’s a predictable movement.

Great, thank you.

We have one recent question from the web, then I’ll return to the floor. The question is regarding the recent disposal of auto in seating business to Alia, did you consider the acquisition of these assets?

First of all from an antitrust point of view, it would not have been possible for us to consider this acquisition and secondly, we’re very happy because we have one competitor less, which is always good news and congratulations to Alia. We have a question here please.

[indiscernible], I wanted to have your opinion on I would say the rise or the birth of new competitors in China, taking into account that China is one third of your operating margin, so do you think it can erode this, do you think it can have a movement similar to the OEM in China, acting locally and might be globally then? Can you give us your assumption?

Thank you.

You know what happened when you look back at however the automotive industry buildup in China. The graph was the main concern to everybody.

So the cars which were built in China were designed in Europe or in the domestic markets of the different OEMs. In order to limit the risk because adding capacity to the rhythm they were obliged to do it.

They ask the traditional suppliers to follow and they gave them the business. Consequence of that is that the Chinese suppliers were not pushed to add technology and we’re today in a situation where they’re lacking technology, they’re low cost suppliers mainly built to print suppliers to the OEMs.

Careful, I’m here, speaking about seating suppliers, clean mobility suppliers, interior suppliers. It’s not the same story on electronics, it’s not the same story on new technologies where the barriers are not exactly the same.

It’s less processed, it’s more product development, so we don’t fear new comers in China with our big partners with and Chinese OEMs we are building supply perimeters which might be reinforced through some bold acquisitions in China but that’s it. On the other side when we look at electronics we have the lot of smaller suppliers in China which are doing very well.

Never the less you’ve built a JV with Hyundai, don’t you think value all this can do the same and maybe just trying technology.

For the moment we are not in competition.

For the moment?

Yeah. So, but if we would be in competition, it means we have taken the right opportunities because we are entering in the perimeters of others and it is up to us to make the right choices.

But again the other question was - what about the margin you do with Chinese OEMs, we are doing the same margin with Chinese OEMs and we do with the international OEMs. We are not providing exactly the same product because the specifications are not the same and we are adjusting our product offer.

But we don’t - honestly I see China much more as an opportunity in all aspects including external acquisitions is than risk.

So if we have no more questions. Thank you very much.

Thank you for being here with us. Thank you.

Thank you.