Annual General May 30, 2017 Shareholders’ Meeting 2017.pdf · Annual General Shareholders’...

Annual General

Shareholders’ Meeting

May 30, 2017

Agenda

2016 Results Michel Favre 1

Outlook and Strategy Patrick Koller 2

Governance and compensation 3 Jean-Pierre Clamadieu

Linda Hasenfratz

Annual General Shareholders’ Meeting - May 30, 2017

2016

Results

Michel Favre

Chief Financial Officer

4 Annual General Shareholders’ Meeting - May 30, 2017

Robust value-added* sales growth + 4.3% (like for like**)

Total sales up 2.6% (like for like**)

Operating margin up 80 bp to 6.2% of value-added sales

5.2% of total sales

Net cash flow at €459m up 52%

Proposed dividend of 90 cents, up 38% versus previous year

2016 - A strong performance exceeding guidance

* Value-added sales: Total sales less monoliths sales

** Constant currencies & scope


2016 performance exceeded commitments set in 2013

2016 total* sales

above

21 billion euros

(CAGR ~5%)

Operating margin

4.5% - 5.0% (total sales)

Europe 4.5% – 5.0% North America >4.0%

Asia >8%

Net cash flow

around

300 million euros

ROCE***

above 20%

2016 total sales

CAGR** 5.3%

Operating margin

5.2% (total sales) Europe 4.6%

North America 4.6% Asia 10.1%

Net cash flow

459 million euros

ROCE

24.6%

2016 COMMITMENTS

2016 ACHIEVEMENTS

* Including Exteriors which was sold in 2016; ** CAGR 2014-2016 excluding Exteriors; *** Pre-tax and including goodwill


IFRS 15 application – Revenue recognition

Value-added sales, best representation of Group activity, are defined as total sales less monolith sales

Monolith sales: Faurecia has a "pass through" role (no role on specification, on system validation

and has no economic interest)

According to our studies, Faurecia should be qualified as an agent for monolith under IFRS 15

Revenue recognition: Monolith sales will be excluded from IFRS sales from January 1, 2018.

This will have no impact on Seating or Interiors, only Clean Mobility will be adjusted

From January 1 2017, Faurecia will report value-added sales only, giving the reconciliation

with total sales in appendix


Solid organic growth in 2016

13,775 15,466 15,614

3,102

3,304 3,097

2014 IFRS 5 2015 2016

18,711 18,770

16,877

Sales in €m CAGR **

2014-2016

+6.5 %

+4.3 %*

Monoliths

Value-added

sales

* Constant currencies & scope; ** Value-added sales


2016 operating margin sharply up

reduced cost base

Operating income in €m

970

830

2014 IFRS 5 2015 2016

+140

5.4% 6.2%

595

4.3% % of VA sales

CAGR

2014-2016

+28%

Operating margin on value-added sales

improved 80 bp to 6.2% versus 2015

Higher sales contribution

(gross margin +100 bp)

Accelerating investments in Faurecia 4.0

project

Higher R&D expenses (+10 bp)


2016 - Achievements

Seating Organic growth of 9.0%, twice the LV production growth

Interiors Operating margin improvement of 250 bp between 2014 and 2016

Clean Mobility 9.4% operating margin (on value-added sales), at benchmark level

Europe Operating margin 5.6%, +80 bp vs 2015, leveraging operational efficiency

North America Operating margin 5.4%, +70 bp vs 2015, confirming operational efficiency

Asia Maintained momentum with value-added sales up 9.1% (organic)

and operating margin of 12.1%, +40 bp vs 2015

South America Very strong growth (+36% organic) and sharp loss reduction (€19m in 2016)

leveraging reduced cost base

ALL BUSINESS GROUPS CONVERGED TO MARGIN LEVELS AT OR ABOVE 5.2%

ALL REGIONS PROGRESSED SIGNIFICANTLY (ON VALUE-ADDED SALES)


Net income at €638m Net margin on continued operations 2.9% (on VA sales)

In €m 2015 2016

Value-added sales 15,466.0 15,613.6

Operating income

(margin as % of VA sales)

830.0

(5.4%)

970.2

(6.2%)

Restructuring & other income and expenses

Net interest expense & other income and interest expense

(65.3)

(206.7)

(105.8)

(162.4)

Pretax income of integrated companies

Corporate income taxes

Net income of associates & other minority interests

558.0

(185.7)

(61.3)

702.0

(189.2)

(63.3)

Net profit from discontinued operations 60.8 188.3

Consolidated net income (Group share) 371.8 637.8

Net income per share* (fully diluted) (in euros) 2.48 3.28

* Continued operations


Net debt almost eliminated

December 31, 2015 December 31, 2016

(342)

(963)

base de coûts réduite

Net debt in €m

Significant cash generation of €459m

Successful refinancing plan completed


Share price stable in 2016 Up by 28% in 2017 (YTD)

70

80

90

100

110

120

130

140

January 1, 2016 May 26, 2017 July 1, 2016 January 1, 2017

2016

-0.5%

2017

+28%

Faurecia

SBF 120

STOXX AUTO


Faurecia S.A. financial statements

2015

253.0

56.8

152.8

(2.9)

19.3

226.0

2016

302.2

26.4

39.9

8.1

25.6

99.9

€ millions

Total sales

Operating margin

Financial and other expenses (net)

Exceptional income and expenses

Corporate taxes

Net income


Proposal for appropriation of net income

Payment of a dividend of € 0.90 per share

Trading ex-coupon on 2 June 2017

and payment in cash on 6 June 2017

Sharp increase of dividend

over the past 2 years: +157%

35

65

90

2014 2015 2016

Dividend per share in € cents

Proposal for appropriation of net income

ORIGIN

Net income for the financial year 99,944,505.79 €

Retained earnings from previous years 1,251,495,014.53 €

Total to be allocated 1,351,439,520.32 €

APPROPRATION

Statutory reserve 1,306,729.10 €

Dividend 124,232,220.90 €

Retained earnings 1,225,900,570.32 €

Total appropriation 1,351,439,520.32 €

Annual General Shareholders’ Meeting - May 30, 2017 15


Share buy-back program (resolution 18)

Maximum nominal purchase price of 60 euros

Issue of ordinary shares or allotment of debt securities and/or securities giving access to ordinary shares

with preferential subscription rights (resolution 20)

250 million euros for a capital increase, representing 25. 87 % of nominal share capital

1 billion euros in the case of debt securities (ceiling for issue of debt securities

with or without preferential subscription rights)

Issue of ordinary shares or allotment of debt securities and/or securities giving access to ordinary shares

without preferential subscription rights (resolutions 21 and 22)

95 million euros for capital increase, representing 9.83% of nominal share capital

1 billion euros for issue of debt securities

Capital increase reserved for employees (resolution 24)

3 % of capital stock

Financial Authorizations

Outlook

and Strategy

Patrick Koller

Chief Executive Officer


Europe 2008

North America

Asia ROW

2016 Europe

North America

Asia

ROW

SALES BY REGION

Completed transformation to become a global leader with diverse customer portfolio

4% 4%

15%

50% 77%

4%

17%

29%

BMW

GM

Ford

Renault-Nissan

Daimler

Others

Hyundai Kia Chrysler

Ford

GM

BMW

Others

VW Group FIAT-Chrysler

PSA

Hyundai Kia

2016

Cummins

Daimler

19.1%

16.9%

15.2% 13.0%

2008

VW Group

PSA

24.7%

23.1%

10.8%

10.7%

Renault-Nissan

SALES BY CUSTOMER

Strong and well-diversified

customer portfolio

Well-balanced geographically

Global leadership positions

in each business

Strong profitability

and financial flexibility

Agile and dynamic teams

with entrepreneurial culture


Accelerating value creation

* Pre-tax and including goodwill

Net debt in €m

Operating margin % of value-added sales

ROCE*

15% 16%

22% 25%

2013 2014 2015 2016

2012 - 2014 2013 - 2015 2014 - 2016

47

53

43

Order intake: three year rolling Value-added sales in €bn

3.5

4.3

5.4

6.2

2013 2014 2015 2016

47

53

2013

1,519 1,388

963

342

2014 2015 2016

CAGR

+11%

CAGR

+22%

(in €m)


Growth objectives secured with order intake up €6bn

Growth accelerating from new customers and new markets

New premium customers growing 25 %

Commercial vehicle sales growing 18 % CAGR 2016-2020

On track to achieve 20% sales with Chinese OEMs

by 2018 and 30% by 2020

18% to be reached in 2017

Growth driven by new strategic partnerships

Growth will come from all three Business Groups

and from China

Profitable growth to accelerate from 2017

Order intake: three year rolling Value-added sales in €bn

Group operating margin €m and % of value-added sales

2012 2014 2016 2018

2012 - 2014 2013 - 2015 2014 - 2016 2015 - 2017

47 53

43

6.2 % 7 %

514 674

970 CAGR +17 %

CAGR +11 %

Film Inspiring mobility


Strategic priorities

Sustainable mobility and smart life on board

Market growth

€25bn 2016-2025

Market growth

€40bn 2016-2025


Strong increase in value of aftertreatment systems for all vehicles

World light vehicle production by powertrain technology % of vehicle production

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2015 2020 2025 2030

EV/Fuel Cell

Hybrid

CNG/LPG

Diesel

Gasoline

Non ICE

ICE

GASOLINE

+130%

DIESEL HYBRID

Value of system € per vehicle

+60% +210%

Euro 5 Euro 6d

(2020)

Euro 5 Euro 6d

(2020)

Euro 5 Euro 6d

(2020)

120

280 360

580

120

370

Value of after-treatment systems for all vehicles

to grow from €225 in 2016 to €315 in 2025

Euro 6d

Euro 7


Lightweight and energy recovery solutions will accelerate with increased electrification

Composites will become key technology for structural and semi-structural parts

New markets opening up for Faurecia

India and China commercial vehicles market becoming emissionized

High horsepower, off-road and industrial applications using ASDS™ solution developed with

Amminex

Real time data monitoring

Development of systems for fuel cell electric vehicles

Growth driven by new markets and new technologies for powertrain electrification

Film Amminex


Cockpit of the Future will be connected, versatile and predictive

Unique positioning as a full interior systems

integrator

Three development contracts with OEMs and six

ongoing negotiations

Acquiring new competencies for predictive

cabin, smart surfaces, artificial intelligence

and infotainment

Seating and interiors

Smart surfaces and HMI technologies

Connectivity and infotainment

Addressable market Cockpit of Future

€ billion

2015 2025

€40bn

Multidisciplinary teams set up on three continents

Silicon Valley

France

Yokohama

Film COF


Parrot Automotive Accelerating in connectivity and infotainment

Over 50m

vehicles equipped

with Parrot

connectivity

modules

Team of 250

highly skilled

engineers

and developers

Unique

infotainment

solutions

using open

Android platform

2015 revenue

of €80m

57

proprietary

patents

10

infotainment

contracts signed

with major OEMs

Film parrot


Well positioned to achieve 2018 profitable growth objectives

* At constant currencies

+6%* +400 bp above market

6.4 - 6.8% of VA sales > €350m Around €4

2017

Value-added

sales growth

2017

Operating

margin

2017

Net cash

flow

2017

Earnings

per share

2017 GUIDANCE

7% of VA sales > €500m €5

Value-added

sales CAGR

2016 - 2018

2018

Operating

margin

2018

Net cash

flow

2018

Earnings

per share

2018 OBJECTIVES

+6%* +400 bp above market


Faurecia confirms New Trajectory

Outperformed all objectives for 2016 set in 2013

Order intake confirms accelerating growth from 2017

A strategy aligned with industry megatrends

Accelerating innovation for sustainable mobility and smart life on board

Development of strategic partnerships important for our development

Strategic flexibility: the means to achieve our ambition

Governance

and compensation

Jean-Pierre Clamadieu

Linda Hasenfratz


Succession plan of the CEO initiated since the Board of Directors of 16th October 2014 having led to the

dissociation of the offices of Chairman of the Board and of CEO from 1st July 2016

A Governance Committee and a Management Committee set up after the Board of Directors of 25th July 2016

replacing the Appointments and Compensation Committee:

Governance Committee: dedicated to issues related to composition and functioning

of the Board of Directors and of its Committees, including issues related to compensation

of the Board members and of the Chairman of the Board

Management Committee: dedicated to issues related to the Group managers up until the CEO,

including issues related to compensation of the CEO

Governance

Reminder of the significant events of 2016


Decision by the Board of Directors of 11th April 2017 to appoint Michel de Rosen as Chairman

of the Board of Directors at the outcome of the present AGM

Yann Delabrière appointed as Honorary Chairman of Faurecia

Board of Directors made of 14 members including 6 women and 9 independent members

at the outcome of the present AGM:

Resignation of Lee Gardner at the outcome of the Board of Directors of 11th April 2017

Non renewal of the mandates of Yann Delabrière and Ross McInnes

Renewal of mandates of four Board members and appointment of two new Board members

Two Board members representing the employees will enter the Board during HY2 2017

Governance

Chairmanship and evolution of the Board composition


Renewal of the mandates of four Board members for four years (resolutions 12 to 15)

Ms Amparo

Moraleda

(first appointed by the

23rd May 2012 AGM)

Mr Jean-Baptiste

Chasseloup de Chatillon


23rd May 2012 AGM)

Mr Jean-Pierre

Clamadieu


29th May 2007 AGM)

Mr Robert

Peugeot


29th May 2007 AGM)


Appointment of two new Board members for four years (resolutions 16 and 17)

Mr Patrick Koller

Ms Penelope Herscher


Modification of the bylaws with a view to appoint two Board members representing the employees (resolution 25)

Modification of Article 11 of the bylaws to provide the conditions for appointment of two Board members

representing the employees in accordance with Loi de sécurisation de l’emploi of 14th June 2013

and Loi relative au dialogue social et à l’emploi of 17th August 2015:

One Board member appointed by the union obtaining the most votes in the first round

of the elections organized within French companies of the Faurecia group

The other one appointed by the European Works Council of the Faurecia group

Duration of the mandate of four years from taking up their functions


Presentation of the Say on Pay

Texts and Faurecia governance structure

Sapin 2 Act of 9th December 2016 and Afep-Medef Code:

New "ex ante" vote relating to principles and criteria used for determining the compensation

of executive and non executive corporate officers

"Ex post" vote relating to the compensation of executive and non executive corporate officers in 2016

Reminder: dissociation Chairman of the Board of Directors and Chief Executive Officer from 1st July 2016.

Therefore:

HY1 2016:

− Yann Delabrière, Chairman and CEO until 30th June 2016

− Patrick Koller, Deputy CEO (since 2nd February 2015) until 30th June 2016

HY2 2016:

− Yann Delabrière, Chairman of the Board of Directors from 1st July 2016

− Patrick Koller, CEO from 1st July 2016


Presentation of the Say on Pay

Practical consequences for Faurecia

As a consequence: six Say on Pay resolutions

Chairman of the Board of Directors

− Ex ante(6th resolution)

− Ex post (9th resolution) for Yann Delabrière during HY2 2016

Chief Executive Officer (CEO and Deputy CEO before dissociation)

− Ex ante (7th resolution)

− Ex post:

• Chairman and CEO (8th resolution) for Yann Delabrière during HY1 2016

• Deputy CEO (10th resolution) for Patrick Koller during HY1 2016

• Chief Executive Officer (11th resolution) for Patrick Koller during HY2 2016


Say on Pay of the Chairman of the Board of Directors

Say on Pay

Chairman of the Board of Directors

Yann Delabrière (as from 1st July 2016)


Say on Pay ex ante of the Chairman of the Board (resolution 6)

Vote on the principles and criteria used to determine the compensation of the Chairman

of the Board of Directors

The compensation of the Chairman of the Board of Directors consists only in annual

fixed compensation

No other compensation (variable, attendance fees, exceptional compensation) is planned

Use of a benchmark to determine the fixed compensation (French listed companies

with dissociated governance structure)

Taking into account of the profile and of the duties of the Chairman as described

in the internal rules of the Board of Directors


Say on Pay ex post

Yann Delabrière, Chairman of the Board of Directors (resolution 9)

Opinion on the components of the compensation of Yann Delabrière in 2016 as Chairman

of the Board of Directors (from 1stJuly to 31st December 2016)

Nature of the compensation Amount due Amount paid in 2016 / Valuation

Fixed compensation € 300,000 on an annual basis € 150,000

Valuation of benefits in kind (company car)

€ 3,685.80

Total € 153,685.80


Say on Pay of the CEO

Say on Pay

Chief Executive Officer (Chairman and CEO/Deputy CEO before dissociation)

Yann Delabrière / Chairman and CEO up to 30th June 2016

Patrick Koller / Deputy CEO up to 30th June 2016

Patrick Koller / CEO as from 1stJuly 2016


Say on Pay ex ante of the CEO (resolution 7)

Vote on the principles and criteria used to determine the compensation of the Chief Executive Officer

The compensation of the Chief Executive Officer is composed of the following components:

Compensation Setting methods

Fixed compensation Determined by using a benchmark (twenty similar industrial French companies)

Short term variable compensation (annual)

It may vary from 0 to 180% of the fixed compensation depending on the achievement of:

• Quantitative objectives giving right to a variable compensation ranging from 0 to150% of the annual fixed compensation

• Qualitative objectives which, depending on the level of achievement,

allow a multiplier effect of the quantitative objectives ranging from 0.70 to 1.20




The compensation of the CEO is composed of the following components:

Compensation Setting methods

Long term variable compensation

(performance shares)

Subject to a presence condition and to performance conditions: • Internal condition: after-tax net income of the Group, before taking into account potential

exceptional events ; • External condition: growth in net earning per Faurecia share as compared with weighted

growth of a reference group of twelve worldwide comparable automotive suppliers

Other • No exceptional compensation is planned • Company car • Medical / Life / Disability insurance





:

Pension Setting methods

Defined contribution pension scheme

• Identical for Group managerial staff

Additional defined benefits pension scheme made

of two parts

• A scheme open to Group managerial staff and subject to specific performance conditions for the CEO

• An additional scheme set up for Executive Committee members and subject to identical performance conditions for all beneficiaries





Severance payment Setting methods

• Justified by the fact that the Board of Directors decided that the CEO can not be an employee and as a consequence can not enjoy the protective regime attached to such status

• Subject to performance conditions

• Is not due in case of gross negligence, resignation or retirement


Say on Pay ex post Yann Delabrière, Chairman and CEO (resolution 8)

Opinion on the components of the compensation of Yann Delabrière in 2016 as Chairman and CEO

(before 30th June 2016)

Nature of the compensation Calculation methods / percentage of achievement Amount paid in 2016 / Valuation


Variable compensation Base: 100% of the fixed compensation paid

Quantitative objectives achieved up to 140.4% Qualitative objectives : multiplier effect of 1.1

€ 617,760


€ 3,685.80

Valuation of performance shares allocated during

the financial year

No performance shares allocated in 2016

-

Total € 1,021,445.80


Say on Pay ex post Patrick Koller, Deputy CEO (resolution 10)

Opinion on the components of the compensation of Patrick Koller in 2016 as Deputy Chief Executive Officer

(before 30th June 2016)




Quantitative objective achieved up to 140.4% Qualitative objectives: multiplier of 1.1

€ 383,011.20

Valuation of benefits in kind (company car, social security

contribution paid by the company to managers)

€ 10,256.94

Valuation of performance shares allocated during

the financial year Performance shares allocated during HY2 2016

Total 703,268.14 euros


Say on Pay ex post Patrick Koller CEO (resolution 11)

Opinion on the components of the compensation of Patrick Koller in 2016 as Chief Executive Officer

(as from 1st July 2016)




Quantitative objectives achieved up to 140.4% Qualitative objectives: multiplier effect of 1.1

€ 579,150


€ 4,174.86

Valuation of performance shares allocated during the financial

year

55,095 shares allocated (maximum). Will be vested in July 2020 subject to a presence

condition and to achievement of internal and external performance conditions as at 31 December 2018

€ 1,722,931

Total € 2,681,255.86

Statutory auditors reports

Valérie Quint

Ernst & Young Audit

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