UPDATE: Plastic Omnium Sees Limited Exposure To U.S. Car Cos
March 17 2009 - 1:40PM
Dow Jones News
French car parts maker Plastic Omnium (POM.FR) said Tuesday it
has relatively limited exposure in the event of the collapse of one
of the large U.S. automobile corporations.
Chief Executive Laurent Burelle estimated the company's exposure
to Chrysler Corp. at about EUR10 million.
It has virtually no exposure to Ford Motor Co. (F), he told a
group of journalists, with exposure to General Motors Corp.'s (GM)
U.S. operations at between EUR30 million and EUR40 million.
Exposure to GM's European operations is about the same, he
added.
If one of the company's big U.S. customers were to collapse, he
said, it would be "very nasty, but not fatal" to Plastic Omnium,
which makes bumpers and front-end modules for cars.
Earlier Tuesday, Plastic Omnium reported it swung to a net loss
of EUR63.2 million in 2008 from a year-earlier profit of EUR51.0
million as downsizing costs and collapsing car markets undermined
its performance in the second half of the year.
Burelle said industry volumes were down 36% at the end of
February compared to a year before, and said the company is basing
its assumptions for the full year on a drop of 40% in the first
half of the year followed by a 10% contraction in the second
half.
He noted that the board's plan to halve this year's dividend
payout to EUR0.35 a share represents a cash outlay of just EUR5
million, even though the company posted its first-ever loss in
2008. He commented that the dividend is designed to reassure
shareholders and bankers that the company doesn't need EUR5 million
to survive. The company bought back 650,000 shares last year and
cancelled 550,000 of them, he noted.
Burelle said that in line with its policy of reducing debt and
preserving cash Plastic Omnium will steer clear of acquisitions in
the medium term, though it could resume looking at possible targets
at the end of 2010 for 2011.
He said his company has been approached by some car makers that
are worried their existing suppliers of parts may not be around to
fulfill their obligations, but said there have been no talks
directly with competitors.
Burelle noted that car manufacturers whose suppliers get into
financial difficulties and can't deliver can try to get another
supplier to take over their tooling and production facilities to
ensure continued supplies of parts and limited disruption of car
assembly.
But he said Plastic Omnium would be reluctant to take on extra
capacity and the additional personnel, development and start-up
costs that such a move would involve. "We're not vultures," Burelle
said.
Plastic Omnium shares surged 12.4% Tuesday to close at EUR5.62
on the back of the company's relatively reassuring comments on its
financial situation.
-By David Pearson, Dow Jones Newswires; +331 4017 1740, david.pearson@dowjones.com
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