PLASTIC OMNIUM (EPA:POM) - Continuing a profitable growth strategy: Free cash-flow, cost reduction and industrial excellence to accelerate innovation and enhance technological content

Transparency directive : regulatory news

13/12/2018 07:30

α-Alphatec, December 13, 2018

  Continuing a profitable growth strategy: Free cash-flow, cost reduction and
   industrial excellence to accelerate innovation and enhance technological
                                    content

To mark its Investor Day, held today at its global R&D center for clean energy
systems, α-Alphatech in Compiègne, Plastic Omnium is unveiling its strategy
for profitable and independent growth to take account of the volatility of
automotive markets in a context of technological change acceleration.

A global and diversified automotive pure player

An independent family group, Plastic Omnium is a global player present in 26
countries, with 122 plants and serving 83 automotive brands.

Following the takeover of HBPO, the world leader in front-end modules, on July
1st, 2018, and the disposal of the Environment Division due to take place on
December 17th, 2018, Plastic Omnium confirms its position as an automotive pure
player organized around two operating segments with different business
models:
- Plastic Omnium Industries, dedicated to production activities for intelligent
  exterior systems and clean energy systems, with significant investment and
  long cycles;
- Plastic Omnium Modules: dedicated to design and assembly activities for
  complex modules with low levels of capital employed.

2018: a complex market environment

2018 was marked by a steady increase in macro-political and macro-economic
risks (trade wars, Brexit, slowdown in China), resulting in uncertainties and
heightened volatility (currency, raw materials, interest rates, etc.). In this
context, to which should be added the decline of diesel and new regulations
relating to the certification of new vehicles in Europe (WLTP), the automotive
market deteriorated in the second half-year, with an expected fall of 3.2%,
following an increase of 2.2% in the first half, resulting in a decrease of
0.5% for the full-year.

In this market environment, Plastic Omnium confirms the following financial
outlook for 2018 (compared with 2017 IFRS 5 data, i.e. restated for the
Environment business):

- growth in economic revenue of at least 5%, i.e. revenue of approximately 8.9
  billion euros in proforma figures;
- growth in consolidated revenue of at least 10%;
- 2018 operating result comparable to that of 2017 (615 million euros in 2017);
- a sharp increase in net result group share following scope effects;
- triple-digit free cash-flow.

2019-2021: outperformance and recurring improvement in financial indicators
against volatile automotive production

o Strengthening of fundamental management principles

In a context of volatile market, Plastic Omnium is strengthening its
fundamental management principles, with:

- Particular attention paid to free cash-flow generation:
  The investment budget for the period 2019-2021 will be around 6% of the
  Group's consolidated revenue, compared with 7%-8% over the 2016-2018 period.

- A strengthened cost reduction policy.

- A renewed ambition in terms of industrial excellence with the implementation
  of industry 4.0 at its plants over the 2018-2022 period. Thanks to predictive
  management of the Group's industrial footprint, industry 4.0 will enable to
  reduce capital employed and improve profitability.

o Average outperformance of 5 points per year

Thanks to a backlog secured at 90% by 2021, market share gains on its main
product lines and the success of its innovative offer, Plastic Omnium will
outperform worldwide automotive production by an average of 5 points per year
over the 2019-2021 period.
Already ranked number 1 worldwide in each of its businesses, Plastic Omnium
will strengthen its leadership positions, with market shares of 19% expected in
bumpers in 2021, vs. 16% in 2018, 25% in fuel systems, vs. 22% in 2018 and 18%
in front-end modules vs. 17% in 2018.

The Group is supported by diversified growth levers, the result of its
successful strategy as a global and innovative player. Over the 2018-2021
period, Plastic Omnium will benefit from the ramp-up of 10 new plants, thereby
increasing its positioning on:

- The North American market:
The ramp-up of 5 plants built over the last 3 years and 2 assembly sites under
construction in Mexico will enable Plastic Omnium to continue to increase its
market shares in its 3 business lines.

- The Chinese market:
In China, the Group has a full industrial footprint of 26 plants in the 6
automotive production clusters and a client portfolio that is continuing to
diversify, notably with

Chinese players, who will represent 30% of our sales in China in 2021 vs. 15%
in 2018. With this sound base, Plastic Omnium will benefit from market share
gains in its production business lines and the development of its front-end
module activities.

- The SUV segment:
The SUV segment will grow by 4 points between 2018 and 2021, moving from 35% of
worldwide automotive production to 39%. Plastic Omnium will grow faster than
this segment, which will represent 48% of Group's revenue in 2021.

- Front-end modules:
Following the takeover of HBPO, global leader in front-end modules, this
activity has been fully consolidated by Plastic Omnium since July 1st, 2018.
HBPO, with nearly 6 million front-end modules delivered per year, will generate
revenue around 2 billion euros in 2018 and is expected to grow by 50% to reach
3 billion euros in 2021.

- SCR emissions control systems for diesel vehicles:
Over the next two years, Plastic Omnium will benefit from market share gains
and the regulatory increase in the penetration rate of SCR in Europe, which
will offset the expected decline in the production of diesel vehicles. The
Group is already anticipating the decline in this activity post-2020.

o Steady improvement in financial indicators

Over the 2019-2021 period, the Group's operating result is expected to rise
steadily. Plastic Omnium stands to benefit from the following operating levers:
- strict cost controls;
- the accretive growth of the Group's operations in North America;
- the improvement of the utilization rates of the Group's industrial
  facilities, particularly in China;
- the success of the innovation portfolio;
- the implementation of industry 4.0 in the Group's industrial footprint.

Over the 2019-2021 period, Plastic Omnium plans to invest around 6% of its
consolidated revenue. This investment program is aimed at building new
capacities, the continuing optimization of its industrial facilities (industry
4.0 and operational excellence), the development of new programs and the launch
of new research projects.

Lastly, the Group will accelerate its cash generation with at least 200 million
euros in free cash-flow per year over the 2019-2021 period.

Well positioned to meet the challenges of the car of tomorrow

Plastic Omnium is in this way giving itself the means necessary to reinforce
its capacity for innovation so as to meet the acceleration in the technological
transformation towards a connected, autonomous and electrified car.

For the connected and autonomous car, Plastic Omnium is positioning itself as
the integrator of connectivity by developing its innovation capacity in the
complex systems that will integrate radar and sensors. HBPO's technological
expertise will also enable Plastic Omnium to step up its development in modular
and intelligent exterior systems, which will profoundly change the design and
aesthetics of automobiles of tomorrow.

In carbon-free cars, Plastic Omnium is positioned as a specialist in storage
for each form of energy, developing specific solutions for plug-in hybrid
vehicles (PHEV) and ICE turbocharging vehicles. At the same time, the Group has
also invested in electrification to be a major player in hydrogen and fuel
cells.

Plastic Omnium has already established new means to achieve this ambition. The
Group employs more than 3,500 engineers in 24 R&D centers worldwide, dedicates
6% of revenue to Research & Development and an additional 100 million euros in
the construction or extension of 3 R&D centers (France, Belgium and China).
Plastic Omnium has also an eco- system of start-ups, partnerships with major
universities and an Automotive Strategic Analysis Committee with external
internationally recognized experts.
Lastly, the Group has recently signed scientific and technological partnerships
in fuel cells and plastronics. An innovative joint development project with the
German automotive supplier Brose has just been announced, to develop a door
concept offering new functions, new styling and new vehicle assembly
strategies.

With its solid fundamentals and in a volatile market environment, Plastic
Omnium has the means to finance a sustained growth both in revenue and in
results, in order to strengthen its innovation strategy, which positions the
Group as a major player in the connected, autonomous and electrified car.

The detailed presentation of this growth and innovation strategy will take
place on Thursday, December 13, 2018 at 10 a.m. Paris time.
It will also be accessible via webcast on the Plastic Omnium Group's website at

www.plasticomnium.com.

* France :       +33170710159      PIN: 10045851#
* Allemagne :    +4969222225429    PIN: 10045851#
* Espagne :      +34911140101      PIN: 10045851#
* Royaume-Uni :  +442071943759     PIN: 10045851#
* Etats-Unis :   +1 6467224916     PIN: 10045851#

GlossaryF

1. Economic revenue reflects the actual operating and managerial conditions of
the Group. It corresponds to consolidated revenue plus revenue from the Group's
joint ventures up to its holding percentage: BPO (50%) and YFPO (50%) and HBPO
33.33% until its full consolidation on July 1, 2018.

2. Consolidated revenue does not include:

   a. the share of joint ventures, which are consolidated using the equity
   method pursuant to IFRS 10-11-12;

   b. the revenue of Plastic Omnium Environment, pursuant to IFRS 5 as at
   January 1, 2018.

3. Proforma figures: including HBPO fully consolidated as of January 1st, 2018

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