Plastic Omnium - 2018 Registration Document

1 PRESENTATION OF PLASTIC OMNIUM AND ITS BUSINESSES Significant events PLASTIC OMNIUM 2018 REGISTRATION DOCUMENT 27 SIGNIFICANT EVENTS 1.4 Disposal of the environment division In December 2018, Compagnie Plastic Omnium confirmed the sale of its subsidiary Plastic Omnium Environment BV to the consortium Latour Capital/Bpifrance (French public investment bank), for an enterprise value of €220 million. The Environment business – which is Compagnie Plastic Omnium’s founding business – is the European leader in the containerization of waste. Standalone, profitable and cash-generating, with 6 plants in France, Germany and Spain, an R&D center, a customer service center recently inaugurated at Saint Priest (France), and with the large network of agencies and service desks serving 8,000 customers, this business generates an annual revenue approximately €340 million, thanks to a broad range of products and services dedicated to waste management (wheeled bins for household waste, crane lifts, composters, underground and semi-underground containers; maintenance, washing, surveys and implementation, data management, incentive-based invoicing systems, etc.). Plastic Omnium Environment employs 1,800 people operating across 12 countries. This disposal reflects Plastic Omnium’s decision to concentrate all of its human and financial resources on developing its automotive business. As the world leader in intelligent exterior systems, in clean energy systems and in modules for motor vehicles, the Group is implementing a strategy of innovation and profitable growth through sustainable mobility. Raising our stake in HBPO, a world leader for front-end modules In June 2018, Compagnie Plastic Omnium raised its stake in HBPO, the world leader in automotive front-end modules, by acquiring a 33.33% stake in the German group, Mahle (HBPO had previously been held equally by Plastic Omnium, Hella and Mahle-Behr) Plastic Omnium now holds 66.67% of HBPO. The acquisition of the 33.33% stake was concluded for an enterprise value of €350 million, financed from the Group’s own resources. HBPO is the world leader in the development, assembly and logistics of automotive front-end modules with 17% of global market share. With 6 million front-end modules delivered annually, in 2018, HBPO generated €2 billion of revenue in 25 plants in Europe, America and Asia and already has an order portfolio that will enable it to reach €3 billion in 2021. HBPO’s size and technological expertise will enable Plastic Omnium to speed up its development in smart and modular products, and meet the technological challenges of tomorrow’s autonomous and connected car, which will considerably modify automotive design and esthetics. Four new plants commissioned Plastic Omnium is committed to supporting carmakers worldwide and to expanding its industrial capacity in high-growth regions for auto production. It continues to strengthen its footprint in these regions. In 2018, Plastic Omnium commissioned 2 plants producing intelligent exterior systems in Greer, United States, and in Shenyang, China, which supply BMW, in addition to 2 plants producing clean energy systems in Hansalpur, India, which supplies Suzuki, and another in Smyrna, United States, which supplies Nissan and an assembly site of front-end modules in Aguascalientes, Mexico, a supplier of Daimler. In total, the Group has an industrial footprint of 124 plants worldwide. In addition, 5 plants are currently under construction (1 in India, 1 in Morocco, 1 in Slovakia, 1 in China and 1 in Malaysia) and 4 module-assembly sites are also under construction (1 in Mexico, 2 in Germany and 1 in China). Innovative positioning to respond to the issues posed by the car of the future Plastic Omnium is creating the resources necessary to strengthen its capacity for innovation, in order to respond to the accelerated technological change towards a connected, autonomous electric car. In connected and autonomous cars, Plastic Omnium is positioned as a connectivity integrator, by growing its capacity to innovate in complex systems that can integrate radars and sensors. The technological expertise of HBPO will also enable Plastic Omnium to accelerate its growth in smart and modular exteriors, which will profoundly change the design and esthetic of the cars of the future. In carbon-free cars, Plastic Omnium is positioning itself as a player in the energy-storage segment and is developing specific solutions for plug-in hybrid electric vehicles (PHEVs) as well as for vehicles with turbocharging combustion engines. At the same time, the Group is committed to electrification to become a key player in hydrogen propulsion and fuel-cell technologies. The Group has thus created, on January 1, 2018, Plastic Omnium New Energies, an entity dedicated to the development of energies of the future, specifically in the fields of fuel cells and hydrogen propulsion. Plastic Omnium has now committed new resources to achieve that ambition. The Group employs nearly 3,000 engineers in 24 R&D centers worldwide, and is allocating 6% of its revenues to R&D, in addition to the €100 million construction or expansion of 3 R&D centers (France, Belgium and China). Moreover, Plastic Omnium has an ecosystem of start-ups, partnerships with leading universities and an Automotive Strategic Analysis Committee comprised of internationally recognized experts. Finally, the Group has recently set up scientific and technological partnerships in the fuel cell and plastronics segments. A development project in partnership with the German automotive equipment manufacturer Brose, has also just been announced to develop a side-door system offering new functionalities, innovative styling and assembly facilities. Lastly, in January 2019, a strategic partnership with the German parts manufacturer, Hella, with regard to an innovative concept that combines exterior coach work systems and lighting. Associated with an “Open innovation” network, all the expertise and investments deployed will enable Plastic Omnium to develop new growth opportunities, by taking up the technological challenges of the self-drive and low-carbon car of the future. Financing activities In December 2018, Compagnie Plastic Omnium completed a private placement under German law (Schuldscheindarlehen) for €300 million. This private placement, without covenants and without rating, has a 7-year maturity and has a fixed coupon of 1.632%. The proceeds from this issuance will be used for the Group’s general funding needs as part of its strategy of profitable and independent growth. It strengthens the Group’s financial structure by extending the average maturity of its debt and diversifying its sources.