Plastic Omnium - 2020 Universal Registration Document

CONSOLIDATED FINANCIAL STATEMENTS 2020 Comments on the financial year and outlook www.plasticomnium.com PLASTIC OMNIUM UNIVERSAL REGISTRATION DOCUMENT 2020 186 In the fourth quarter of 2020 more specifically, worldwide automotive production started growing again (up 2.1%) and Plastic Omnium generated economic revenue of €2,402 million, up 3.1% or 6.8% at constant exchange rates, representing an outperformance of 4.7 points. Per region, Plastic Omnium outperformed by 6.5 points in Europe, 8.7 points in China and 18.6 points in Asia excluding China. In North America, business was in line with automotive production. COST FLEXIBILITY AND REDUCTION PROGRAM: LIMITING THE IMPACT OF PRODUCTION DROP ON OPERATING INCOME IN THE FIRST HALF AND ALLOWING THE GROUP TO BENEFIT FROM THE SHARP UPTURN IN ACTIVITY IN THE SECOND HALF Consolidated gross income totaled €642 million in 2020, down from €1,039 million in 2019. It represented 9.1% of consolidated revenue vs 12.2% in 2019. Already expecting a significant drop in automotive production in 2020, the Group started implementing cost reduction and industrial footprint flexibility plans in late 2019. It stepped up all of those measures as soon as production stoppages were announced in the first quarter of 2020, first affecting China and then the rest of the world. Those measures were managed site-by-site and on a daily basis, and then adjusted as closely as possible to local conditions in order to support the resumption of activity, which varied widely between regions. In the second half, the faster-than-expected rebound in worldwide automotive production amplified the positive effects of these measures. In 2020 as a whole, staff costs were reduced by 12% (down €153 million), while production costs and general expenses were cut by 10% (down €87 million). Gross R&D spend was €310 million, representing 4.4% of consolidated revenue (€383 million and 4.5% in 2019). Net R&D spend, i.e. after deduction of capitalized development costs and amounts recharged to customers, was €266 million (3.8% of consolidated revenue) compared to €253 million in 2019 (3.0% of consolidated revenue). Selling costs totaled €34 million (0.5% of consolidated revenue) versus €37 million (0.4% of consolidated revenue) in 2019. Administrative expenses fell from €248 million in 2019 to €230 million in 2020, and represent 3.3% of consolidated revenue vs 2.9% in 2019. Amortization of intangible assets acquired in business combinations represented an expense of €22 million in 2020 compared to €27 million in 2019. The Group’s share of the income of associates and joint ventures was €29 million versus €36 million in 2019. In 2020, the Group’s operating margin amounted to €118 million and represented 1.7% of consolidated revenue: €100 million for Plastic Omnium Industries (1.9% of revenue) and €19 million for Plastic Omnium Modules (1.0% of revenue). In the second half of 2020, the Group’s operating income amounted to €234 million and represented 5.7% of revenue ( 7.0% for Plastic Omnium Industries and 2.5% for Plastic Omnium Modules). Operating margin improved relative to the second half of 2019 (5.4% of revenue including 6.5% for Plastic Omnium Industries and 2.3% for Plastic Omnium Modules), while business levels were slightly lower (consolidated revenue down 2.7%). Consolidated revenue and operating margin by business In millions of euros 2019 2020 Revenue Operating margin % of revenue Revenue Operating margin % of revenue Plastic Omnium Industries 6,398 460 7.2% 5,143 100 1.9% Plastic Omnium Modules 2,096 50 2.4% 1,931 19 1.0% TOTAL 8,494 511 6.0% 7,073 118 1.7% Against a background of ongoing market volatility, Plastic Omnium is continuing to find ways to gain flexibility in its cost structure. Along with these cost flexibility measures, the Group is adjusting its industrial facilities to take account of a market scenario in which worldwide automotive production is not expected recover to pre-crisis levels (92 million vehicles) before 2024/2025. Thus, the Group will achieve €40 million of annual cost savings by the end of 2022 by closing three plants (in Germany, Spain and Argentina), streamlining the German R&D footprint within the Intelligent Exterior Systems business, mothballing certain paint lines and achieving synergies in the organization of our Asian head office. The action plan at the Greer plant in the United States is also moving forward as announced. During the plant shutdown in the second quarter, the Group completed work to transform its industrial and logistics processes, which has improved all industrial indicators. The plant is now operating at high output rates, and is delivering the quality and service expected by customers. The Group confirms its target for the Greer plant to return to breakeven in 2021.