Forvia : Positive earnings, but we have only seen the tip of the iceberg.

Forvia reported an organic revenue growth of 2.1% in Q1 2025, which is notable given the structural risks in the automotive sector. This growth outperformed the market by 80 basis points, despite a challenging geographic mix. Key growth drivers included the Electronics and Seating segments, with Electronics performing well globally and Seating benefiting from new product launches in Europe and increased orders from BYD. Geographically, Europe (EMEA) saw a 3.6% organic growth, mainly driven by strong Electronics and Seating performance. In contrast, the Americas experienced a slight decline of 3.8%, affected by tough prior-year comparisons. Asia led with a 5.8% organic growth, particularly boosted by double-digit growth in China from collaborations with local OEMs like BYD. In terms of business segments, Seating grew by 12.2% due to new launches, while Electronics grew by 8.2%. Interiors showed modest growth at 1.7%, while Clean Mobility and Lighting faced declines of 7.4% and 6.8%, respectively. Forvia is focused on enhancing operational efficiency and managing costs to support margins, with a stable free cash flow outlook projected at €655 million. The company aims to maintain a net debt to adjusted EBITDA ratio of ≤1.8x, with plans to reduce it below 1.5x by 2026. Despite challenges, Forvia reaffirmed its 2025 sales guidance of €26.3 billion to €27.5 billion, reflecting a cautious but optimistic outlook amid ongoing market uncertainties. … However, we remain underweight on Forvia following the high-volume risk in the U.S.