Forvia sales fall less than expected, but BYD hurts China business

By Mathias de Rozario and Gilles Guillaume

July 31 (Reuters) - French car parts supplier Forvia reported a smaller-than-expected drop in its half-year sales on Friday, sending its shares 2% higher, even as weaker performance by major client BYD weighed on its China business.

Sales fell 4.3% to €10.51 billion ($12.09 billion) in the first half of the year, compared with analysts' consensus of €10.30 billion provided by the company.

Excluding currency effects, sales fell 1.9%, underperforming against a 1% decline in global automotive production forecast by ​S&P Global Mobility.

Forvia's sales in China declined by 19.3% in the same period.

"In China, we continue to have an unfavourable mix of manufacturers, given the importance of BYD in our portfolio, and BYD is performing slightly less well than before," finance chief Olivier Durand said in a call with journalists.

The group, born from Faurecia's 2022 acquisition of Germany's Hella, has been cutting costs to recover margins as the car parts sector grapples with weak global auto demand and growing competition from Chinese suppliers.

Some European suppliers are trying to leverage their technologies outside of the conventional sector to return to growth, turning to the growing defence industry for example.

"We have a range of technologies, be it sensors, actuators or energy management systems, that are applicable in this context," Durand told reporters.

Forvia announced earlier this week a partnership with a European defence technology company, with an order for about 500 interceptor drones signed already.

This will allow the company to reduce its restructuring effort and costs, Durand said.

Forvia improved its operating margin to 6% in the first half, while analysts had expected 5.8%, and reduced its net debt to €5.5 billion, compared with the end-2025 number of €6 billion and a consensus of €5.9 billion.

"This is the company’s biggest half-year of organic debt reduction since the acquisition of Hella," Durand said.

Forvia also confirmed its financial guidance for 2026.

($1 = 0.8690 euros)

(Reporting by Mathias de Rozario in Gdansk and Gilles Guillaume in Paris, editing by Milla Nissi-Prussak)