UPDATE: Plastic Omnium Sees Limited Exposure To U.S. Car Cos

French car parts maker Plastic Omnium (POM.FR) said Tuesday it has relatively limited exposure in the event of the collapse of one of the large U.S. automobile corporations.

Chief Executive Laurent Burelle estimated the company's exposure to Chrysler Corp. at about EUR10 million.

It has virtually no exposure to Ford Motor Co. (F), he told a group of journalists, with exposure to General Motors Corp.'s (GM) U.S. operations at between EUR30 million and EUR40 million. Exposure to GM's European operations is about the same, he added.

If one of the company's big U.S. customers were to collapse, he said, it would be "very nasty, but not fatal" to Plastic Omnium, which makes bumpers and front-end modules for cars.

Earlier Tuesday, Plastic Omnium reported it swung to a net loss of EUR63.2 million in 2008 from a year-earlier profit of EUR51.0 million as downsizing costs and collapsing car markets undermined its performance in the second half of the year.

Burelle said industry volumes were down 36% at the end of February compared to a year before, and said the company is basing its assumptions for the full year on a drop of 40% in the first half of the year followed by a 10% contraction in the second half.

He noted that the board's plan to halve this year's dividend payout to EUR0.35 a share represents a cash outlay of just EUR5 million, even though the company posted its first-ever loss in 2008. He commented that the dividend is designed to reassure shareholders and bankers that the company doesn't need EUR5 million to survive. The company bought back 650,000 shares last year and cancelled 550,000 of them, he noted.

Burelle said that in line with its policy of reducing debt and preserving cash Plastic Omnium will steer clear of acquisitions in the medium term, though it could resume looking at possible targets at the end of 2010 for 2011.

He said his company has been approached by some car makers that are worried their existing suppliers of parts may not be around to fulfill their obligations, but said there have been no talks directly with competitors.

Burelle noted that car manufacturers whose suppliers get into financial difficulties and can't deliver can try to get another supplier to take over their tooling and production facilities to ensure continued supplies of parts and limited disruption of car assembly.

But he said Plastic Omnium would be reluctant to take on extra capacity and the additional personnel, development and start-up costs that such a move would involve. "We're not vultures," Burelle said.

Plastic Omnium shares surged 12.4% Tuesday to close at EUR5.62 on the back of the company's relatively reassuring comments on its financial situation.

-By David Pearson, Dow Jones Newswires; [phone], [e-mail] 

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