CONSOLIDATED FINANCIAL STATEMENTS COMMENTS ON THE CONSOLIDATED FINANCIAL CHANGE IN EQUITY STATEMENTS STATEMENT OF CASH FLOWS OUTLOOK AND POST-BALANCE SHEET EVENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS BALANCE SHEET INCOME STATEMENT STATEMENT OF COMPREHENSIVE INCOME At December 31, 2017, Compagnie Plastic Omnium’s consoli- Comments on the dated sales amounted to €6,768.5 million, up by 15.6% as reported and by 9.6% at constant scope and exchange rates. Consolidated Financial There was a negative currency effect of -€68.8 million and the Statements scope effect stood at €684.5 million. In late 2017, Plastic Omnium launched its project to dispose its Environment division. The Environment Division’s activity, after the disposal of peri- pheral activities in mid-2016 (Signature Limited, a United At December 31, 2017, Compagnie Plastic Omnium’s economic Kingdom-based subsidiary specializing in highway signage, and revenue amounted to €8,000.6 million, up by 15.4%. For the year, Emballagen GmbH, a Germany-based subsidiary specializing in the currency effect stood at -€98.6 million, and the scope effect the development, production, and marketing of metal drums for at €707.7 million (including €558.4 million from the acquisition of the chemicals industry), is now fully refocused on products and the Faurecia’s Exterior Systems business on July 29, 2016). services for optimizing waste management for local authorities This sharp increase is attributable to: and industry. At December 31, 2017, its revenue amounted to €335.5 million, up 2.5% at constant scope and exchange rates. • organic growth of 10.8% in the automotive business, which outperformed global automotive production by 8.6 points; • the exterior systems acquired on July 29, 2016. In €M, by segment 2016 2017 Change % change Like-for-like Automotive 6,566.8 7,665.1 +16.7% +10.8% Environment 368.9 335.5 -9.1% +2.5% Economic revenue(1) 6,935.7 8,000.6 +15.4% +10.4% Automotive 5,488,3 6,433.0 +17.2% +10.0% Environment 368.9 335.5 -9.1% +2.5% Consolidated revenue(2) 5,857.3 6,768.5 +15.6% +9.6% In € millions and as a % of revenue, At constant scope by region 2016 2017 Change and exchange rates Europe/Africa 3,738.5 4,359.4 + 16.6% +6.0% 54% 54% North America 1,810.5 2,044.9 + 12.9% + 15.5% 26% 26% South America 198.4 269.5 + 35.9% + 23.8% 3% 3% Asia 1,188.4 1,326.8 +11.7 + 14.0% 17% 17% Economic revenue(1) 6,935.7 8,000.6 +15.4% + 1 0.4% (1) Economic revenue corresponds to consolidated sales, plus revenue from the Group’s joint ventures, at their percentage of ownership: BPO, HBPO and YFPO for Plastic Omnium Automotive. The figure reflects the operational and managerial realities of the Group. (2) Consolidated revenue, in accordance with IFRS 10, 11 and 12, does not include the Company’s share of the revenue of joint ventures which are accounted for by the equity method. PLASTIC OMNIUM COMMENTS ON THE Consolidated FINANCIAL Statements Automotive Division: robust growth in all Also contributing to the Group’s growth dynamic, the innovation geographic areas in 2017 portfolio continues to strengthen, with in particular: • further growth worldwide of SCR systems for reducing diesel The economic revenue(1) of Plastic Omnium Automotive stood at vehicle emissions, with an increase of 28% over the year to €7,665.1 million. It grew by 16.7% as reported and by 10.8% at reach revenue of €390 million. Eight new contracts were constant scope and exchange rates within a 2.2% increase in signed in 2017, four of which are with new customers for China, worldwide automotive production over 2017 (source: IHS January India, and Thailand; 2018), outperforming the market by 8.6 points. This is the result • the range of tailgate and spoiler products, which represented to market share gains, the ramp-up of new production capacities, €255 in revenue in 2017, was expanded by 21 new contracts and the success of the innovative products launched. All geogra- including five additional customers (including three new electric phical areas contributed to the strong growth in sales. entrants); Business was sustained in Europe, which accounts for 53% of • production of the first pressurized tanks for plug-in hybrid total automotive revenue(1). It increased by 19.2%, benefiting vehicles started in December 2016 in South Korea for Hyundai. from the acquisition of external systems, a mainly European A second contract started production in January 2018 in China business. Plastic Omnium grew by 6.3% at constant scope and for Geely/Volvo. Five new programs are in development in Asia exchange rates as production increased by 3.3%. Business was and North America, including two additional customers. Thanks particularly strong in 2017 in France (up by 12.0% at constant to its technology, the Group is poised to serve the strong scope and exchange rates), in the UK (up by 14.1% at constant growth of hybrid electric vehicles around the world in the years scope and exchange rates) thanks in particular to the commissio- to come. ning of the Warrington-Liverpool plant for exterior parts for Jaguar Land-Rover in June 2016, and in Germany (up by 8.3% at In 2017, Volkswagen remained the Group’s leading customer with constant scope and exchange rates). 21% of Automotive revenue, ahead of PSA Peugeot Citroën with 13% and General Motors with 12%. Business in North America grew by 12.8% and 15.3% at constant scope and exchange rates over the year, outperforming automo- In 2017, German carmakers remained the top contributors to tive production by 19.8 points. The business benefited from the Automotive revenue with 35% of the business (versus 33% in new capacities that have come on stream over the past 3 years 2016), ahead of American carmakers with 25% (versus 28% in (2 plants commissioned in the United States in 2015, followed by 2016), Asian carmakers with 22% (versus 19% in 2016), and 3 plants in Mexico in 2016-2017), and the expected ramp-up of French carmakers with 16% (versus 17% in 2016). In total, the SCR systems to reduce diesel vehicle emissions in the United Group has a portfolio of 78 customer brands, 25 of which are States. And in North America, the Group benefited from a signifi- Chinese customers and 7 pure electrics. cant exposure on SUV/Light Truck models, which account for Consolidated gross profit was €1,101 million, versus €975 million more than 80% of its business. in 2016. It represented 16.3% of consolidated sales, versus Business in Asia, including China, grew by 14.3% at constant 16.6% in 2016. scope and exchange rates. In China, where economic revenue Gross R&D spend was €401 million compared with €339 million amounted to €721 million, or 9% of total automotive revenue, in 2016, an increase of 18.2%. Net R&D spend, after deduction business grew by 17.0% at constant exchange rates within a 2.7% of capitalized development costs and amounts re-invoiced to increase in global automotive production over the year, outperfor- customers, was €170 million (2.5% of consolidated sales), stable ming the market by 14.3 points. The Group benefited from strong compared with €146 million in 2016. investments made over the last three years to develop the indus- trial footprint, consisting of 26 plants, and increase market Selling costs were €61 million (0.9% of consolidated sales) shares, particularly with Chinese manufacturers. Plastic Omnium compared with €55 million (0.9% of consolidated sales) in 2016. has 25 local brands in its customer portfolio, which represent a Administrative expenses rose from €246 million in 2016 to €270 growing share of revenue produced in China (currently 16%), million in 2017 and represent 4.0% of consolidated sales, versus particularly with SUVs. 4.2% in 2016. In the rest of Asia, business growth was 11.2% at constant scope Amortization of intangible assets acquired in business combina- and exchange rates, driven by Japan, India and South Korea. tions amounted to an expense of €20 million in 2017, compared with €22 million in 2016. (1) Economic revenue corresponds to consolidated sales, plus revenue from the Group’s joint ventures, at their percentage of ownership: BPO, HBPO and YFPO for Plastic Omnium Automotive. The figure reflects the operational and managerial realities of the Group. The share of profit of associates and joint ventures amounted to • the operational excellence achieved with the 126 new €62 million in 2017, versus €52 million in 2016. This strong programs launched during the year; growth mainly comes from the Chinese joint venture YFPO. • strict cost controls; The operating margin, after amortization of intangible assets • and the earlier than expected success of turnaround measures acquired in business combinations and after share of profit of aimed at the Exterior Systems business acquired in July 2016 associates and joint ventures, amounts to €641 million in 2017 (merger of 2 organizations, adjustment of the program port- (9.5% of consolidated sales), versus €558 million in 2016 (9.5% folio, the closure of plants in the United States in 2016 and in of consolidated sales; 9.0% of revenue on a comparable basis, Brazil early 2017, and of 2 paint lines in Germany in 2017, i.e. integrating at January 1, 2016 the External Systems business streamlining of the workforce, etc.). acquired on July 29, 2016). For the year, it was up 14.9%. Plastic Omnium Environment produced an operating margin of Operating margin for the Automotive business amounted to €21.1 million in 2017, i.e.