Can Plastic Omnium beat the market?

French supplier Plastic Omnium expects to outperform the global automotive market by an average of 5 percentage points a year and have annual free cash flow of more than €200 million (about $218 million) between 2020 and 2022. This comes after its operating margin dipped to about 6 percent, from a forecast of 8.4 percent last year.

The company's new boss, Laurent Favre, 48, outlined his plans for the maker of fuel systems, body panels and front-end modules to Automotive News Europe News Editor Peter Sigal. Edited excerpts:

Q: What is your first task at Plastic Omnium?

A: It's about continuing the successful growth of the company. Plastic Omnium had €1.5 billion ($1.63 billion) in revenue in 2001 when Laurent Burelle took over the CEO position, and in 2019 we will be at more than €9 billion ($9.8 billion), which is a fantastic story.

The auto industry is facing many major changes, but I am convinced there are great opportunities for Plastic Omnium. We have a very healthy balance sheet and we are a market leader in all our businesses. We have a global footprint with more than 130 factories. We have more than 20 r&d centers around the world. Our base is a perfect fit with the auto industry.

Do you have a long-term vision for the company?

I believe the future of mobility is clean and connected, and that is where we want to play a major role. We think we are still able to gain market share, but the next step will be to increase content per car. That means integrating functions and working with customers in more and more complex assemblies.

Could you provide an example of integrated components?

Today, Plastic Omnium is producing products; tomorrow, we want to produce functions. That means integrating radar, lidar or lighting, for example, into our exterior systems. We are doing that in our cooperation with Hella for bumpers, and with Brose for doors. That is really the transformation we are working on — from a product supplier to a function supplier.

The pressure to be sustainable is rising. As a company that uses plastics, are you working on those issues?

We produce systems with integrated functions. Therefore, plastics are only 9 percent of our total purchase. On the other hand, delivering plastic components such as bumpers and tailgates is a huge contribution for automakers to lower emissions. These parts are lighter than equivalent steel parts. We have also been decisive in the area of corporate and social responsibility, and part of this is reducing CO2 emissions not only in how we produce but also in our complete supply chain.

Plastic Omnium has three main business units — clean energy, intelligent exteriors and modules. How do you see them developing?

In exteriors, in addition to integrating functions, we are focusing on lightweighting and aerodynamics, which helps customers improve their CO2 emissions and increase range for electric cars.

In clean energy, we have solutions for hybrid technology, such as fuel tanks for plug-in hybrids that are very complex. We also have been investing in hydrogen fuel cell technology. In front-end modules, we are the leader with our HBPO joint venture (with Hella), and we are developing new modules to increase the content per car, for example, to add cockpits or DC-to-DC converters for hybrid cars.

What's different about your plug-in hybrid tanks?

You need to think about deformation when the car is running on pure electric power, so the tanks have internal reinforcements.

It's also about acoustics, because you need to prevent the slosh noise from the gasoline. All the additional technologies we bring into the plug-in hybrid tank creates higher content for Plastic Omnium.

How do you see your order book developing for fuel cells?

We take a longer view of the market for fuel cells. We have invested about €200 million ($218 million) in hydrogen technologies since 2016, we have r&d centers in Europe and China and we have many strategic partnerships and a dedicated business unit for new energies. We are coming from tanks, where we are the market leader for combustion engines. We already have an order from a German manufacturer to develop a 350-bar tank and we are the first player to have a 700-bar certified pressurized tank. Tanks are only the first steps, because we see a market for 2 million vehicles by 2030.

Our long-term target is to be able to supply the complete system. We think that hydrogen will be one of the major clean mobility solutions. It will probably be combined with batteries, in a kind of hybrid system. Wider use will start with buses and trucks, then with fleets, but it will be mainstream in the long term.

Will you be hurt by Brexit?

We have factories in the U.K., and Jaguar Land Rover is one of our major customers. But we produce in the U.K. for their U.K. factories and in Slovakia for the factory they have there, so we are not dependent on what is happening with Brexit. One of our strengths is that we produce where the customers are, so we can balance risks.