Valeo Se · EURONEXT:FR
Valeo — Investor Day (March 2011)
52 slides from Valeo's investor day presentation, Mar 9, 2011
Slide 1: Grow further the new focused Valeo
Grow further the new focused Valeo Investor Day, March 2011
Slide 2: International and focused top management in place
International and focused top management in place Jacques Robert Charvier Christophe Perillat Michel Boulain Géric Lebedoff Martin Haub Edouard Hans-Peter Aschenbroich CFO COO HR General Counsel R&D and de Pirey Kunze Prod. Marketing Corp. Strategy Sales & Business CEO & Planning Dvpt Michael Schwen
Slide 3: My diagnosis in March 2010: Strengths
My diagnosis in March 2010 Strengths Brand Quality Operational excellence & reactivity Committed people Global presence & diversified customer base Global leadership on most product lines Innovation Healthy financial situation March 9th 2011 Investor day I 3 I
Slide 4: 0 km quality
My diagnosis in March 2010 Strengths 27 ppm “0 km quality” Brand 22 ppm Quality 17 ppm Operational excellence & reactivity 9.3 ppm 8.6 ppm Committed people Global presence & diversified customer base 2006 2007 2008 2009 2010 Global leadership on most product lines Innovation Healthy financial situat
Slide 5: Strengths: customer portfolio
My diagnosis in March 2010 Strengths Brand Customer Customer portfolio portfolio 28% 2010 Quality 2010 German Operational excellence 23% & reactivity French* Committed people 9% Global presence & diversified Others customer base Global leadership on most 18% 22% product lines American Asian** Innova
Slide 6: Strengths: global leadership on product lines
My diagnosis in March 2010 Strengths Brand Powertrain Systems Thermal Systems Quality Electrical Transmission Global Thermal Systems Systems Systems Operational excellence & reactivity #1 #2 #2 Committed people Comfort and Driving Visibility Systems Assistance Systems Global presence & diversified D
Slide 7: My diagnosis in March 2010: Weaknesses
My diagnosis in March 2010 Strengths Weaknesses Brand Unfocused strategy Quality Lack of growth Operational excellence & reactivity Poor profitability Committed people Obsolete organization Global presence & diversified customer base Global leadership on most product lines Innovation Healthy
Slide 8: Our commitments for the new Valeo
My diagnosis in March 2010 Weaknesses Our commitments for the new Valeo Unfocused strategy Focus on CO2 emissions reduction Lack of growth in all market segments Poor profitability Deliver above market organic growth in each region Obsolete organization Actively participate in industry conso
Slide 9: Our commitment in March 2011
Our commitment in March 2011 Grow further the new focused Valeo March 9th 2011 Investor day I 9 I
Slide 10: Ahead of March 2010 strategic plan
1 Ahead of March 2010 strategic plan 2 Outperforming the market by 3pt Innovation and new products New customers and geographies 3 Acquisitions on top of organic growth Niles 4 A new profitable model Best in class profitability March 9th 2011 Investor day I 10 I
Slide 11: CO2 emissions reduction
CO2 emissions reduction Energy consumption reduction Grow further the new focused Valeo Asia Emerging countries March 9th 2011 Investor day I 11 I
Slide 12: CO2 emissions reduction: a crucial need
CO2 emissions reduction Energy consumption reduction A crucial need Environmental considerations “It’s “It’s really really important important that that we we have have an an improvement improvement curve on fuel mileage and CO2 reduction.” curve on fuel mileage and CO2 reduction.” Energy indepe
Slide 13: The automotive world is changing
The automotive world is 2007 2010 changing 70m vehicles 74m vehicles North America to re-emerge from a very low basis RoW RoW But a strong shift to Asia Asia Especially China: +8m +10m veh Asia vehicles in 2010 vs. 2007 SA SA NA -3m veh NA Europe -3m veh Europe Asia Emerging countries March 9t
Slide 14: This trend will continue: production by region
This trend will continue Production by region 2010 27% 50% 6% 17% 2020e 2000 32% 22% 34% Europe & Africa 5% 60% Asia & Others 13% 30% North America 4% South America March 9th 2011 Investor day I 14 I
Slide 15: China is the first automotive market and India will follow
China is the first automotive market today and India will follow Auto Production Index Year 1@ 100 2500 2000 1500 India in 2010 1000 500 China in 1999 0 0 5 10 15 20 25 No. of years after liberalization* *Year 1 – 1978 for China and 1992 for India March 9th 2011 Investor day I 15 I
Slide 16: First results in 2010
CO2 emissions reduction Energy consumption reduction First results in 2010 Asia Emerging countries March 9th 2011 Investor day I 16 I
Slide 17: Outperforming our main regions
Outperforming our main regions Full Year OE Sales outperforming the market by 2pts World YOY Production +39%** Production +15%** Valeo OE Sales* +27% +60%* +20%* Production** +25% North America Europe Production +28%** Production +12%** +36%* +8%* Asia South America * OE light vehicle sales at same
Slide 18: Outperforming Asian market by 8%
Outperforming Asian market by 8% Production +28%** +36%* Asia Production +22%** Production +22%** 19% of sales +38%* +19%* Korea Japan Production +31%** +48%* 19% of sales 30% of sales China Production +34%** 40% of sales +81%* India 4% of sales * OE Light vehicle sales at same perimeter & exchange
Slide 19: Ahead of the 2013 plan presented in March 2010
Ahead of the 2013 plan presented in March 2010 2013 2007 2009 2010 as announced in March 2010 Sales (in million euros) 9,567 7,499 9,632 10,000 Operating Margin 3.6% 1.8% 6.4% 6-7 % (as % of sales) Capital turnover 4 4 5 5 ROCE* 14% 7.1% 32% >30% *Operating margin / capital employed excluding goodwi
Slide 20: A new horizon for 2015
A new horizon for 2015 €14bn Sales at 2010 perimeter, ie. Organic growth only 2009 2010 2015 8.1% Sales (in million euros) 7,499 9,632 CAGR** ~14,000 Operating Margin 1.8% 6.4% >7% (as % of sales) Capital turnover 4 5 5 ROCE* 7.1% 32% >30% *Operating margin / capital employed excluding goodwill ** O
Slide 21: Ahead of March 2010 strategic plan
1 Ahead of March 2010 strategic plan 2 Outperforming the market by 3pt Innovation and new products New customers and geographies 3 Acquisitions on top of organic growth Niles 4 A new profitable model Best in class profitability March 9th 2011 Investor day I 21 I
Slide 22: Find the right balance between growth and profit
Grow further the new focused Valeo Find the right balance between growth and profit March 9th 2011 Investor day I 22 I
Slide 23: €14bn sales by 2015: outperforming the market by 3pt
€14 bn Sales by 2015 Outperforming the market by 3pt In a 5% CAGR worldwide production hypothesis March 9th 2011 Investor day I 23 I
Slide 24: Outperforming the market by 3pt
Innovation New customers & new products & geographies Outperforming the market by 3pt March 9th 2011 Investor day I 24 I
Slide 25: Innovation: a key driver for growth in each Business Group
Innovation R&D expenses & new products 6% of Sales A key driver for growth in each of the Business Groups March 9th 2011 Investor day I 25 I
Slide 26: A strong pipeline of innovations: already in production
Innovation A strong pipeline of & new products innovations Already in production Stop and start to become a standard LEDs to become a standard Battery cooling 360 View March 9th 2011 Investor day I 26 I
Slide 27: A strong pipeline of innovations: ordered
Innovation A strong pipeline of & new products innovations Already in production Ordered Double clutch Aquablade & Direct drive Touchscreen Center Console Combined Charge air cooler and Air intake March 9th 2011 Investor day I 27 I
Slide 28: A strong pipeline of innovations: development contracts
Innovation A strong pipeline of & new products innovations Ordered Development contracts Range extender Laser scanner Sensor fusion Full electric drivetrain March 9th 2011 Investor day I 28 I
Slide 29: A strong pipeline of innovations: new innovations
Innovation A strong pipeline of & new products innovations Development contracts New innovations Electrical driven compressor Energy recovery Electrical motors eSkin Eco-driving assistance… March 9th 2011 Investor day I 29 I
Slide 30: Strengthen position in fast growing markets
Strengthen position in fast New customers growing markets & geographies 2010 Europe to stay our main region 60%* Historically Europe but also as a strong technological & Africa basis 8%* South Asia to grow in our portfolio America External growth would be needed to reach 35% Valeo share in Asi
Slide 31: Strengthen position in fast growing markets: 2015 mix
Strengthen position in fast New customers growing markets & geographies 2010 2015 60%* <50%* Europe Europe & Africa & Africa 8%* 6%* South South America America 13%* 19%* ~15%* >30%* North Asia & North Asia & America Others America Others * In % of OEM light vehicle sales March 9th 2011 Investor day
Slide 32: Increase position with Premium & Asian customers
Increase position with New customers Premium & Asian & geographies customers 2010 2015 Strong relationship with 28% German OEMs German Especially Premium ones 23% To keep technological leadership French* 9% Intensify relationship with Others Asian customers Grow our share with Japanese OEMs 18
Slide 33: Ahead of March 2010 strategic plan
1 Ahead of March 2010 strategic plan 2 Outperforming the market by 3pt Innovation and new products New customers and geographies 3 Acquisitions on top of organic growth Niles 4 A new profitable model Best in class profitability March 9th 2011 Investor day I 33 I
Slide 34: Outperforming the market by 3pt + external growth
Innovation New customers & new products & geographies Outperforming the market by 3pt + External growth March 9th 2011 Investor day I 34 I
Slide 35: External growth principles
External growth principles Permanent assessment of our product portfolio 3 criteria Perform “Make or Buy” analysis Capital employed optimization Acquisitions on top of the organic growth target March 9th 2011 Investor day I 35 I
Slide 36: Permanent assessment of our product portfolio
Permanent assessment of our product portfolio Keep-or-sell assessment criteria for each business ROCE* >20% Growth One of the 3 major worldwide players March 9th 2011 Investor day I 36 I
Slide 37: Acquisitions on top of the organic growth objective
Acquisitions on top of the organic growth objective Keep a balanced customer portfolio Keep a balance between distribution channels Original equipment Aftermarket Find new growth levers and reinforce our most successful product lines Privilege main growth strategy axes CO2 emissions reduction
Slide 38: Investor day I 38 I
March 9th 2011 Investor day I 38 I
Slide 39: Niles: bolt-on acquisition to lead interior controls
Niles A bolt-on acquisition to become world-wide leader in interior controls Global Global market market shares shares 17% + 12% 11% 10% 7% 7% 7% 5% March 9th 2011 Investor day I 39 I
Slide 40: Interior controls is a promising product line
Interior controls is a promising product line Center console as a technologies integrator Before After eSkin Enhanced human machine Infotainment monobox interfaces make Climate control Switches automotive Infotainment and climate control hidden boxes connectivity technologies eSkin Infotainment poss
Slide 41: Rebalanced geographical exposure
Rebalanced geographical exposure Niles, a perfect match with Valeo Europe + Russia China Korea N-A Japan S-A India Asean Valeo Interior Controls Sales forecasts 2015 Valeo to use Niles commercial & industrial footprint Niles Sales forecasts 2015 to sell & manufacture its advanced products in Asia Ma
Slide 42: A stronger presence of Valeo in Japan
A stronger presence of Valeo in Japan and with Japanese customers Valeo + Niles Market Valeo Valeo + Niles + Ichikoh 5% 8% 14% 13% Japan 15% 18% 25% Japanese 30% OEMs March 9th 2011 Investor day I 42 I
Slide 43: Niles acquisition key financials
Niles acquisition key financials Niles key figures (January to December 2010) Sales: ~€435m EBITDA > 13% Operating margin >7% Employees: ~3,500 (60% in competitive countries) Transaction Multiples Acquisition of 77.9% stake from RHJI EV/Sales: 0.74x 20% stake from Nissan EV/EBITDA <5.7
Slide 44: Ahead of March 2010 strategic plan
1 Ahead of March 2010 strategic plan 2 Outperforming the market by 3pt Innovation and new products New customers and geographies 3 Acquisitions on top of organic growth Niles 4 A new profitable model Best in class profitability March 9th 2011 Investor day I 44 I
Slide 45: A new profitable model
€14 bn Sales by 2015 A new profitable model Profitability sustainable through the cycle March 9th 2011 Investor day I 45 I
Slide 46: Outperform automotive market growth
Outperform automotive market growth Outperformance on our main markets Quality performance recognition Order intake at record high €12.5 bn at the end of 2010 Aftermarket + Others > €1.6 bn in 2010 €14 bn sales in High confidence in achieving 2015 target 2015 March 9th 2011 Investor day I 46 I
Slide 47: Optimization of capital employed
Optimization of capital employed to service the Group development Development in Asia and emerging countries less capital intensive 50 to 60% of investments allocated to development in Asia and emerging countries Lean Capex strategy leads to lower investments Capex at [4.5-5%] of sales March 9th 201
Slide 48: Profitability sustainable through the cycle
Profitability sustainable through the cycle Maintaining profitability despite raw material price evolution Keeping break even point under strict control Implementing new organization Lower Capex growth model 2015 Operating Going forward with Visibility turnaround margin target >7% March 9th 2011 Inv
Slide 49: Disciplined financial policy
Disciplined financial policy Keep a strong balance sheet A priority: back to investment grade… Financial performance recognized by rating agency : notation Ba1 upgrade of the outlook from stable to + as of December 9. …to offer flexibility for future development… A reinforced financial structure
Slide 50: Best in class ROCE
Best in class ROCE 2007 2010 2015 Sales (in million euros) 9,567 9,632 ~14,000 Operating Margin 3.6% 6.4% >7% (as % of sales) Capital turnover 4 5 5 ROCE* 14% 32% >30% *Operating margin / capital employed excluding goodwill March 9th 2011 Investor day I 50 I
Slide 51: Conclusion
Conclusion The right strategy The right products The right teams The right business model Valeo is clutched for profitable growth March 9th 2011 Investor day I 51 I
Slide 52: Investor day I 52 I
March 9th 2011 Investor day I 52 I