Slide 1: Valeo Investor Day London 2017
VALEO INVESTOR DAY London 2017
Slide 2: Acceleration of our journey to a more profitable Valeo
ACCELERATION OF OUR JOURNEY TO A MORE PROFITABLE VALEO ROBERT CHARVIER CHEF FINANCIAL OFFICER VALEO INVESTOR DAY london 2017 — 2021 FINANCIAL TARGETS (aoa) ont)
Slide 3: All data related to 2017-2021 based on Valeo perimeter
ALL DATA RELATED TO 2017-2021 ARE BASED ON THE PERIMETER OF VALEO AT THE END OF 2016 AND INTEGRATE: ICHIKOH, VALEO-KAPEC* FTE* VALEO SIEMENS CEAUTOMOTIVE (consotioateo at Equity) RAW MATERIALS (STEEL, COPPER, ALUMINIUM, PLASTIC...) BASED ON CURRENT PRICES. * Pending regulatory approvals
Slide 4: Performance highlight 2015/2016
PERFORMANCE HIGHLIGHT 2015/2016 VALEO CONTINUED TO OUTPERFORM STRUCTURAL OVERPERFORMANCE IN TERMS OF GROWTH COMPARED TO MARKET GROWTH IN SALES BASE 100 IN 2008 (REPORTED FIGURES) (LIKE FOR LIKE FIGURES) wk 190 1 JAPANESE +10% 7 EUROPEAN 170 te +9% +8% 150 22 DIRECT +8% 130 COMPETITORS 118 +4% 90 +3%
Slide 5: 2014 to 2017: what has been achieved
2014 ff 2017 WHAT HAS BEEN ACHIEVED SALES (€bn) 12.7. ~17 +6PTS in 2015 OE SALES OUTPERFORMANCE +5PIS +5PTIS sSPTs in 2016 OPERATING MARGIN 7.2% ~8% 8.1% in 2016 CASH CONVERSION RATE 21% ~28% 31% in 2016 ROCE 31% >32% 34% in 2016
Slide 6: We are ahead of the plan announced in March 2015
WE ARE AHEAD OF THE PLAN ANNOUNCED IN MARCH 2015
Slide 7: Valeo's virtuous circle
VALEO’S VIRTUOUS CIRCLE oe eo \ open INTAKE open PROFITABILITY IMPROVEMENT AND G&A DECREASE ‘ a
Slide 8: Innovation
INNOVATION
Slide 9: Valeo growth is fueled by successive innovation waves
VALEO GROWTH IS FUELED BY SUCCESSIVE INNOVATION WAVES MOBILITY & DIGITAL AUTONOMOUS & CONNECTED CAR ELECTRIFICATION & SMART ENGINES 2019 2022 2025 R&D EFFORT : +~50% BETWEEN 2013 AND 2016 q NET R&D EXPENSES: ONLY 0.5PTS INCREASED OVER 2013-2016 as
Slide 10: Generating strong growth engines
eee GENERATING STRONG GROWTH ENGINES GROWTH ENGINES” | TRADITIONAL PRODUCTS 2015 Source: Valeo *Strategic products and services that are positioned on growth markets or generate a significant increase in Group sales VALEO +26% PER YEAR MARKET : +13% / YEAR VALEO +4% PER YEAR MARKET : +3% / YEAR 2021
Slide 11: Order intake growth
ORDER INTAKE GROWTH
Slide 12: Acceleration of our order intake
ACCELERATION OF OUR ORDER INTAKE >40% INNOVATION TARGET OVER THE PERIOD 2017-2021 2009 2014 2015 2016 (°) Products and technologies in series production for less than 3 years 12 Based on 2014 to 2016
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Slide 14: Acceleration of Valeo's sales growth
ACCELERATION OF VALEO’S SALES GROWTH AUTOMOTIVE PRODUCTION* ASSUMPTIONS 2016 2021 MILLIONS OF VEHICLES EUROPE 22.5 24.7 +1.9% ASIA & OTHERS cexc.cuina) 22.7 26.3 +3.0% CHINA 26.9 30.9 +2.8% NORTH AMERICA 17.9 18.9 +1.1% SOUTH AMERICA 2.7 3.3 +4.1% TOTAL * LMC and VALEO Estimates Base forecast st LMC
Slide 15: Outperforming automotive production by 7 points
ACCELERATION OF VALEO’S SALES GROWTH OUTPERFORMING AUTOMOTIVE PRODUCTION BY 7 POINTS OEM SALES (€BN) 14.4 19.2 23.8 >10% GLOBAL AUTOMOTIVE PRODUCTION muuions of units 92.7 99.1 104.1 *2.3% 15
Slide 16: Secured growth
ACCELERATION OF VALEO’S SALES GROWTH SECURED GROWTH @ TARGET OE SALES ~85% BOOKED BUSINESS ~50% BOOKED BUSINESS @ OE SALES OR BOOKED OE SALES 2017 2019 2021 16
Slide 17: An improved geographical portfolio
ACCELERATION OF VALEO’S SALES GROWTH AN IMPROVED GEOGRAPHICAL PORTFOLIO* see @ Europe @ North America @ South America @ China @ Asia w/o China “OEM sales by destination > 17
Slide 18: We are an aftermarket company
WE ARE AN AFTERMARKET COMPANY ACCELERATING EVERYWHERE AFTERMARKET SALES 2016 ASIA EUROPE AMERICA 2021 18
Slide 19: We are an aftermarket company
WE ARE AN AFTERMARKET COMPANY ACCELERATING EVERYWHERE AFTERMARKET SALES IN€M SIGNIFICATIVE IMPACT FROM ACQUISITION (IN ASIA WITH ICHIKOH & VALEO-KAPEC* AND IN EUROPE WITH FTE*) GROWTH FUELED BY VALEO OE GROWTH IN THE PAST 6 YEARS ACCELERATION IN ASIA WHERE THE AVERAGE AGEING CAR FLEET IS INCREASING
Slide 20: Sales in €bn, CAGR 2016-2021
ACCELERATION OF VALEO’S SALES GROWTH SALES IN €BN CAGR 2016-2021: >10% YeaRs
Slide 21: Capex
CAPEX IN % OF SALES ACCELERATION OF GROWTH VALEO FACTORY OF THE NEAR FUTURE PLANT MASSIFICATION RE-USE OF ASSETS THROUGH STANDARDIZATION 21
Slide 22: Working capital
WORKING CAPITAL IN ME INVENTORY IMPROVEMENT SUPPLY CHAIN FINANCING ACCELERATION IN ASIA VALEO REMAINS A NEGATIVE WORKING CAPITAL COMPANY BUT WORKING CAPITAL IS NO LONGER CASH CONTRIBUTOR : -50ME PER YEAR OVER 2017-2021 ~
Slide 23: Profitability improvement and G&A decrease
PROFITABILITY IMPROVEMENT AND G&A DECREASE
Slide 24: Gross margin improvement
GROSS MARGIN IMPROVEMENT DEPRECIATION VOLUME PRICE 2021
Slide 25: Decrease of general & administrative expenses
DECREASE OF GENERAL & ADMINISTRATIVE EXPENSES OVER THE PERIOD 2017-2021 FULL DIGITALIZATION OF ADMINISTRATIVE PROCESSES rn G&A IN PERCENTAGE OF SALES 4.3% ACCELERATED GROWTH é.. “e,, 3.2% a 2.8% OPTIMIZATION “sg OF ORGANIZATION 2010 2016 2021 > 25
Slide 26: Break-even point improvement
BREAK-EVEN POINT IMPROVEMENT @ : 2010 2016 2021
Slide 27: R&D increase
R&D INCREASE
Slide 28: R&D
R&D ~6% OVER THE PERIOD TO GROWTH ENGINES AND FOCUS ON NEW REVOLUTIONS OF GROSS MARGIN INCREASE ALLOCATED TO THE FINANCING OF R&D FOUNDATION OF VALEO PROFITABLE GROWTH MODEL 28
Slide 29: Focus on new revolutions
ae FOCUS ON NEW REVOLUT OF GROSS MARGIN INCREASE ALLOCATED TO THE FINANCING OF R&D FF VALEO PROFITABLE |
Slide 30: Profitability & cash
PROFITABILITY & CASH
Slide 31: Profitability: operating margin
PROFITABILITY OPERATING MARGIN IN PERCENTAGE OF SALES
Slide 32: Profitability: EBITDA by business group
PROFITABILITY EBITDA BY BUSINESS GROUP IN % OF SALES 2016 2021 COMFORT ASSISTANCE 14.7% ~17% SYSTEMS revere 13.3% ~15%* Bem 10.0% ~13% Ce 13.9% ~14%** : 2014 2015 2016 noes 2021 “Including FTE, Valeo-KAPEC, “*Including ICHIKOH 32 VSeA consolidated under the equity method
Slide 33: Significant cash generation
SIGNIFICANT CASH GENERATION [Ese] | Bie) CASH GENERATED OVER THE PERIOD 2017-2021 FREE CASH FLOW / EBITDA 2017 33 2021
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Slide 35: Pursuit of our M&A strategy
PURSUIT OF OUR M&A STRATEGY MAINTAIN A BALANCE BETWEEN : - ORIGINAL EQUIPMENT - AFTERMARKET ICHIKOH & FTE* Kaka) PRIVILEGE MAIN STRATEGIC GROWTH LEVERS : - C02 EMISSION REDUCTION - INTUITIVE DRIVING - ASIA AND EMERGING MARKETS SPHEROS, VALEO-KAPEC*, FTE*, VALEO SIEMENS eAUTOMOTIVE PEIKER, CLOUDMADE,
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Slide 37: Valeo provides an increasing ecosystem for startups and innovators
VALEO PROVIDES AN INCREASING ECOSYSTEM FOR STARTUPS AND INNOVATORS 37
Slide 38: Valeo's virtuous circle
VALEO’S VIRTUOUS CIRCLE oe eo \ open INTAKE open PROFITABILITY IMPROVEMENT AND G&A DECREASE ° a
Slide 39: 2021 financial targets
2021 FINANCIAL TARGETS 21s 219202 SALES (€bn) 16.5 >22.5 >27 EBITDA* 13.0% ~14.5% ~15% OPERATING MARGIN* 8.1% ~8.5% ~9.0% FREE CASH FLOW 3.7 bn€ 2017 - 2021 ROCE** 34.0% ~28% ~30% ROA*** 21% ~19% >20% * Including Joint Ventures and associates “* ROCE, or return on capital employed, corresponds to op
Slide 40: Acceleration of our journey to a more profitable Valeo
ACCELERATION OF OUR JOURNEY TO A MORE PROFITABLE VALEO VALEO INVESTOR DAY — London 2017 —
Slide 41: Safe harbor statement
SAFE HARBOR STATEMENT Statements contained in this press release, which are not historical fact, constitute "Forward-Looking Statements". These statements include projections and estimates and their underlying assumptions, statements regarding projects, objectives, intentions and expectations with r
Slide 42: Valeo Investor Day London 2017
VALEO INVESTOR DAY London 2017