Slide 1: H1 2020 Results
H1 2020 RESULTS JACQUES ASCHENBROICH CHAIRMAN & CEO SMART TECHNOLOGY FOR SMARTER MOBILITY
Slide 2: Table of Contents
H1 2020 RESULTS TABLE OF CONTENTS COVID-19 CRISIS: STRONG ACTION PLAN MARKET TRENDS OT vatioate our os 05 oat COMO * STRATEGY OQ NEALTH PROTECTION, 7 OUR 1ST PRIORITY OG 1122020 ouTtLoox 38 STRONG LIQUIDITY O3 position % OF Backup siipes 40 OG, STRONG OUTPERFORMANCE IN ALL REGIONS "7 VALEO RESERVED
Slide 3: Covid-19 crisis: market trends validate our strategy
©) Covid-19 crisis: market _ trends validate | our strategy _
Slide 4: Covid-19 Crisis: Market Trends Validate Our Strategy
COVID-19 CRISIS: MARKET TRENDS VALIDATE OUR STRATEGY CAR HAS A GREEN DEAL AS s ENSURING MOBILITY IS ROLE TO PLAY BACKBONE OF PASSENGER ACCELERATING WITHIN THE RECOVERY MOBILITY HEALTH AND IN CITY SAFETY CENTERS THE EUROPEAN GREEN DEAL VALEO RESERVED Valeo MAY 2020 | 4
Slide 5: We have invested in 12 new key technological platforms
FIT SOP 2019 SOP 2019 SOP 2019 X1.6 X1.3 X2.9 New customer in ADAS GOLF 8 ID.3** SOP 2019 SOP 2019 We have invested in 12 new key technological platforms to create a unique product portfolio. X3.4 X4.5 In H2 2020, sales in 48 volts: 3 times higher vs 2019 Expanding our competitive edge through high
Slide 6: Valeo 48V powertrain adoption by customers
Daimler press release dated July 8, 2020 “The next generation of the S-Class, which will be presented in autumn, represents the future of Mercedes-Benz. It combines the two strategic focuses of electrification and digitization. 48-volt technology is standard with all engines, and the plug-in hybrid v
Slide 7: A Transformation Acknowledged by the Market
A TRANSFORMATION ACKNOWLEDGED BY THE MARKET Honda’s FIT abolishes Driver and passenger millimeter-wave radar with Valeo’s health and safety are now monitored smart front camera providing in the Wey VV7 thanks to Valeo level 2 ADAS system driver monitoring system VALEO RESERVED Valeo MAY 2020 | 7
Slide 8: Citroen AMI and start of production timeline
Citroen ATUL Electrified AMI 3 wheelers Droid SOP SOP SOP Q1 2020 Q2 2020 Q4 2020 Expected in 2021
Slide 9: Greener & Safer Mobility at the Heart of Our Strategy
#1 GREENER & SAFER MOBILITY AT THE HEART OF IN 2020: OUR STRATEGY ● NEW MID-TERM SUSTAINABLE #1 TARGETS SAFER (36%) ● LONG-TERM CARBON 2019 NEUTRALITY PROGRAM #1 * OEM Sales** GREENER (57%) #1 * excl. tyre companies ** incl. VSeA
Slide 10: Health Protection, Our 1st Priority
02 HEALTH PROTECTION, OUR 1°" PRIORITY
Slide 11: Our 1st Priority
OUR 1st PRIORITY A reinforced protocol has been implemented: ● a worldwide mandatory standard; ● ensuring maximum protection for all employees; ● audited and will remain valid as long as the virus is active... ● … despite around 10% impact on direct labor productivity.
Slide 12: Active in the Fight Against Covid-19
ACTIVE IN THE FIGHT AGAINST COVID-19 As part of its commitment in the fight against Covid-19, Valeo has: ● Provided 10,000 ventilators; ● Provided 80,000 FFP2/FFP3 masks to hospitals; ● Donated masks produced in some of our plants.
Slide 13: Strong Liquidity Position
03 STRONG LIQUIDITY POSITION
Slide 14: €2.3bn in Undrawn Credit Lines
€2.3BN IN UNDRAWN CREDIT LINES ● €2.3bn in undrawn credit lines at end of June 2020; ● Liquidity position: ○ No debt falling due before June 2021; ○ Average debt maturity of 3.4 years; ○ Adequate headroom under the bank covenant (3.5 times the EBITDA); ○ €2.1bn in cash and cash equivalent.
Slide 15: Leverage Ratio at 2.7x
LEVERAGE RATIO AT 2.7x Shareholders’ equity and net debt Net debt to EBITDA Gearing Gearing Gearing 64% 61% 123% Shareholders’ equity (€m) Net debt (€m) excluding non-controlling interests Leverage Leverage Leverage 1.3x 1.1x 2.7x LT Outlook ST Covenant of 3.5X Moody's Baa3 Negative Prime-3 Negative
Slide 16: Debt maturity and outstanding amounts
Outstanding Maturity Coupon amount $575m/ Non-dilutive convertible bond June 2021 0% €470m EMTN Sept. 2022 €600m 0.375% EMTN Jan. 2023 €500m 0.625% Schuldschein Apr. 2023 €336m Eurib 6M (floor) + 0.95%-0.95% EMTN Jan. 2024 €700m 3.25% Undrawn Schuldschein Apr. 2025 €212m Eurib 6M (floor) + 1.15%-1.291
Slide 17: Strong Outperformance in All Regions
04 STRONG OUTPERFORMANCE IN ALL REGIONS
Slide 18: Strong Outperformance in All Regions Q2 2020
STRONG OUTPERFORMANCE IN ALL REGIONS Q2 2020 OEM Like for like sales(2) -49% OEM World 42% of Valeo sales(2) sales(2) OEM -56% 13% of Valeo sales(2) sales(2) -68% Europe (1) Outperformance -2pts vs IHS(3) North America North America Outperformance OEM sales** +6% Production*** +4% +7pts vs IHS(3) ex
Slide 19: H1 OEM sales outperformance by region
H1 OEM sales outperformance (like for like) 2020 (in percentage points) +15pts Europe China +11pts +9pts +9pts +3pts -3pts World +8pts +6pts +4pts North America Asia excl. China +9pts +10pts +6pts +4pts 0pts -1pt
Slide 20: Outperformance in All Business Groups
OUTPERFORMANCE IN ALL BUSINESS GROUPS H1 MAINLY DRIVEN BY ADAS, ELECTRIC SYSTEMS AND LIGHTING 2020 Outperformance +11pts +8pts +2pts +5pts Group €7.1bn H1 total sales In €m % of H1 20 sales Total reported sales -24% -26% -33% -28% OEM sales Like for like -24% -27% -33% -30% *excl. TCM
Slide 21: Regional recovery trends
● China, strong recovery since March; ● North America, strong recovery since end of May; ● Europe, gradual recovery since mid-May; ● Korea and Japan impacted by the decline in exports; ● Brazil and India, very slow recovery.
Slide 22: €5.6bn New Order Intake
€5.6BN NEW ORDER INTAKE Most RFQs €4bn (requests for quotation) suspended since March 2020
Slide 23: Strong Action Plan to Limit Covid-19 Impact
05 STRONG ACTION PLAN TO LIMIT COVID-19 IMPACT
Slide 24: The world has changed dramatically since the Covid-19 outbreak
a ee See Pp The worldhas ~~ Pad ¥ changed We ae dramatically aat a since the ete a Covid-19 . outbreak VALEO RESERVED
Slide 25: A Strong and Fast Action Plan to Variabilize Costs and Save Cash
A STRONG AND FAST ACTION PLAN TO VARIABILIZE COSTS AND SAVE CASH
Slide 26: €570M Cost Reduction
€570 M COST REDUCTION Valeo July 21,2020 | 26
Slide 27: Across All Plants, for a Total Amount of €570M
H1 ACROSS ALL PLANTS, FOR A TOTAL AMOUNT OF €570M 2020 ● Variabilization of labor and indirect labor costs of which headcount reduction of 12,000 people incl. temporary employment cuts; ○ €248m in cost savings ● Development effort reduction; ○ €196m in cost savings ● Production overheads reduction;
Slide 28: Variabilization of costs 58% in Q2
THANKS TO COST REDUCTION PLAN Variabilization of costs* 58% in Q2 * Operating cost reduction excl. material consumption vs H1 2019 Loss of sales contribution after material consumption
Slide 29: Decrease in Gross R&D Effort of €196M
DECREASE IN GROSS R&D EFFORT OF €196M In €m and as a % of sales Capitalized development expenditure In €m and as a % of sales €(196)m 4.0% Amortization and impairment of capitalized development expenditure (net of subsidies) In €m and as a % of sales 10.8% 8.0% 12.2% €195m impairment % OF WHICH 1.8%
Slide 30: Drop Through 25% in Q2
DROP THROUGH Drop through* 25% in Q2 28% in H1 *Excl.one-off charges and capitalized development expenditure impact (capitalized costs less amortization)
Slide 31: Reductions in capex, inventories and dividends
● Reduction of €141m in CAPEX* ● Reduction of €243m gross inventories ● Reduction of €249m in dividends *Excl. Capitalized R&D
Slide 32: Valeo Siemens eAutomotive
VALEO SIEMENS e-AUTOMOTIVE ● Impact on Valeo’s P&L and cash in line with expectations despite Covid-19 crisis; ● VSeA’s 2020 losses expected to be slightly lower than in 2019, in line with expectations.
Slide 33: €622M One-off Charges
€622M ONE-OFF CHARGES AROUND 90% OF ONE-OFF CHARGES LINKED TO THE COVID-19 CRISIS
Slide 34: Impairment Tests
IMPAIRMENT TESTS In its financial statement for the 6 months ended June 30, Valeo has acknowledged the change of environment since Covid-19 outbreak: ● In-depth review of the value of its assets; ● Write-down of Brazilian assets, diesel assets and Top Column Module (TCM). Significant impairment of ass
Slide 35: Operating margin reported
€764M* R&D 2019 Covid-19 drop 2020 capitalization & non recurring reported through* reported (in €m) amortization Operating margin 514 (764) (133) (457) (840) excl. JV & associates *Excl. impact of R&D capitalization & amortization
Slide 36: €(593)M Net Loss, €409M EBITDA
€(593)M NET LOSS €409M EBITDA (5.8% of sales) BEFORE €622M BEFORE ONE-OFF CHARGES ONE-OFF CHARGES
Slide 37: €1bn Cash Consumption in H1
€1BN CASH CONSUMPTION IN H1 H1 2019 H1 2020 EBITDA (€m) 1,218 202 Change in operating working capital* 230 (574) Income tax (152) (106) Change in provisions (36) 232 Other operating items, of which: (57) (89) Payment for the principal portion of lease liabilities (46) (43) Restructuring costs (10) (
Slide 38: H2 2020 Outlook
06 H2 2020 OUTLOOK Valeo
Slide 39: H2 2020 guidance
For the second half of 2020, Valeo has based its guidance on production volume estimates published by IHS. These estimates do not factor in a second phase of Covid-19 lockdown restrictions or any adverse impact on production, supply chain and market evolution . Based on this scenario, i.e., a fall o
Slide 40: Backup Slides
07 BACKUP SLIDES VALEO RESERVED July 21,2020 | 40
Slide 41: Q2 Sales
Q2 SALES Q2 2020 -2pts €m Reported -50% -34% -49% -48% -49% -33% -48% -48% Like for like ' Exchange rates -0.4% Exchange rates -0.8% Exchange rates -0.9% Exchange rates -0.4% Scope +0.2% Scope 0.0% Scope 0.0% Scope +0.2%
Slide 42: H1 Sales
H1 SALES H1 2020 +6pts €m Reported -29% -18% -33% -28% -29% -18% -32% -28% Like for like Exchange rates +0.1% Exchange rates -0.5% Exchange rates -0.4% Exchange rates -0.0% Scope 0.0% Scope 0.0% Scope +0.1% Scope +0.1%
Slide 43: H1 Outperformance by Region
H1 OUTPERFORMANCE BY REGION H1 Like for like 2020 OEM sales(2) OEM -29% 47% of Valeo sales(2) sales(2) OEM -31% World 18% of Valeo sales(2) sales(2) -36% Europe (1) North America North America Outperformance OEM sales** +6% Outperformance +6pts vs IHS(3) Production*** +4% +9pts vs IHS(3) Outperforma
Slide 44: H1 Outperformance in Asia
H1 OUTPERFORMANCE IN ASIA H1 2020 Like for like OEM 25% of Asian sales(2) sales(2) OEM -27% 33% of Valeo sales(2) sales(2) -20% OEM Japan (2) sales(2) Asia (1) 26% of Asian sales -22% Outperformance South Korea -1pt vs IHS(3) Outperformance +8pts vs IHS(3) OEM 42% of Asian sales(2) sales(2) Outperfo
Slide 45: Customer Portfolio
CUSTOMER PORTFOLIO % of OEM sales German German 31% 30% Asian Asian 31% 33% H1 19 H1 20
Slide 46: R&D Expenses
R&D EXPENSES Capitalized development expenditure In €m and as a % of sales In €m and as a % of sales +18% €195m impairment Amortization and impairment of capitalized development expenditure (net of subsidies) In €m and as a % of sales €195m €733m impairment €236m 1.8% 2.3% €236m
Slide 47: Drop Through
H1 DROP THROUGH 2020 (in m€) H1 2020 H1 2019 Variation YoY Sales 7,058 9,776 (2,718) Operating margin excl. JV & associates (840) 514 (1,354) One-off expenses 457 457 Capitalized development expenditure (319) (400) 81 Amortization of capitalized of development expenditure 236 184 52 Operating margin
Slide 48: One-off Charges Recorded in H1
ONE-OFF CHARGES RECORDED IN H1
Slide 49: Reconciliation of Valeo and Top Column Module (TCM) Data
RECONCILIATION OF VALEO AND TOP COLUMN MODULE (TCM) DATA The Group decided to withdraw from the TCM Segment. The table below reconciles reported consolidated data for H1 2020 with data excluding the TCM business.
Slide 50: Segment data excluding TCM
H1 2020 Comfort & Driving Assistance Powertrain Thermal Visibility (€m) Systems* Systems Systems Systems Others Total Sales: ● segment (excluding Group) 1,371 1,836 1,535 2,143 173 7,058 ● intersegment (Group) 9 61 25 26 (121) 0 EBITDA 84 91 (31) 75 (17) 202 Research & Development expenditure, net (
Slide 51: Definitions of order intake and like for like
● Valeo order intake corresponds to business awarded by automakers during the period (including joint ventures accounted for based on Valeo’s share in net equity) less any cancellations, based on Valeo’s best reasonable estimates in terms of volumes, selling prices and project lifespans. Unaudited i
Slide 52: Contacts
INVESTOR RELATIONS VALEO 43, rue Bayen F-75848 Paris Cedex 17 France Thierry Lacorre E-mail: valeo.corporateaccess.mailbox@valeo.com Website: www.valeo.com CONTACTS
Slide 53: Share Data and ADR Data
Share Data • Bloomberg Ticker FR FP • Reuters Ticker VLOF.PA • ISIN Number FR 0013176526 • Shares outstanding as of June 30, 2020 241,036,743 ADR Data • Ticker/trading symbol VLEEY • CUSIP Number 919134304 • Exchange OTC • Ratio (ADR: ord) 1:2 • Depositary Bank J.P. Morgan • Contact at J.P. Morgan –
Slide 54: Forward-looking statements
Statements contained in this document, 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 respect to future financial r
Slide 55: Valeo - Smart Technology for Smarter Mobility
Valeo SMART TECHNOLOGY FOR SMARTER MOBILITY