Valeo Se · EURONEXT:FR
Valeo — FY2012 Earnings Presentation
55 slides from Valeo's earnings presentation, Feb 22, 2013
Slide 1: FY 2012 Results
FY 2012 Results Jacques ASCHENBROICH – CEO February 22, 2013
Slide 2: Highlights FY 2012
Highlights FY 2012 Record order intake of 15.8 bn€ (1) Driven by innovation and Asia Improved profitability Sales up 8.2% to 11.8 bn€ OE sales up 8% to 9.9 bn€ Up 2% like-for-like Asia now at 26% of OE sales (22% in 2011) German and Asian customers respectively at 29% and 28% of OE sales Global perf
Slide 3: Highlights FY 2012
Highlights FY 2012 Operating margin of 725 M€ (+3% vs 2011), or 6.2% of sales (2) Stability of H2 margin compared to H1 despite European slowdown (-8%) Net income of 380 M€ (420 M€ excl. non recurring items ) (3) EPS of 5.03 € EPS excl. non recurring items in line with 2011 at 5.56 € Free cash flow
Slide 4: 2013 outlook
2013 outlook Based on the following key assumptions for FY 2013: Automotive production: Europe: -4% World: +1% Raw material prices in line with 2012 levels Valeo has set the following objectives for 2013: Performance higher than the market in each of the main production regions Assuming an upturn in
Slide 5: Record order intake of 15.8 bn€
Record order intake of 15.8 bn€ (1) Well positioned to perform better than the market thanks to innovation and the acceleration in Asia and the emerging markets February 22, 2013 I 5 FY 2012 results
Slide 6: Record order intake thanks to innovation and Asia
Record order intake thanks to innovation and Asia (1) Growing order intake fuelling organic growth % of order intake Innovation In bn€ 28% CAGR +12% 15,8 14,9 12,5 7,8 10,0 10,1 7,2 9,7 9,2 6,0 7,7 4,9 5,0 5,1 3,4 6,1 Americas 22% 7,7 8,0 Asia 6,5 34% 4,3 4,8 5,0 5,0 3,1 Europe 2005 2006 2007 2008 2
Slide 7: Innovation fuelling organic growth
Group order intake Innovation fuelling organic growth In bn€ 14,9 15,8 Strong product portfolio in CO2 emissions reduction 10,0 10,1 12,5 9,7 9,2 7,7 2005 2006 2007 2008 2009 2010 2011 2012 Since 2009, CO2 emission reduction order intake increased by around 70% Main drivers Examples of innovations R
Slide 8: Innovation fuelling organic growth
Group order intake Innovation fuelling organic growth In bn€ 14,9 15,8 Strong product portfolio in intuitive driving 10,0 10,1 12,5 9,7 9,2 7,7 2005 2006 2007 2008 2009 2010 2011 2012 Since 2009, intuitive driving order intake increased by around 130% Main drivers Examples of innovations Recent orde
Slide 9: Asia fuelling organic growth
Asia fuelling organic growth Acceleration in Asia (34% of order intake, 26% of OE sales) and in China (18% of order intake, 10% of OE sales) SA NA 5% 17% Other Asia Asian 34% countries China 46% 54% Europe 44% World: 15.8 bn€ Asia: 5.3 bn€ February 22, 2013 I 9 FY 2012 results
Slide 10: Sales up 8.2% to 11.8 bn€
Sales up 8.2% to 11.8 bn€ Well positioned to perform better than the market thanks to innovation and repositioning of customer & geographic mix February 22, 2013 I 10 FY 2012 results
Slide 11: Total sales up 8.2% (+2.5% like-for-like) to €11.8 bn
Total sales up 8.2% (+2.5% like-for-like) to €11.8 bn H2 sales impacted by a deteriorating European environment Total sales M€ 5,534 5,760 +4% Total sales M€ +8.2% 11,759 Perimeter +0.7% 10,868 Exchange rates Like-for-like +2.4% +1% H2 11 H2 12 Perimeter +3.2% Exchange rates +2.5% Like-for-like +2.5
Slide 12: OE sales up 8% (+2% like-for-like) to 9.9 bn€
OE sales up 8% (+2% like-for-like) to 9.9 bn€ H2 OE sales impacted by a deteriorating European environment OE sales M€ OE sales 4,792 10,868 M€ 4,697 +2% 9,632 9,910 9,207 +8% Perimeter +0.4% Exchange rates +2.5% Like-for-like -0.9% H2 11 H2 12 Perimeter +3.1% Exchange rates +2.7% Like-for-like +1.8
Slide 13: Improving aftermarket performance up 4% in H2
Improving aftermarket performance up 4% in H2 71% rise in miscellaneous sales (including tooling revenues) in H2 In M€ and YoY change H2 11 H2 12 Ch. Ch. FY 11 FY 12 Ch. Ch. like-for-like like-for-like 4,697 4,792 Original Equipment 9,207 9,910 +2% -1% +8% +2% 85% 83% % of sales 85% 84% 693 722 Afte
Slide 14: Repositioning towards German & Asian customers (57% of OE sales)
Repositioning towards German & Asian customers(57% of OE sales) 29% and 28% respectively in 2012 in % of OE sales Others 7% Others 9% German American German American 29% 17% 29% 18% French French* 18% 20% Asian Asian** 28% 25% FY 11 FY 12 * Excluding Nissan ** Including Nissan February 22, 2013 I 14
Slide 15: Repositioning towards German & Asian customers (58% of OE sales)
Repositioning towards German & Asian customers(58% of OE sales) 30% and 28%, respectively in H2 in % of OE sales Others Others 8% 6% German 28% American American German 17% 19% 30% French* French* 18% 17% Asian** Asian** 29% 28% H2 11 H2 12 * Excluding Nissan ** Including Nissan February 22, 2013 I
Slide 16: Geographic repositioning
Geographic repositioning Asia and emerging countries at 54% of sales, with Asia accounting for 27% OE sales by production region Europe at 50% in H2 East Eastern Europe & Europe Europe & Europe Africa 58% Africa 52% 14% 14 % Western Western Europe Europe 50% in Asia Asia 54% in Asia 44% 38% & emergi
Slide 17: Strong development in Asia and North America
Strong development in Asia and North America Through organic & external growth Geographic contribution to sales growth (in M€) (43) 277 213 7 226 65 255 11,759 (127) 18 10,868 2011 Europe Asia North South Currencies 2012 America America Perimeter Growth Decrease February 22, 2013 I 17 FY 2012 result
Slide 18: Global performance impacted by Japanese OEMs
Global performance impacted by Japanese OEMs Performance 2pts higher than the market in Europe Underperf. -4pts* Underperf. -3pts* Outperf. World +2pts* OE sales +2% North America Production +6% Valeo OE sales** +15% Europe Production +18% Valeo OE sales** -3% Production -5% 17% of Valeo sales 51% o
Slide 19: Global performance in line with the market excluding Japanese OEMs
Global performance in line with the market excluding Japanese OEMs Performance higher than the market in Asia excluding Japanese OEMs Perf. Outperf. Outperf. World (exc. Japanese) 0pt* +9pts* +2pts* OE sales +2% North America Production +2% (Detroit 3) Europe Valeo OE sales +17% Valeo OE sales** -3%
Slide 20: Temporary underperformance in Asia
Temporary underperformance in Asia Only due to Japan Underperf. Asia -1pt* Valeo OE sales** +8% Production +9% 26% of Valeo sales Underperf. -21pts* Japan OE sales** -1% Outperf. Production +20% +10pts* 29% of Asian sales Outperf. Korea OE sales** +8% +9pts* Production -2% China Outperf. OE sales**
Slide 21: Operating margin of 725 M€, up 3% vs 2011
Operating margin of 725 M€, (2) up 3% vs 2011 Stability of H2 operating margin compared to H1 at 6.2% of sales, despite European slowdown (-8% in production) February 22, 2013 I 21 FY 2012 results
Slide 22: Gross margin at 1,948 M€ or 16.6% of sales
Gross margin at 1,948 M€ or 16.6% of sales Mainly impacted by exchange rates & startup costs at new plants 942M€ +2% 927M€ Walkdown +0,2pt -0,0pt -0,4pt 16.8% -0,3pt +0,1pt 16.4% 1,948M€ H2 11 Volume OEM / Currencies Startup Others H2 12 1,843M€ +6% Aftermarket (Real+ mix of new Rupees) production…
Slide 23: Positive impact of raw materials in H2
Positive impact of raw materials in H2 Slight decrease in LME and drop in rare earth prices 2900 Aluminum 11000 Copper €/T €/T 2700 10000 2500 9000 2300 8000 2100 7000 1900 6000 1700 5000 1500 4000 2010 2011 2012 2010 2011 2012 Gross impact - change % FY 12 % of Net impact consumption H1 11 / H2 11
Slide 24: Operating margin up 3% to 725 M€ (6.2% of sales)
Operating margin up 3% to 725 M€ (6.2% of sales), (1) In H2, operating margin at 6.2% of sales despite 8% decline in European production 359M€ -1% 355M€ 0.0pt Walkdown -0.4pt +0.1pt 6.5% 6.2% 725M€ +3% 704M€ H2 11 Gross R&D SG&A H2-12 margin +0.6pt -0,4pt +0.1pt 0.0pt 6.2% 6.5% FY 11 Gross R&D SG&A
Slide 25: Net R&D expenditure stable at 5.1% of sales
Net R&D expenditure stable at 5.1% of sales To support increasing order intake Order Intake Bn€ CAGR +12% 15,8 14,9 12,5 In M€ 7,8 9,7 10,0 10,1 7,2 & % of sales 9,2 7,7 6,0 4,9 5,0 5,1 +7.0% 3,4 6,1 7,7 8,0 6,5 598 4,3 4,8 5,0 5,0 3,1 561 501 2005 2006 2007 2008 2009 2010 2011 2012 5.8% 5.2% 5.1% F
Slide 26: Sound management of SG&A
Sound management of SG&A In M€ With G&A costs remaining at 3.6% of sales +8.0% 625 578 Selling Selling Expenses Expenses 196 181 Admin. Admin. Expenses Expenses 397 429 % of sales FY 11 FY 12 5.3% 5.3% 1.7% 1.7% 3.6% 3.6% FY 11 FY 12 February 22, 2013 I 26 FY 2012 results
Slide 27: Sustainability of margins thanks to lower breakeven point
Sustainability of margins thanks to lower breakeven point Breakeven point significantly lower than pre-crisis level Breakeven point In % sales 95% 91% 88% 79% 78% 76% 75% 2007 2008 2009 2010 2011 2012 MT objective February 22, 2013 I 27 FY 2012 results
Slide 28: Net income of 380 M€ with EPS at 5.03€
Net income of 380 M€ with EPS at 5.03€ Excl. non recurring items(3), net income of 420 M€ with EPS at 5.56 € FY 11 FY 12 ▲ Total sales (M€) 10,868 11,759 +8.2% Operating margin (1) (M€) 704 725 +3.0% % of sales 6.5% 6.2% -0.3pt Out of which Access Mecanism Other income & expenses (M€) 0 (53) na capi
Slide 29: ROCE at 28%
ROCE(4) at 28% Higher level of capital employed to support order intake(1) FY 11 FY 12 Total sales 10.9 bn€ 11.8 bn€ Operating margin (1) 6.5% 6.2% Capital turnover 4.9* 4.5** ROCE (4) 31% 28%** ROA (5) 19% 17% *Proforma sales **Proforma balance sheet February 22, 2013 I 29 FY 2012 results
Slide 30: Segment information
Segment information February 22, 2013 I 30 FY 2012 results
Slide 31: EBITDA of 1,260 M€ or 10.7% of sales
EBITDA of 1,260 M€ or 10.7% of sales (6) Visibility hit by weaker sales on aftermarket and startup costs / Recovery of Powertrain FY 12 Comfort & Driving Assistance % of sales 11.9% M€ & % of sales Powertrain % of sales 10.1% 11.9% 11.2% Thermal % of sales 11.5% 10.7% Visibility % of sales 8.0% 9.1%
Slide 32: Free cash flow of 81 M€ after investment flow of 857 M€
Free cash flow of 81 M€ after (7) investment flow of 857 M€ Strong increase in order intake requiring investment flows in production capacities in fast growing markets & R&D February 22, 2013 I 32 FY 2012 results
Slide 33: Recorded investments increased to 879 M€
Recorded investments increased to 879 M€ To support organic growth Capex* M€ (% of sales) & % of OE sales 5,4% 5,0% +23% 879 717 FY 11 FY 12 Capex* 635 540 Increase in capitalized R&D driven Capitalized R&D by improving profitability of order book 177 244 (% of sales) FY 11 FY 12 2.1% 1.6% FY 11 FY
Slide 34: Change in working capital of 73 M€
Change in working capital of 73 M€ due to structural negative working capital in Europe In M€ Rest of FY 11* Europe the world FY 12* -308 -381 6 67 +€73M • Inventories, accounts and notes receivables, other current assets , accounts and notes payables, other current liabilities February 22, 2013 I 3
Slide 35: Free cash flow of 81 M€
Free cash flow of 81 M€ (7) Further to investment flow & impact of slowdown in Europe on working capital FY 11 FY 12 EBITDA (6) (M€) 1,212 1,260 Operating working capital (M€) (29) (49) Of which impact of European slowdown (66) Restructuring & employee-related costs (M€) (52) (37) Other operating it
Slide 36: Strong financial structure
Strong financial structure “Investment Grade” rating confirmed by Moody’s and Standard & Poor’s February 22, 2013 I 36 FY 2012 results
Slide 37: Investment Grade rating
“Investment Grade” rating Confirmed by Moody’s and Standard & Poor’s Moody’s Long term Outlook Short term Moody’s rating Baa3 Stable Prime-3 Standard and Poor’s Long term Outlook Short term S&P’s rating BBB Stable A-2 February 22, 2013 I 37 FY 2012 results
Slide 38: Strong financial structure
Strong financial structure In line with “Investment Grade” status Net debt (9) over EBITDA (6) Shareholders’ equity and net debt Net debt (M€) Shareholders’ equity (M€) excluding non-controlling interests Net debt (M€) EBITDA (6)12 months rolling (M€) 2,052 1,936 1,212 1,260 1,708 1,150 763 523 763
Slide 39: Strong liquidity position
Strong liquidity position To cope with challenging environment Liquidity : Debt: Cash & cash equivalent: 1.3 bn€ Maturity Amount Coupon Undrawn bank credit lines: 1.2 bn€ EMTN June 2013 311M€ 3.75% Average Maturity : 3.3 years Euribor 3M Syndicated Loan June 2016 250M€ + 1.3% Aug 2016 (redeemable in
Slide 40: Outlook & dividend
Outlook & dividend February 22, 2013 I 40 FY 2012 results
Slide 41: Proposed dividend payment of €1.50/share, ie payout ratio of 30%
Proposed dividend payment of €1.50/share, ie payout ratio of 30% 2012 dividend of €1.50/share to be proposed at the next Shareholders’ Meeting 2010 2011 2012 EPS 4.86 5.68 5.03 EPS 4.86 5.68 5.56 excl. non recurring items Dividend 1.20 1.40 1.50 Payout ratio 25% 25% 30% February 22, 2013 I 41 FY 201
Slide 42: 2013 outlook
2013 outlook Based on the following key assumptions for FY 2013: Automotive production: Europe: -4% World: +1% Raw material prices in line with 2012 levels Valeo has set the following objectives for 2013: Performance higher than the market in each of the main production regions Assuming an upturn in
Slide 43: Valeo's mid-term objectives
Valeo’s mid-term objectives 2010-2012 objectives set out during Investor Day – March 2011 According to the objectives set out in March 2011: Operating margin between 6% to 7% over the period 2010-2012 2010 2011 2012 Operating margin 6.4% 6.5% 6.2% (% of sales) ROCE higher than 30% in 2010 and in 201
Slide 44: Valeo's mid-term objectives
Valeo’s mid-term objectives Despite economic slowdown in Europe, mid-term objectives confirmed Adjustement of Valeo’s European automotive production assumptions European Production 2011 2012 2013 Previous (March 9, 2011) 19.7 20.8 21.8 Change in % +6% +5% -4% -12% New (Feb 22, 2013) 21.1 20.0 19.1 C
Slide 45: Valeo's mid-term objectives
Valeo’s mid-term objectives A business model which remains valid In view of the record order intake of the past few years driven by: a portfolio of innovative products the expansion in Asia and emerging countries 2010-2012 profitability objectives achieved despite economic slowdown in Europe Valeo i
Slide 46: Investor Relations
Contact Investor Relations Thierry Lacorre 43, rue Bayen F-75848 Paris Cedex 17 France Tel.: +33 (0) 1.40.55.37.93 Fax: +33 (0) 1.40.55.20.40 E-mail: thierry.lacorre@valeo.com Web site: www.valeo.com February 22, 2013 I 46 FY 2012 results
Slide 47: Share Information
Share Information Share Data Bloomberg Ticker FR FP Reuters Ticker VLOF.PA ISIN Number FR 000130338 Shares outstanding as of Dec. 31, 2012 79,462,540 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 – ADR
Slide 48: Glossary
Glossary (1) Order intake: Order intake corresponds to business awarded by automakers (less any cancellations) during the period, based on Valeo's best and reasonable estimates in terms of volumes, sale prices and project lifespans. (2) Operating margin corresponds to operating income less other inc
Slide 49: Back-up
Back-up February 22, 2013 I 49 FY 2012 results
Slide 50: Half year P&L
Half year P&L 2009 2010 2011 2012 (in € million) H1 H2 H1 H2 H1 H2 H1 H2 Total sales 3,472 4,027 4,787 4,845 5,334 5,534 5,999 5,760 Gross margin 453 685 856 879 916 927 1,006 942 as % of sales 13.0% 17.0% 17.9% 18.1% 17.2% 16.8% 16.8% 16.4% R&D expenditure (234) (239) (267) (270) (285) (276) (313)
Slide 51: Segment information
Segment information 2012 Comfort and Driving Powertrain Thermal Assistance Visibility (in €m) Systems Systems Systems Systems Others TOTAL Net sales · segment (excluding Group) 3,237 3,313 2,487 2,698 24 11,759 · intersegment (Group) 29 27 23 36 (115) - EBITDA 329 383 298 220 30 1,260 Research & Dev
Slide 52: Quarterly information
Quarterly information in M€ Sales by segment Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 Q3-12 Q4-12 Comfort & Driving 408 440 418 438 481 489 567 620 657 634 615 604 Assistance Powertrain 636 708 625 714 767 782 743 834 855 826 784 802 Systems Thermal Systems 693 754 735 751 783 776
Slide 53: Investment Grade rating
“Investment Grade” rating Confirmed by Moody’s and Standard & Poor’s Moody’s Long term Outlook Short term Moody’s rating Baa3 Stable Prime-3 “The Baa3 rating is supported by the Group’s (i) solid business profile, (ii) adequate credit metrics and a (iii) balanced financial policy… Valeo ranks the la
Slide 54: Safe Harbor Statement
Safe Harbor Statement Statements contained in this report, which are not historical fact, constitute “Forward-Looking Statements”. Even though Valeo’s management feels that the Forward-Looking Statements are reasonable, investors are put on notice that actual results may differ materially due to num
Slide 55: FY 2012 results
Automotive technology, naturally