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Valeo — Investor Day (March 2010)
23 slides from Valeo's investor day presentation, Mar 10, 2010
Slide 1: Investor day
Investor day March 10th, 2010
Slide 2: Towards best-in-class ROCE
Towards best-in-class ROCE Robert Charvier, CFO March 10th, 2010
Slide 3: Agenda
Agenda 1 Growth 2 A breakeven point significantly lowered 3 The financial strategic levers 4 2013 financial profile March 10th, 2010 I 3 I
Slide 4: Growth
1 Growth 2 A breakeven point significantly lowered 3 The financial strategic levers 4 2013 financial profile March 10th, 2010 I 4 I
Slide 5: Worldwide automotive production
1.1 Worldwide automotive production Conservative assumptions 2013/2009 2009 2013 (Million of Vehicles) CAGR Europe 16.6 20.0 + 4.8% North America 8.5 13.5 +12.3% South America 3.7 4.2 +3.2% Asia & other 30.6 34.4 +3.0% TOTAL 59.4 72.1 +5.0% In 2013, production in Europe and North America remains bel
Slide 6: Valeo sales growth
1.2 Valeo sales* growth (M€) 2009 2013 % CAGR Europe 4.9 6.1 +6% North America 0.7 1.2 +13% South America 0.6 0.7 +6% Asia 1.3 2.0 +12% TOTAL 7.5 10.0 +7.5% 72% of 2013 OE sales already in orderbook 1 Bn € of 2013 OE sales related to CO2 emission reduction Organic growth > production growth by 2.5%
Slide 7: Growth driven by OE sales
1.3 Growth driven by OE sales 2013 OE Sales Forecast American Others German OEM (10%) OEM (17%) (28%) 8.3Bn€ B€ 2009 2013 Original equipment 6.0 8.3 French OEM Asian (22%) OEM Aftermarket 1.5 1.7 (23%) Sales 7.5 10.0 OEM Sales = 138 Sales = 133 Worldwide production = 121 Aftermarket sales = 113 100
Slide 8: A breakeven point significantly lowered
1 Growth 2 A breakeven point significantly lowered 3 The financial strategic levers 4 2013 financial profile March 10th, 2010 I 8 I
Slide 9: Significant breakeven point reduction achieved in 2009
2-1 Significant breakeven point reduction achieved in 2009 Fixed manufacturing costs -210 M€ Fixed R&D costs -40 M€ reduction Breakeven point - 1.1 B€ SG&A -90 M€ Margin on + 33 bp variable costs March 10th, 2010 I 9 I
Slide 10: Increased industrial flexibility
2.2 Increased industrial flexibility DIRECT WORKFORCE 40000 30000 Temporary 20000 Permanent 10000 0 Jun-08 Dec-08 Jun-09 Dec-09 INDIRECT WORKFORCE 22000 -13% 20000 18000 Indirect 16000 14000 Jun-08 Dec-08 Jun-09 Dec-09 March 10th, 2010 I 10 I
Slide 11: A reduced dispersion of Business Group profitability
2.3 A reduced dispersion of Business Group profitability Q4-2009 Ebitda margin Comfort & Driving Assistance %sales 9.9% Powertrain %sales 11.7% Q4-2009 Business Group Average: Thermal %sales 10.4% 10.9% Visibility %sales 11.2% 10.9% EBITDA in Q4-2009 allowed by breakeven point decrease March 10th, 2
Slide 12: The financial strategic levers
1 Growth 2 A breakeven point significantly lowered 3 The financial strategic levers 4 2013 financial profile March 10th, 2010 I 12 I
Slide 13: Implementation of a new organization
3.1 Implementation of a new organization Alignment with customer organization Î Additional growth Purchasing organized around 6 worldwide commodities Î Leverage the Group purchasing power Worldwide production lines managed by the Business Groups Î Optimize capex & R&D costs Administration costs opti
Slide 14: Capital turnover acceleration
3.2 Capital turnover acceleration Lean investment practices Worldwide optimization Increased sourcing from competitive countries Make or buy trade off ÎCAPEX ** ≈ 4 to 4.5 % as of 2013 ÎCAPEX ** < 80% yearly depreciation in 2009/2010/2011 ÎStrict priority to growing areas (60% in Asia & emerging cou
Slide 15: Working capital optimization
3.3 Working capital optimization Negative operating working capital by the end of 2009 (-300 M€) Still room for improvement (inventories optimization) But Increase of customer payment terms as a consequence of growth in Asia Target: 2013 working capital ≈ 2009 level March 10th, 2010 I 15 I
Slide 16: Optimization of R&D costs / allocation
3.4 Optimization of R&D costs / allocation Cost savings related to increased weight of competitive countries Priority given to strategic research projects 2009 2013 R&D expenses (M€) 470 600 + 130 M€ (% sales) 6.4% 6.0% March 10th, 2010 I 16 I
Slide 17: Turnaround of Visibility Business Group
3.5 Turnaround of Visibility Business Group : A clear strategy Wiper motors rationalization Aftermarket competitiveness Accelerate synergies within lighting alliance (Ichikoh + Valeo Sylvania) Secure margins through strict project management and optimization of industrial footprint + 0.5 Pt operatin
Slide 18: 2013 financial profile
1 Growth 2 A breakeven point significantly lowered 3 The financial strategic levers 4 2013 financial profile March 10th, 2010 I 18 I
Slide 19: Operating margin multiplied by ~3.5 in 2013
4.1 Operating margin multiplied by ~ 3.5 in 2013 +0.5pt +1.5pts +0.4pt +2.8pts including 6-7% +1pt D&A 1.8% 2009 Volume R&D G&A Visibility 2013 recovery Breakeven point 7,000 8,000 March 10th, 2010 I 19 I
Slide 20: EBITDA by Business Group
4.2 EBITDA by Business Group 2009 Comfort & Driving Assistance %sales 7,9% Powertrain 2013 %sales 10,3% Group Average: Thermal %sales 8,0% [12% - 13%] Visibility %sales 7,5% TOTAL 8,9% Convergence of Business Group profitability to Group average March 10th, 2010 I 20 I
Slide 21: A healthy financial situation
4.4 A healthy financial situation Financial debt Planned reimbursement Refinancing of debt repayments scheduled in 2011, 2012 and 2013 to be organized in an orderly manner 2009 gearing ratio: 59% 2009 leverage ratio: 1.1x Undrawn credit lines: 1100 M€ Cash available: 860 M€ Expected FCF over 2010-20
Slide 22: Conclusion: best in class ROCE
4.5 Conclusion : best in class ROCE (*) Capex discipline CAPITAL CAPITAL Working capital EMPLOYED EMPLOYED optimization ~~ 22 Bn€ Bn€ ROCE ROCE >30% >30% Growth Visibility recovery PROFITATIBILITY PROFITATIBILITY Productivity 6-7% 6-7% New organization (*) Ebit / Capital employed excluding goodwill
Slide 23: Automotive technology, naturally
Automotive technology, naturally