Valeo Se · EURONEXT:FR
Valeo — Shareholder Meeting (June 2009)
46 slides from Valeo's shareholder meeting presentation, Jun 9, 2009
Slide 1: Combined Shareholders' Meeting
Combined Shareholders’ Meeting Jacques Aschenbroich - CEO June 9, 2009
Slide 2: Contents
Contents Valeo: a well-known automotive supplier An unprecedented economic crisis 2008: a highly contrasted year A quick reaction in the face of the crisis A sound financial situation Outlook: taking up the challenges of growth and profitability Combined Shareholders’ Meeting – June 9, 2009 I 2 I
Slide 3: Contents
Contents Valeo: a well-known automotive supplier An unprecedented economic crisis 2008: a highly contrasted year A quick reaction in the face of the crisis A sound financial situation Outlook: taking up the challenges of growth and profitability Combined Shareholders’ Meeting – June 9, 2009 I 3 I
Slide 4: A well-balanced customer portfolio
A well-balanced customer portfolio At first quarter 2009 In % of sales 14 12 10 8 6 4 Opel 2 0 Combined Shareholders’ Meeting – June 9, 2009 I 4 I
Slide 5: A global Group close to its customers
A global Group close to its customers Sales by production region 56% of sales Western Europe -38%* 11% of sales 13% of sales North America Eastern Europe 14% of sales -38%* Asia -38%* 6% of sales South America -38%* Figures at December 31, 2008 Combined Shareholders’ Meeting – June 9, 2009 I 5 I
Slide 6: Quality performance recognized by customers…
Quality performance recognized by customers… Customer returns in defective parts per million 185 69% of sites < 10 ppm (incl. 25% of sites at 0 ppm) 2008 53 32 15 10 14 6 2003 2004 2005 2006 2007 2008 2009 end May Combined Shareholders’ Meeting – June 9, 2009 I 6 I
Slide 7: … along with operational excellence
… along with operational excellence Service rate: 99.2% Accident rate: 5.24% 76% of sites certified ISO 18001 Stocks reduced by 11% in 2008 88% of sites certified ISO 14001 Combined Shareholders’ Meeting – June 9, 2009 I 7 I
Slide 8: Operational excellence recognized by customers
Operational excellence recognized by customers Toyota “Excellent Quality Performance” Award for the Valeo Group 27 Divisions in 14 countries recognized by 20 customers Combined Shareholders’ Meeting – June 9, 2009 I 8 I
Slide 9: Contents
Contents Valeo: a well-known automotive supplier An unprecedented economic crisis 2008: a highly contrasted year A quick reaction in the face of the crisis A sound financial situation Outlook: taking up the challenges of growth and profitability Combined Shareholders’ Meeting – June 9, 2009 I 9 I
Slide 10: The most severe economic crisis since the 1930's
The most severe economic crisis since the 1930’s Subprime crisis starting in early 2007 Banking and liquidity crisis Full-blown economic crisis Combined Shareholders’ Meeting – June 9, 2009 I 10 I
Slide 11: The crisis and the automotive sector
The crisis and the automotive sector Strong drop in vehicle registrations Î Sudden halt in access to credit Î Loss of consumer confidence (unemployment risk) Deterioration in the quality of credit for companies in the sector Î Strict rationing of credit granted to automotive manufacturers Weakening
Slide 12: Collapse of automobile production…
Collapse of automobile production… (in % vs previous year) +3.8 +2.9 -1.6 -21.1 -38.0 Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Combined Shareholders’ Meeting – June 9, 2009 I 12 I
Slide 13: … spreading to all regions of the world
… spreading to all regions of the world % vs previous year Europe 30 North America 20 South America Asia 10 0 -10 -20 -30 -40 -50 -60 Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Combined Shareholders’ Meeting – June 9, 2009 I 13 I
Slide 14: Contents
Contents Valeo: a well-known automotive supplier An unprecedented economic crisis 2008: a highly contrasted year A quick reaction in the face of the crisis A sound financial situation Outlook: taking up the challenges of growth and profitability Combined Shareholders’ Meeting – June 9, 2009 I 14 I
Slide 15: 2008: a highly contrasted year
2008: a highly contrasted year First nine months: improvement in operating margin and net income Fourth quarter: collapse of the automotive markets Adaptation to the crisis and cost reduction Rigorous cash control Combined Shareholders’ Meeting – June 9, 2009 I 15 I
Slide 16: Sustained commercial momentum
Sustained commercial momentum In billion euros Order intake / x OE sales 1.3x 1.3x 1.4x 9.9 10.1 10.1 45% with German Others automakers 32% Innovative products 2006 2007 2008 Combined Shareholders’ Meeting – June 9, 2009 I 16 I
Slide 17: Emergency plan implemented from Q4 2008
Emergency plan implemented from Q4 2008 Cost reduction Î Drastic decrease in temporary workforce (-4,800 people) Î Announcement of a headcount adaptation plan affecting 5,000 permanent employees Î Decrease in general production expenses of -30% Reduction in working capital requirements Î Significant
Slide 18: 2008 sales penalized by volume collapse in Q4
2008 sales penalized by volume collapse in Q4 In million euros -9.0% Perimeter -0.7% 9,689 8,815 Exchange rates -1.5% 2007 2008 Combined Shareholders’ Meeting – June 9, 2009 I 18 I
Slide 19: Key figures – 2008
Key figures – 2008 In million euros 2008 2007 Change Sales 8,815 9,689 -9.0% Gross margin 1,314 1,497 -12.2% as % of sales 15.2% 15.7% - 0.5 pt Operating margin 230 346 -33.5% as % of total oper. revenues 2.6% 3.6% -1.0 pt Net income (207) 81 ns Basic earnings per share (€) (2.73) 1.06 ns Free cash
Slide 20: A highly contrasted year
A highly contrasted year First 9 months Q4 2008 2007 % 2008 2007 % Sales 7,026 7,251 -3.1% 1,789 2,438 -26.6% Gross margin 1,106 1,111 -0.5% 208 386 -46.1% as % of sales 16.0% 15.5% +0.5 pt 11.9% 16.1% -4.2 pts Operating margin 268 250 +7.2% (38) 96 ns as % of total op. rev. 3.8% 3.4% +0.4 pt -2.1%
Slide 21: Evolution of the gross margin
Evolution of the gross margin 16.0% 15.5% +0.5 pt In % of sales +0.3pt +2.1pts -0.1pt -2.8pts 9 months 2007 9 months 2008 15.7% 15.2% 16.1% -4.2 pts 2007 Raw Selling Activity Productivity 2008 materials prices and savings 11.9% plan Q4 2007 Q4 2008 Combined Shareholders’ Meeting – June 9, 2009 I 21
Slide 22: Evolution of the operating margin
Evolution of the operating margin +0.4 Pt In % of total operating revenues 3.8% +0.3pt 3.4% -0.1pt +2.8pts 9 months 2007 9 months 2008 3.6% 2.6% - 4.0pt 2007 Raw Selling Activity Productivity 2008 materials prices and savings -6 Pts plan 3.9% Q4 08 Q4 07 -2.1% Combined Shareholders’ Meeting – June 9
Slide 23: Results (cont.)
Results (cont.) In million euros 2008 2007 Change R&D expenses (net) (488) (534) -8.6% % of total oper. revenues 5.5% 5.5% Administrative & selling expenses (596) (617) -3.4% % of total oper. revenues 6.8% 6.4% Total general expenses (1,084) (1,151) -5.8% % of total oper. revenues 12.3% 11.9% Other
Slide 24: Results (cont.)
Results (cont.) In million euros 2008 2007 Change Operating income (52) 319 ns Cost of net debt (45) (51) -11.8% Other financial income & expenses (59) (46) +28.3% Equity in net earnings of assoc. 9 8 +12.5% Income before income taxes (147) 230 ns Income taxes (51) (83) -38.6% Non-strategic activiti
Slide 25: Contents
Contents Valeo: a well-known automotive supplier An unprecedented economic crisis 2008: a highly contrasted year A quick reaction in the face of the crisis A sound financial situation Outlook: taking up the challenges of growth and profitability Combined Shareholders’ Meeting – June 9, 2009 I 25 I
Slide 26: Environment: first quarter 2009
Environment: first quarter 2009 Decrease of 38% in global automobile production in the first quarter Î Europe: -38% Î USA: -52% Slight improvement in March Î Vehicle scrapping bonus in Europe Î More dynamic emerging markets, particularly Brazil and China Î Nearing the end of destocking Combined Shar
Slide 27: Key figures of the first quarter 2009
Key figures of the first quarter 2009 in million euros Q1-2009 Q1-2008 Change Sales 1,624 2,437 -33.4% Gross margin 185 391 -52.7% as % of sales 11.4% 16.0% -4.6 pts Operating margin (66) 90 ns as % of sales -4.1% 3.7% ns Net income (159) 43 ns Net financial debt 933 786 +18.7% Free cash flow (116)
Slide 28: Publication of quarterly results
Publication of quarterly results As from 2010, Valeo will no longer publish quarterly results, but only regulated information concerning sales and the level of activity. Combined Shareholders’ Meeting – June 9, 2009 I 28 I
Slide 29: Reinforcement of the cost reduction and cash control program
Reinforcement of the cost reduction and cash control program Headcount reduction of 5,000 people, including 1,600 in France Î 3,230 departures recorded at end March Reduction of investment by one-third in 2009 600 million euros of savings, of which 500 million euros in 2009 Î 140 million Q4 2008 Î 1
Slide 30: Headcount adaptation plan
Headcount adaptation plan -12,100 Temporary Permanent -3,230 permanent -4,900 -1,670 temporary 61,200 59,700 58,400 54,000 51,200 49,100 Dec-2007 June-08 Sept-08 Nov-08 Dec-08 Mar-09 Combined Shareholders’ Meeting – June 9, 2009 I 30 I
Slide 31: Priority: cash flow management
Priority: cash flow management Continued decrease in working capital requirements Î Stock reduction of 75 million euros in Q1 Tightened control of investment Alignment of managerial objectives with the generation of free cash flow Combined Shareholders’ Meeting – June 9, 2009 I 31 I
Slide 32: Controlled customer risk
Controlled customer risk GM and Chrysler under U.S. bankruptcy protection No loss in terms of receivables due Combined Shareholders’ Meeting – June 9, 2009 I 32 I
Slide 33: Contents
Contents Valeo: a well-known automotive supplier An unprecedented economic crisis 2008: a highly contrasted year A quick reaction in the face of the crisis A sound financial situation Outlook: taking up the challenges of growth and profitability Combined Shareholders’ Meeting – June 9, 2009 I 33 I
Slide 34: Controlled liquidity situation
Controlled liquidity situation No debt reimbursement due before January 2011 Î Océane reimbursable in January 2011 for a total of 463 million euros Cash available at 31/03/2009: more than 500 million euros Liquidity secured via confirmed bilateral credit line program worth 1.2 billion euros Î No dra
Slide 35: A crisis-proof financial structure
A crisis-proof financial structure In million euros 1,733 Shareholders’ equity 1,311 excl. minority interests 1,171 Net financial debt 933 786 821 Debt ratio 45% 63% 80% 31/03/2008 31/12/2008 31/03/2009 Combined Shareholders’ Meeting – June 9, 2009 I 35 I
Slide 36: Financial strategy
Financial strategy Reinforcement of the Group’s liquidity Î Change of covenants Î Tight cash control Diversification of the Group’s resources Disposal of certain non-strategic activities when market conditions will permit Increased flexibility for refinancing the Group’s debt Î Financial authorizati
Slide 37: Financial authorizations
Financial authorizations Resolution 8: Capital increase with Pref. Subs. Rights Î Will replace the current authorization which expires in July 2009 Î Period of validity of the authorization: 26 months Î Maximum aggregate par value: 40M€ Resolution 9: Capital increase without Pref. Subs. Rights Î Des
Slide 38: Capital increase reserved for employees
Capital increase reserved for employees Employee shareholders today represent 1.18% of Valeo’s capital Main characteristics Î Validity of the authorization: 26 months Î Maximum discount of 20%, in accordance with the law Î Maximum aggregate par value: 5 M€ or 2% of the capital Combined Shareholders’
Slide 39: Contents
Contents Valeo: a well-known automotive supplier An unprecedented economic crisis 2008: a highly contrasted year A quick reaction in the face of the crisis A sound financial situation Outlook: taking up the challenges of growth and profitability Combined Shareholders’ Meeting – June 9, 2009 I 39 I
Slide 40: Outlook
Outlook Confirmed automobile production forecast Î -30% in H1 Î -20% in 2009 Evolution of sales in line with automobile production in H2 Combined Shareholders’ Meeting – June 9, 2009 I 40 I
Slide 41: Short-term priorities
Short-term priorities Reinforcement of the savings program Î 600 million euros of annualized savings – of which 500 million euros in 2009 and 183 million euros achieved in Q1 Cash control Î One-third decrease in investment in 2009 Î Positive free cash flow excluding restructuring expenses Rigorous m
Slide 42: Evolution of the Valeo share over 10 years
Evolution of the Valeo share over 10 years 30/06/99 02/06/09 Δ VALEO 80.00 15.02 -81.2% CAC 40 4536.61 3378.04 -25.5% 250 PEUGEOT 25.50 22.46 -11.9% RENAULT 42.20 30.28 -28.2% MICHELIN 39.67 45.02 +13.5% 200 FAURECIA 39.15 6.41 -83.6% 150 100 50 0 9 1 2 4 5 7 8 0 3 6 00 02 03 99 01 04 05 06 07 08 09
Slide 43: Evolution of the share since the beginning of 2008
Evolution of the share since the beginning of 2008 (base 100) 31/12/07 05/06/09 Δ VALEO 28.20 13.60 -51.06% 30 CAC 40 5614.10 3339.05 -40.5% 27 PEUGEOT 51.85 22.51 -56.6% RENAULT 97.01 30.76 -68.3% 24 MICHELIN 78.50 43.93 -54.7% FAURECIA 46.60 7.10 -84.8% 21 18 15 12 9 6 3 0 31/12 30/1 29/2 30/3 29/
Slide 44: A clear analysis for preparing action plans
A clear analysis for preparing action plans Lack of growth Lack of profitability Lack of organizational efficiency Lack of strategic vision Combined Shareholders’ Meeting – June 9, 2009 I 44 I
Slide 45: A clear analysis and a strategy to define for taking up the challenges
A clear analysis and a strategy to define for taking up the challenges of the automotive industry The technological challenge The emerging countries challenge The “societal” challenge The industry consolidation challenge Combined Shareholders’ Meeting – June 9, 2009 I 45 I
Slide 46: Enabling a better automotive world
a Enabling a better automotive world