Valeo Se · EURONEXT:FR
Valeo — Investor Day (February 2022)
99 slides from Valeo's investor day presentation, Feb 25, 2022
Slide 1: Valeo Strategic & Financial Outlook 2022-2025
VALEO STRATEGIC & FINANCIAL OUTLOOK 2022-2025 February 25, 2022 1
Slide 2: CEO message on the Move Up plan
Today, we are launching our Move Up plan covering the 2022-2025 period. Move Up means building a Group that is technologically stronger and ideally positioned, and accelerating in electrification with the integration of Valeo Siemens eAutomotive, as well as in ADAS, reinvention of the interior exper
Slide 3: Electrification Acceleration and ADAS Acceleration
ELECTRIFICATION ACCELERATION ADAS ACCELERATION ELECTRIFICATION MARKET* €200bn ADAS MARKET* €120bn €150bn €60bn €90bn x6.5 x8 x5 €25bn €30bn x3 x4 €15bn x1.5 2021 2025 2030 2035 2021 2025 2030 2035 February 25, 2022 *Automotive and new mobility 3
Slide 4: Valeo 2025: Technologically Strong
VALEO 2025 ELECTRIFICATION TECHNOLOGICALLY STRONG ADAS ACCELERATION ACCELERATION 2025 SALES* ~€27.5bn CAGR 21/25 LIGHTING EVERYWHERE +13 % ** INTERIOR EXPERIENCE REINVENTION February 25, 2022 *Sales after non-strategic assets divestiture **OEM sales CAGR after non-strategic assets divestiture, inclu
Slide 5: Valeo 2025: Financially Strong
VALEO 2025 FINANCIALLY STRONG RESTORED SOLID CASH DELEVERAGED PROFITABILITY GENERATION February 25, 2022 5
Slide 6: Financially Strong: 2025 targets
VALEO 2025 FINANCIALLY STRONG 2025 2025 EBITDA* 2025 EBIT* FREE CASH FLOW* 2025 ROCE* €800m to ~14.5% ~6.5% €1bn >25% February 25, 2022 *After non-strategic assets divestiture 6
Slide 7: Financially Strong: disposals and leverage
VALEO 2025 FINANCIALLY STRONG VSeA 100% €500m <0.7x VALEO * VALUE OF NON-STRATEGIC ASSETS DISPOSALS 2025 STRATEGIC LEVERAGE RATIO** INTEGRATION *Closing expected in July 2022 **As net debt / EDITDA after non-strategic assets divestiture February 25, 2022 7
Slide 8: From Mobility Revolution to Value Creation
FROM MOBILITY REVOLUTION TO VALUE CREATION February 25, 2022 8
Slide 9: 2021 Review and Financial Outlook 2022-2025
1 2 3 2021 FINANCIAL REVIEW OUTLOOK 2022-2025 February 25, 2022 9
Slide 10: 2021 Review
2021 REVIEW 2021 REVIEW February 25, 2022 10
Slide 11: Resilient 2021 results: sales and order intake
RESILIENT 2021 RESULTS IN A CHALLENGING ENVIRONMENT 2021 SALES 2021 ORDER INTAKE €17.3bn INCLUDING VSeA €22.1bn +6% LIKE FOR LIKE GROWTH €14.1bn OEM SALES February 25, 2022 11
Slide 12: Resilient 2021 results: EBITDA, EBIT, free cash flow
RESILIENT 2021 RESULTS IN A CHALLENGING ENVIRONMENT 2021 EBITDA 2021 EBIT 2021 FREE CASH FLOW €2.3bn €699m €292m 13.4% AS % OF SALES 4.0% AS % OF SALES 13% AS % OF EBITDA February 25, 2022 12
Slide 13: Dividend per share
DIVIDEND € 0.35 PER SHARE UP 17% TO BE PROPOSED AT THE NEXT AGM February 25, 2022 13
Slide 14: Strong operational resilience
STRONG OPERATIONAL RESILIENCE SUPPLY CHAIN COMPETITIVENESS AFTERMARKET ESG STRATEGY EFFICIENCY DYNAMISM 0 €1.1bn €2.1bn €700m LOST CAR BREAKEVEN DECREASE* 2021 SUSTAINABILITY AFTERMARKET SALES LINKED BONDS February 25, 2022 *vs 2020 excluding H1 non recurring items 14
Slide 15: Move Up is built on solid foundations
VALEO MOVE UP IS BUILT ON FROM MOBILITY REVOLUTION TO SOLID FOUNDATIONS VALUE CREATION DETAILED STRATEGY & EXECUTION PLAN FOR ALL OUR ACTIVITIES February 25, 2022 15
Slide 16: Move Up is built on solid foundations
VALEO MOVE UP IS BUILT ON FROM MOBILITY REVOLUTION TO SOLID FOUNDATIONS VALUE CREATION DETAILED STRATEGY & EXECUTION PLAN FOR ALL OUR ACTIVITIES February 25, 2022 16
Slide 17: Our industry is transforming
OUR INDUSTRY IS TRANSFORMING ELECTRIFICATION ADAS ACCELERATION ACCELERATION LIGHTING INTERIOR EXPERIENCE EVERYWHERE REINVENTION February 25, 2022 17
Slide 18: Well positioned on the industry megatrends
WELL POSITIONED ON THE INDUSTRY MEGATRENDS GROWTH DRIVERS VALEO’S BUSINESS KEY PRODUCTS GROUPS 48V & HV 48V & HV 48V & HV 48V & HV CHARGING eMOTORS INVERTER eDRIVE DCDC & OBC STATION POWERTRAIN SYSTEMS (PTS) ELECTRIFICATION ACCELERATION COOLANT BATTERY ELECTRIC HEAT PUMP FLEX HEATER eHEATER COOLER C
Slide 19: Limited legacy business
LIMITED LEGACY BUSINESS 8% 4% 11 % 2021 2025 2030 47 % 48 % 50 % 48 % OEM SALES OEM SALES 45 % OEM SALES 39 % ICE legacy products EV & xEV* Powertrain agnostic PTS & THS CDA & VIS February 25, 2022 *Including Plug-in & Hybrid 19
Slide 20: Resilient, profitable and cash generating aftermarket
RESILIENT, PROFITABLE & CASH GENERATING AFTERMARKET 85% 473K of Valeo offer from mechanics using OE technologies Valeo Service digital €2.1bn platform 2021 SALES Double digit e-commerce sales growth in 2021 February 25, 2022 20
Slide 21: Globally balanced customer portfolio
GLOBALLY BALANCED CUSTOMER PORTFOLIO AMERICAS EUROPE & AFRICA ASIA 21% * 45% * 34% * KEY CUSTOMERS February 25, 2022 *% of 2021 OEM Sales 21
Slide 22: Working with new mobility players and tech partners
WORKING WITH NEW MOBILITY PLAYERS & TECH PARTNERS NEW EV SHUTTLES & TECH COMMERCIAL MICROMOBILITY STARTUPS DROIDS PLAYERS VEHICLES Worldwide Delivery Company Premium electric vehicle manufacturer Chinese Tech Company Electric vehicle & platform manufacturer Self Driving Tech Company February 25, 202
Slide 23: Efficient operating model
EFFICIENT OPERATING MODEL PTS CDA TOTAL QUALITY PRODUCT PRODUCTION DEVELOPMENT SYSTEM THE 5 AXES FOR CUSTOMERS’ SATISFACTION INVOLVEMENT SUPPLIER OF PERSONNEL INTEGRATION THS VIS February 25, 2022 23
Slide 24: Electronic transversal expertise
ELECTRONIC TRANSVERSAL EXPERTISE PTS CDA GROWING SALES WITH ELECTRONICS CONTENT >€10bn 2021 SALES TOP 5 AUTO ELECTRONIC BUYER THS VIS February 25, 2022 24
Slide 25: Software transversal expertise
SOFTWARE TRANSVERSAL EXPERTISE PTS CDA APPLICATION SOFTWARE CORE SOFTWARE (BASIC & MIDDLEWARE) 40% OF ENGINEERS ARE SOFTWARE & SYSTEM ENGINEERS SOFTWARE FOUNDRY (TOOLCHAIN) THS VIS February 25, 2022 25
Slide 26: Sustainability is in our DNA
SUSTAINABILITY IS IN OUR DNA CARBON NEUTRALITY BY 2050 BENCHMARK IN OUR INDUSTRY ON TRACK IN 2021 #1* #1 #1 * #1 #1 MOST REPRESENTED SUPPLIER* IN ESG INDICES INCLUDING CAC40 ESG GLOBAL ESG LEADERS ESG LEADERS February 25, 2022 * excl. Tyre companies 26
Slide 27: Solid governance aligned with sustainability and compliance targets
SOLID GOVERNANCE, ALIGNED WITH SUSTAINABILITY & COMPLIANCE TARGETS BOARD OF DIRECTORS 14 Number of Directors CSR OBJECTIVES integrated into Women ratio* 50% Skilled Board of Directors with diversified Jacques Aschenbroich Chairman of the Independency** 83% expertise Board of Directors Nationalities
Slide 28: Move Up is built on solid foundations
VALEO MOVE UP IS BUILT ON FROM MOBILITY REVOLUTION TO SOLID FOUNDATIONS VALUE CREATION DETAILED STRATEGY & EXECUTION PLAN FOR ALL OUR ACTIVITIES February 25, 2022 28
Slide 29: From mobility revolution to sales outperformance
FROM MOBILITY REVOLUTION TO SALES OUTPERFORMANCE CAGR 70% OEM SALES (WITH 100% VSEA) 21/25* booked ~€24bn ratio in +13% 2025 €14.8bn PTS* THS* ADAS* IE* VIS* 15% 11% 19% 14% 10% IHS CAGR 21/25 >8 pts >4 pts >12 pts >8 pts >4 pts 6.3% 2021 Market Growth Electrification Acceleration Electrification Ac
Slide 30: EBIT margin improvement
EBIT MARGIN IMPROVEMENT AS % OF SALES ~6.5% (+) Operational leverage on volumes Improved gross margin Engineering: better efficiency thanks to platforms CAPEX: improved use rate 4.0% Optimized SG&A (+) Cost management 1.7% Move Up efficiency plan PTS synergy objectives (+) Full inflation recovery 20
Slide 31: EBITDA margin improvement
EBITDA MARGIN IMPROVEMENT AS % OF SALES ELECTRIFICATION ADAS ACCELERATION ACCELERATION ~14.5% PTS 13.4% % >11% 11.3% CDA ADAS ~21% THS ~13% EBITDA 2025 CDA ~18% 14.5%* ~ VIS CDA IE 2021 2021 2025 ~15% ~14% EBITDA Pro forma EBITDA* (WITH VSeA 100%) LIGHTING INTERIOR EXPERIENCE EVERYWHERE REINVENTION
Slide 32: Value creation: free cash flow
VALUE CREATION ELECTRIFICATION ADAS ACCELERATION ACCELERATION FREE CASH FLOW €800m - €1bn PTS + CDA THS ADAS ++ 2025 FCF + CONVERSION RATE* €292m >20% CDA IE VIS ++ +++ 2021 GROWTH CASH CONVERSION 2025* IMPROVEMENT LIGHTING INTERIOR EXPERIENCE EVERYWHERE REINVENTION *FCF after non-strategic assets d
Slide 33: Detailed strategy and execution plan
VALEO MOVE UP IS BUILT ON FROM MOBILITY REVOLUTION TO SOLID FOUNDATIONS VALUE CREATION DETAILED STRATEGY & EXECUTION PLAN FOR ALL OUR ACTIVITIES February 25, 2022 33
Slide 34: Electrification
ELECTRIFICATION ELECTRIFICATION ACCELERATION February 25, 2022 34
Slide 35: Electrification at Valeo: a powertrain and thermal story
ELECTRIFICATION AT VALEO A POWERTRAIN & THERMAL STORY OBC & INVERTER eDRIVE eMOTOR DCDC ePOWERTRAIN PROPULSION eTHERMAL MANAGEMENT COOLANT BATTERY HEAT eCOMPRESSOR eHEATER COOLER PUMP February 25, 2022 35
Slide 36: Accelerating in ePowertrain to deliver sustainable value
WE ARE ACCELERATING IN ePOWERTRAIN TO DELIVER SUSTAINABLE VALUE February 25, 2022 36
Slide 37: Acceleration in powertrain electrification
ACCELERATION IN POWERTRAIN ELECTRIFICATION ACCELERATING MARKET GROWING CONTENT PER CAR VALEO, A GLOBAL LEADER +17.5% X6 HIGH VOLTAGE CAGR 21-30 2025 BEV CONTENT PER CAR* From low voltage to high voltage +22% X2 48V CAGR 21-30 2025 48V CONTENT PER CAR* WE ARE ACCELERATING IN ELECTRIFICATION AND DELIV
Slide 38: High voltage ePowertrain market growth
HIGH VOLTAGE ePOWERTRAIN WILL GROW BY 17.5% CAGR 2021-2030 MILD HYBRIDS WILL ALSO GROW BY 15% CAGR 2021-2030 FULL AUTOMOTIVE MARKET 121 Alternator Transmission (€BN) 18 POWERTRAIN ICE SPECIFIC 93 12 MILD HYBRIDS 48V Systems Hybrid transmission 22 9 47 eDrive eMotor 92 HIGH VOLTAGE 22 63 3 Inverter O
Slide 39: 40% of the high voltage market outsourced
40% OF THE HIGH VOLTAGE MARKET OUTSOURCED ~€40bn 92bn OBC* eMotor Inverter € DCDC 30% 40% 90% 2030 OUTSOURCED OUTSOURCED OUTSOURCED in-house by OEM eMotor Inverter OUTSOURCED Reducer OBC-DCDC February 25, 2022 Source: Ongoing quotes & Valeo estimate / McKinsey analysis *OBC: On Board Charger 39
Slide 40: Accelerating our technology roadmaps
ACCELERATING OUR TECHNOLOGY ROADMAPS OBC INVERTER & eMOTOR DCDC 1 OUR INNOVATIONS st AWARD on V2G OBC February 25, 2022 40
Slide 41: Strong growth of 48V technologies
STRONG GROWTH OF 48V TECHNOLOGIES € 4bn 2025 ~ 45% ON iBSG ~ 15% ON DCDC 48V AUTOMOTIVE MARKET VALEO 2025 TARGET MARKET SHARE February 25, 2022 41
Slide 42: New electric mobility: additional 48V growth opportunity
NEW ELECTRIC MOBILITY ADDITIONAL 48V GROWTH OPPORTUNITY 2021 ORDER INTAKE 2025 SALES AMBITION 2030 SALES AMBITION €200m €250m >€500m eBIKE eSCOOTER eRICKSHAW eDROID & eCHASSIS SMALL EV 2 WHEELER 3 WHEELER 4 WHEELER February 25, 2022 42
Slide 43: PTS growth in 2025
PTS GROWTH IN 2025 OEM SALES ~€7.5bn 21/25 CAGR** +15% €4.3bn 80%BOOKED RATIO IN 2025 MARKET GROWTH-OVER-MARKET 2021* GROWTH 2025*** *With VSeA 100% **OEM sales CAGR after non-strategic assets divestiture & Including VSeA 100%, including FX impacts ***Sales after non-strategic assets divestiture
Slide 44: What drives new PTS profitability
WHAT DRIVES NEW PTS PROFITABILITY PTS WITH VSeA INTEGRATION FROM JULY 2022 ~13% 12.2% 13.4% >11% 10.4% 9.4% PTS WITH VSeA 8.2% AT 100% Net losses of VSeA in 2022 halved vs 2021 5.8% 5.8% EBITDA 0.9% AS % OF SALES 2019 2020 2021 2022 2023 2024 2025 2026 February 25, 2022 44
Slide 45: New PTS will be cash breakeven as of 2022
NEW PTS WILL BE CASH BREAKEVEN AS OF 2022 FREE CASH FLOW BEFORE TAX IN €m (Including 100% VSeA) ~350 0 -234 -191 -280 February 25, 2022 45
Slide 46: Electrification will boost thermal profitability
ELECTRIFICATION WILL BOOST THERMAL PROFITABILITY February 25, 2022 46
Slide 47: Electrification will boost thermal profitability
ELECTRIFICATION WILL BOOST THERMAL PROFITABILITY CONCENTRATED MARKET GROWING CONTENT PER CAR VALEO, A LEADER 50% OF MARKET SHARE HELD BY TOP 4 X2.5 Valeo global technology leader, state of the art #2 Valeo 2025 BEV CONTENT PER CAR* EV products IN MARKET SHARE WE ARE DRIVING THE EV REVOLUTION AND BOO
Slide 48: Thermal performance is key for fast charge and stable EV range
THERMAL PERFORMANCE IS KEY FOR FAST CHARGE & STABLE EV RANGE FAST CHARGE STABLE & EXTENDED RANGE THANKS TO BATTERY THERMAL MANAGEMENT THANKS TO FULL HEAT PUMP SYSTEMS NEW CHARGING TIMES 23° C STANDARD EV RANGE 450 KM 60 MIN 15 MIN 270 KM IMPACT ON BATTERY NO HEAT PUMP COOLING NEEDS -7° C RANGE IN WI
Slide 49: BEV increases thermal content per car
BEV INCREASES THERMAL CONTENT PER CAR Coolant eHeater Battery Cooler eCompressor Heat Pump x2.5 CONTENT PER VEHICLE IS MULTIPLIED BY* €21bn 2025 eTHERMAL MARKET February 25, 2022 *2025 ICE vs EV ratio 49
Slide 50: 40 years of experience with strong technical leadership
40 YEARS OF EXPERIENCE WITH STRONG TECHNICAL LEADERSHIP 2000 Battery Cooler Coolant Coolant eHeater eHeater Cumulated eCompressor Battery Cooler xEV patents Heat Pump Heat Pump exchangers STELLANTIS VOLKSWAGEN TOYOTA DS 3 eTENSE ID.3 & ID.4 BZ4x February 25, 2022 50
Slide 51: THS growth in 2025
THS GROWTH IN 2025 OEM SALES ~€5bn 21/25 CAGR* +11% €3.3bn 70% BOOKED RATIO IN 2025 MARKET GROWTH-OVER-MARKET 2021 GROWTH 2025** *OEM sales CAGR after non-strategic assets divestiture, including FX impacts **OEM Sales after non-strategic assets divestiture
Slide 52: What drives THS profitability
WHAT DRIVES THS PROFITABILITY AS % OF SALES ~13% (+) Operational leverage on volumes Improved gross margin 10.9% ~11% Engineering: better efficiency thanks to platforms CAPEX: improved use rate Optimized SG&A (+) Cost management Move Up efficiency plan (+) Full inflation recovery 2021 2022 2025 (+)
Slide 53: ADAS
ADAS ADAS ACCELERATION February 25, 2022 53
Slide 54: ADAS is a profitable and very fast growing business
ADAS IS A PROFITABLE AND VERY FAST GROWING BUSINESS ACCELERATING MARKET GROWING CONTENT PER CAR VALEO ADAS LEADERSHIP 15% 30 CAGR 21-25 X1.4 YEARS OF INNOVATION EXPERIENCE ~90% 2025 AVERAGE CONTENT PER CAR* with scalable offer from sensors to full stacks CARS WITH ADAS IN 2030 WE ARE SUPPORTING ADAS
Slide 55: Complete and scalable offer
COMPLETE & SCALABLE OFFER SYSTEM INTEGRATION FULL STACK Automation up to Level 4 FUNCTION Automated Parking Functions & Active Safety Functions SOFTWARE COMPUTING Central, Domain & Zonal HARDWARE Controllers SENSOR Ultrasonics Satellite Cameras Radars LiDAR Front Camera PORTFOLIO February 25, 2022 5
Slide 56: Offer from sensors to full stack
OFFER FROM SENSORS TO FULL STACK ADAS FUNCTIONS DATA FUSION & ENVIRONMENT MODEL COMPUTER POINT CLOUD VISION PROCESSING FRONT CAMERA LiDAR February 25, 2022 56
Slide 57: ADAS generalization confirmed
ADAS GENERALIZATION CONFIRMED 55% 75% 87% L3 L4 2021 L1 L3 2025 L1 2030 L1 L2 L2 L2 REGULATIONS NCAP SAFETY RATINGS INNOVATION MERCEDES DRIVE PILOT February 25, 2022 57
Slide 58: 30 years of experience in innovation
30 YEARS OF EXPERIENCE IN INNOVATION TRAILER VISION Mirror-integrated Multi-beam Radar Seamless Hidden Automotive Transparent New Ultrasonic Rain Sensor Top View Ultrasonic 3D Lidar Trailer Data interface 1995 Rear Camera w/ 2010 2017 2019 distance overlay 3D Surround AI surround CAM ONLY LEVEL2 200
Slide 59: 1.5+ billion ADAS sensors over the past 30 years
1.5+ BILLION ADAS SENSORS OVER THE PAST 30 YEARS X2 WITHIN THE NEXT 5 YEARS VALEO HAS DEVELOPED A GLOBAL LEADERSHIP POSITION IN ADAS ULTRASONICS 44% 47% 2021 MARKET SHARE 2025 IRELAND CZECH REP. GERMANY FRANCE HUNGARY ITALY SATELLITE CAMERA KOREA USA MOROCCO TUNISIA INDIA CHINA JAPAN 21% 25% 2021 MA
Slide 60: Benchmark in system validation
BENCHMARK IN SYSTEM VALIDATION VIRTUAL VALIDATION PHYSICAL VALIDATION 40 large scale simulation capability worldwide network of with 8 HIL & SIL FARMS 9 TEST TRACKS on sites and in the cloud with on-site facilities PETABYTES running 250+ test benches running 250+ vehicles February 25, 2022 60
Slide 61: SCALA 3 enabling Level 3 today
ALREADY ENABLING LEVEL 3 TODAY AND NEW FEATURES TO COME SCALA 1 SCALA 2 SCALA 3 enabling level 3 enabling automation level 3 up to 60 km/h level 3 up to 130 km/h GEN3 VS GEN1 236 m 203 m 184 m → Detects infrastructure Vertical field of view x8 → Detects lost cargo Resolution x265 75 m → Detects vuln
Slide 62: Valeo leadership in LiDAR
VALEO LEADERSHIP IN LiDAR 160,000+ UNITS SHIPPED TO DATE COMPETITOR A COMPETITOR B COMPETITOR C RIGHT PERFORMANCE COMPETITIVE PRICING AUTOMOTIVE GRADE Secured Partially secured Not secured February 25, 2022 Internal study 62
Slide 63: CDA ADAS growth in 2025
CDA ADAS GROWTH IN 2025 OEM SALES ~€4bn 21/25 CAGR* +19% €1.9bn 65% BOOKED RATIO IN 2025 MARKET GROWTH-OVER-MARKET 2021 GROWTH 2025** *OEM sales CAGR after non-strategic assets divestiture, including FX impacts **OEM Sales after non-strategic assets divestiture
Slide 64: What drives CDA ADAS profitability
WHAT DRIVES CDA ADAS PROFITABILITY AS % OF SALES 2021-2022 (+) Contribution on higher sales 20% ~21% (-) Higher engineering costs for LIDAR & DCU ~18% (ADAS new products) (-) Delayed electronics components inflation recovery 2022-2025 (+) Operational leverage on volumes Improved gross margin Enginee
Slide 65: Interior Experience
INTERIOR EXPERIENCE INTERIOR EXPERIENCE REINVENTION February 25, 2022 65
Slide 66: Interior experience is a growing profitable opportunity
INTERIOR EXPERIENCE IS A GROWING PROFITABLE OPPORTUNITY ACCELERATING MARKET GROWING CONTENT PER CAR VALEO INTERIOR EXPERIENCE 10% Interior Cocoon for +14% occupant safety CAGR 21-25 ~90% 2025 AVERAGE CONTENT PER CAR* 5G Secure telematics platform CARS WITH CONNECTIVITY IN 2030 WE ARE REINVENTING LIF
Slide 67: Interior experience will be a key differentiator
INTERIOR EXPERIENCE WILL BE A KEY DIFFERENTIATOR IMMERSIVE CONNECTIVITY EXPERIENCE INTERACTIVE INTERIOR SURFACES COCOON February 25, 2022 67
Slide 68: Interior experience will be a key differentiator
INTERIOR EXPERIENCE WILL BE A KEY DIFFERENTIATOR HEAD-UP CONNECTIVITY HUB DISPLAYS 5G, GPS, V2X SMART INTERIOR SURFACES MONITORING SYSTEM February 25, 2022 68
Slide 69: CDA Interior Experience growth in 2025
CDA INTERIOR EXPERIENCE GROWTH IN 2025 OEM SALES ~€2bn 21/25 CAGR* +14% €1.2bn 65% BOOKED RATIO IN 2025 MARKET GROWTH-OVER-MARKET 2021* GROWTH 2025** *OEM sales CAGR after non-strategic assets divestiture, including FX impacts **OEM Sales after non-strategic assets divestiture
Slide 70: What drives CDA Interior Experience profitability
WHAT DRIVES CDA INTERIOR EXPERIENCE PROFITABILITY AS % OF SALES ~14% (+) Operational leverage on volumes ~12% Improved gross margin 11.5% Engineering: better efficiency thanks to platforms CAPEX: improved use rate Optimized SG&A (+) Cost management Move Up efficiency plan (+) Full inflation recovery
Slide 71: Lighting Everywhere
LIGHTING LIGHTING EVERYWHERE February 25, 2022 71
Slide 72: Visibility is a core and profitable business
VISIBILITY IS A CORE & PROFITABLE BUSINESS CONCENTRATED MARKET GROWING CONTENT PER CAR VALEO, THE LEADER 60% Innovation and R&D x1.2 are key differenciators OF MARKET SHARE HELD BY TOP 4 #1 Valeo 2025 AVERAGE CONTENT PER CAR* High barrier to entry IN MARKET SHARE WE ARE DELIVERING THE LIGHTING OF TH
Slide 73: Valeo is #1 in a concentrated and growing market
VALEO IS #1 IN A CONCENTRATED & GROWING MARKET TODAY TOMORROW NEW FEATURES OTHERS 1 KOITO MARELLI HELLA TOP 4 MARKET SHARE: 60% AVERAGE CONTENT PER VEHICLE MULTIPLIED BY* 1.2 x February 25, 2022 *2020 vs 2025 73
Slide 74: Standard and competitive platforms
STANDARD & COMPETITIVE PLATFORMS, ALREADY PERFORMING ON THE MARKET HEADLAMP VALEO THINLENS 50% VALEO ELECTRONIC CONTROLLER HEADLAMP VALUE 21 6.2 94% 84% 78% MODELS MU LIFETIME STANDARD HW STANDARD HW STANDARD SW February 25, 2022 74
Slide 75: In depth expertise in lighting
IN DEPTH EXPERTISE IN LIGHTING STYLING SIMULATION PROCESS ELECTRONICS OPTICS SOFTWARE February 25, 2022 75
Slide 76: VIS growth in 2025
VIS GROWTH IN 2025 OEM SALES ~€6bn 21/25 CAGR* +10% €3.9bn 60% BOOKED RATIO IN 2025 MARKET GROWTH-OVER-MARKET 2021 GROWTH 2025** *OEM sales CAGR after non-strategic assets divestiture, including FX impacts **OEM Sales after non-strategic assets divestiture
Slide 77: What drives VIS profitability
WHAT DRIVES VIS PROFITABILITY AS % OF SALES ~15% 2021-2022 13.3% ~13% (-) Delayed resin inflation recovery 2022-2025 (+) Operational leverage on volumes Improved gross margin Engineering: better efficiency thanks to platforms CAPEX: improved use rate Optimized SG&A (+) Cost management 2021 2022 2025
Slide 78: Financial Outlook 2022-2025
FINANCIAL OUTLOOK 2022 - 2025 February 25, 2022 78
Slide 79: Profitable growth
PROFITABLE GROWTH 2025 SALES* 2025 EBITDA* ~€27.5bn ~14.5% 2025 ROCE* >25% AS % OF SALES >€ 24bn 2025 EBIT* ~6.5% OEM SALES > 5pts AS % OF SALES outperformance February 25, 2022 *After non-strategic assets divestiture 79
Slide 80: 2025 targets to deliver value while strengthening balance sheet
OUR 2025 TARGETS ARE SET TO DELIVER VALUE WHILE STRENGTHENING OUR BALANCE SHEET 2025 FREE CASH FLOW* LEVERAGE RATIO* € 800m €500m <0.7X to €1bn VALUE OF NON-STRATEGIC NET DEBT/EBITDA ASSETS DISPOSALS February 25, 2022 *After non-strategic assets divestiture 80
Slide 81: Volume hypothesis
VOLUME HYPOTHESIS LIGHT VEHICLES PRODUCTION FORECAST, M units CAGR 21/25 +6.3% 84.1 Mu IHS FEBRUARY 2022 82.9 Mu VALEO BASE = IHS-1.5% 79.9 Mu VALEO DOWNSIDE = IHS-5% 2019 2020 2021 2022 2023 2024 2025 February 25, 2022 81
Slide 82: Outperformance in 2022 thanks to growth drivers
OUTPERFORMANCE IN 2022 THANKS TO OUR GROWTH DRIVERS 21/22 OEM €19.2bn - €20bn TOTAL SALES sales Growth* +17% €17.7bn €17.3bn 2021 H2 2022 Growth-Over- 2021 VSeA Sales 2021** Market Growth Market 2022** *Like for Like **Sales with VSeA consolidated in H2
Slide 83: All business groups will contribute to outperformance
ALL BUSINESS GROUPS WILL CONTRIBUTE TO OUTPERFORMANCE OVER THE PLAN GLOBAL LIGHT VEHICLES PRODUCTION PATH VALEO OEM SALES PATH 70% booked ratio in 2025 VALEO IN MILLION CAGR 13% UNITS ~€24bn*** IHS CAGR 6.3% >5pts 94.2 €14.8bn** VALEO BASE = 82.9 (IHS-1.5%) VALEO DOWNSIDE CASE = 79.9 (IHS-5%) OUTPER
Slide 84: Synergy and efficiency plans
SYNERGY & EFFICIENCY PLANS PTS SYNERGY OBJECTIVES AFTER MOVE UP INTEGRATION OF VSeA EFFICIENCY PLAN RUN RATE RUN RATE 100% 100% 100% 100% €120m €100m 75% PER YEAR AT RUN RATE PER YEAR AT RUN RATE €270m 60% €360m 50% Cumulated Cumulated 23-25 22-25 €70m €50m R&D synergy Non R&D synergy objectives & o
Slide 85: Pro forma EBIT margin increase in 2022
PRO FORMA EBIT MARGIN INCREASE IN 2022 4.0% 3.2%-3.7% 3.0% 2021 H2 2021 2021 Input Costs Move Up Operational New products 2022 VSeA Margin EBIT EBIT EBIT including H2 VSeA inflation efficiency plan Leverage Improvement EBIT* *EBIT after VSeA integration from July 2022
Slide 86: Pro forma EBIT margin improvement
PRO FORMA EBIT MARGIN IMPROVEMENT EBIT (%SALES) GROUP WITH VSeA INTEGRATION INFLATION RECOVERY POST VSeA INTEGRATION ~6.5%* VSeA INTEGRATION MARGIN RECOVERY FROM JULY 2022 5.3% 4.0% 3.2% to 3.7% (+) Operational leverage on volumes Improved gross margin 2.8% 1.7% Engineering: better efficiency thanks
Slide 87: Capex and net R&D reduction
CAPEX AND NET R&D REDUCTION CAPEX PRO FORMA NET R&D PRO FORMA (% sales, including VSeA 100% (% sales, including VSeA 100%) & excluding capitalized R&D) 7.9% 6% 5.5%* ~5.5% ~6.5% 2021 2022 2023 2024 2025 2021 2022 2023 2024 2025 February 25, 2022 *Excl. exceptional 2021 lease 87
Slide 88: 2022 free cash flow shows resilience
2022 FREE CASH FLOW SHOWS RESILIENCE €292m ~€320m €97m H2 2021 2021 EBITDA Other 2021 VseA FCF including improvement Working Capital CAPEX (taxes, 2022* impacts H2 VSeA restructuring…) *including VSeA as of July 2022
Slide 89: Sharp improvement of pro forma FCF
SHARP IMPROVEMENT OF PRO FORMA FCF INFLATION RECOVERY POST VSeA INTEGRATION €800m-€1bn GROUP WITH VSeA INTEGRATION VSeA INTEGRATION MARGIN RECOVERY FROM JULY 2022 519 294 292 ~320 GROUP WITH VSeA 100% FREE CASH FLOW (€m) 2019 2020 2021 2022 2023 2024 2025 * after non strategic assets divestiture Feb
Slide 90: Divestment plan of non-strategic assets
DIVESTMENT PLAN OF NON-STRATEGIC ASSETS €500m IN VALUE February 25, 2022 90
Slide 91: Focused capital allocation and reduced leverage
FOCUSED CAPITAL ALLOCATION AND REDUCED LEVERAGE M&A Valeo Siemens eAutomotive integration €500m divestiture of non-strategic assets DELEVERAGING Net Debt/EBITDA < 0.7x by 2025 PROGRESSIVE INCREASE OF DIVIDEND PER SHARE From €0.35 per share February 25, 2022 91
Slide 92: Leverage ratio path
LEVERAGE RATIO PATH NET DEBT / EBITDA (x) 1.9 ~1.7 1.3 1.1 <0.7* February 25, 2022 *after non-strategic assets divestiture 92
Slide 93: 2022 guidance and 2025 target
2022 GUIDANCE & 2025 TARGET 2022* 2025 targets*** Sales €19.2bn - €20.0bn ~€27.5bn EBITDA (%sales) 11.8% - 12.3% ~14.5% EBIT (%sales) 3.2% - 3.7% ~6.5% Free Cash Flow ~€320m** €0.8bn - €1.0bn Leverage ratio ~1.7x** <0.7x February 25, 2022 *after VSeA integration in July 2022 **at IHS-1.5% ***after n
Slide 94: 2030 ambitions
2030 AMBITIONS ELECTRIFICATION ADAS ACCELERATION ACCELERATION 2030 SALES >€40bn LIGHTING INTERIOR EXPERIENCE EVERYWHERE REINVENTION February 25, 2022 94
Slide 95: Q&A
Q&A February 25, 2022 95
Slide 96: Safe Harbor Statement
SAFE HARBOR STATEMENT 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 respec
Slide 97: Financial glossary
FINANCIAL GLOSSARY Order intake corresponds to business awarded by automakers during the period to Valeo, and to joint ventures and associates based on Valeo’s share in net equity, (except Valeo Siemens eAutomotive, for which 100% of orders are taken into account), less any cancellations, based on V
Slide 98: Financial glossary
FINANCIAL GLOSSARY Free cash flow corresponds to net cash from operating activities (excluding changes in non-recurring sales of receivables and net payments for the principal portion of lease liabilities) after taking into account acquisitions and disposals of property, plant and equipment and inta
Slide 99: Other glossary
OTHER GLOSSARY ADAS: Advanced Driver-Assistance Systems PTS: Powertrain Systems ICE: Internal Combustion Engine THS: Thermal Systems EV: Electrical Vehicle VIS: Visibility Systems HV: High Voltage CDA: Comfort & Driving Assistance OBC: On Board Charger VSeA: Valeo Siemens eAutomotive V2G: Vehicle to