Valeo Se · EURONEXT:FR
Valeo — H1 2008 Earnings Presentation
37 slides from Valeo's earnings presentation, Jul 29, 2008
Slide 1: H1-2008 Results
H1-2008 Results Thierry Morin – Chairman & CEO July 29, 2008
Slide 2: Agenda
Agenda 1 Highlights 2 Financials 3 Business and corporate development 4 Outlook July 29, 2008 I 2 I
Slide 3: Half-year highlights
Half-year highlights
Slide 4: Half-year highlights
Half-year highlights Financials Î Net income up 41% to €100m (€1.30/share) Î Fourth consecutive quarter of improved margins in Q2 Î Net debt down €178m from year-end 2007 Business and corporate development Î Strong order intake and good traction for innovative products Î Established an initial prese
Slide 5: Half-year key figures
Half-year key figures In euro million H1-2008 H1-2007 Change Total operating revenues 4,914 5,006 -1.8% Operating margin 203 177 +14.7% as % of total operating revenues 4.1% 3.5% + 0.6 pt Net income 100 71 +40.8% Return on capital employed 16.7% 13.6% +22.8% Net financial debt 621 799* €(178)m *year
Slide 6: Quarterly key figures
Quarterly key figures Q2-2008 Yoy Q1-2008 Yoy change change Total Operating Revenues 2,444 -2.5% 2,470 -1.2% Gross margin 403 +2.3% 388 +2.9% % of Sales 16.7% +0.8 pt 15.9% +0.6 pt Operating margin 113 +9.7% 90 +21.6% % of Total Operating Revenues 4.6% +0.5 pt 3.6% +0.6 pt Net income 57 +50.0% 43 +3
Slide 7: Business environment
Business environment Global economic slowdown Global car production decelerates from +4.2% in Q1 to just +1% in Q2; D3 under considerable pressure in North America Renewed pressure on raw materials Dramatic currency shifts Interest rates heading higher in Europe July 29, 2008 I 7
Slide 8: Sales
Sales
Slide 9: Total operating revenues
Total operating revenues In euro million H1-2007 H1-2008 +3.5% Prices * Scope/ forex -1.8% 5,006 4,914 Perimeter +0.1% Forex -2.5% Prices* -2.9% Volumes* +3.5% *at identical functions July 29, 2008 I 9
Slide 10: H1-2008 net sales Geographical trends
H1-2008 net sales Geographical trends Market +5% Market -12% -3%* Incl. D3: -17% -3%* Europe North America 67% of total Sales 12% of total Sales Market +8% +23%* Asia Market +20% 13% of total Sales +19%* South America 6% of total Sales Valeo sales *At same perimeter & exchange rate July 29, 2008 I 1
Slide 11: Results
Results
Slide 12: Gross margin
Gross margin As % of sales H1-2007 H1-2008 +0.4 pt + 0.1 pt +0.2 pt 16.3% 15.6% Raw material Pass through/ Activity/ prices Contract renewal Productivity July 29, 2008 I 12
Slide 13: LME basket average price
LME basket average price Euro / Ton 2 600 LME Average: CU + AL + AA + ZN* 2 500 H1 €2,463 2 400 H1 2 300 €2,265 2 200 2 100 2 000 Jan Feb March Apr May June July Aug Sept Oct Nov Dec Jan Feb March Apr May June 2007 2008 * CU: Copper Cuivre, AL: Primary Aluminium, AA: Aluminium Alloy, ZN: Zinc July 2
Slide 14: Steel price (Hot-rolled- Dollar / Ton)
Steel price (Hot-rolled- Dollar / Ton) Spot price 1,207 1200 1000 800 600 349 400 200 J A S O N D J F MA M J J A S O N D J F MA M J J A SO N D J F MA M J J A SO N D J F MA M J J A S O N D J F MA M J 2003 2004 2005 2006 2007 2008 July 29, 2008 I 14
Slide 15: Oil prices
Oil prices $139.0 140 120 Brent-Monthly average 100 80 60 40 $26.5 20 0 M M M M M M M M M M M M M M N D N D N D N D N D N D N D F F F F F F F J J J J J J J J J J J J J J J J J J J J J O O O O O O O S S S S S S S A A A A A A A A A A A A A A 2001 2002 2003 2004 2005 2006 2007 2008 July 29, 2008 I 15
Slide 16: Raw material impact
Raw material impact ppt of sales - cumulative Gross impact 4.7 4.7 Net impact 4.5 4.5 4.3 4.3 4.3 4.2 3.6 2.0 2.2 2.2 2.1 1.9 1.9 1.7 1.6 1.8 1.8 1.8 1.6 1.8 0.7 1.1 0.5 2004 2005 2006 Q1 Q2 Q3 Q4 Q1 Q2 2007 2008 July 29, 2008 I 16
Slide 17: LCC implementation
LCC implementation % of productive employees 72 70 HCC 68 66 62 56 52 51 48 49 44 38 LCC 34 30 32 28 2001 2002 2003 2004 2005 2006 2007 juin-08 July 29, 2008 I 17
Slide 18: Quality levels – More consistency across the organization
Quality levels –More consistency across the organization Including 14 sites at ppm Customer returns In parts per million H1 2007 70 sites (51%) 185 Including 26 sites at 0 ppm 53 96 sites (77%) 32 H1 2008 15 10 14 2003 2004 2005 2006 2007 H1 2008 Single-digit PPM July 29, 2008 I 18
Slide 19: Four consecutive quarters of margin improvement
Four consecutive quarters of margin improvement Quarterly YOY change in operating margin (Q1-07 to Q2-08) (pt) +1.1 +0.6 + 0.3 + 0.5 0 - 0.4 Q1 Q2 Q3 Q4 Q1 Q2 2007 2008 July 29, 2008 I 19
Slide 20: Results
Results In euro million H1-2008 H1-2007 Change R&D (net) (270) (279) as % of total op. revenues 5.5% 5.6% -0.1 pt SG&A (318) (315) as % of total op. revenues 6.5% 6.3% +0.2 pt Total overhead (588) (594) as % of total op. revenues 12.0% 11.9% +0.1 pt Operating margin 203 177 as % of total op.
Slide 21: Results (cont.)
Results (cont.) In euro million H1-2008 H1-2007 Change Operating income 182 167 + 9.0% Cost of net debt (22) (25) -12.0% Other financial income/(expenses) (6) (20) -70.0% Associates 7 5 + 40.0% Income before taxes 161 127 +26.8% Taxes (56) (47) +19.1% Effective tax rate 36.4% 38.5% -2.1 pts Mino
Slide 22: Cash flow and balance sheet
Cash flow and balance sheet
Slide 23: Net financial debt walkdown
Net financial debt walkdown 2008 2007 In euro million Gross operating cash flow 395 380 Cash Tax -41 -38 Change in working capital 49 4 Operating cash flow 403 346 Customer contributions 18 22 Interest paid -34 -41 Acquisitions of intangible assets -75 -77 Acquisition of tangible ass
Slide 24: Shareholder’s equity and net debt
Shareholder’s equity and net debt In euro million 1,836 1,782 1,782 Shareholder’s Equity incl. minority interests Net Debt 940 799 622* 1,263 Gearing Gearing 968 Gearing 51% 45% 35% 30/06/2007 31/12/2007 30/06/2008 * Before dividend payment (€ 92m) July 29, 2008 I 24
Slide 25: Solid financials
Solid financials 250 3,5 3 200 2,5 2 150 1,5 100 1 0,5 50 0 -0,5 0 l na -1 W ia I r o li v ta ar n JC ne le ec eo TR en Le to ag Va ar ur st Au ti n M W Vi Fa on rg C Bo -50 -1,5 Net debt/Equity (LA) Net debt/ebitda July 29, 2008 I 25
Slide 26: Return on capital employed analysis
Return on capital employed* analysis H-2008 H1-2007 H1-2006 Asset turn (x) 4.07** 3.88 3.75 Operating margin (%) 4.1 3.5 3.8 ROCE (%) 16.7 13.6 14.2 * Pretax excluding goodwill ** Before dividend payment July 29, 2008 I 26
Slide 27: Business highlights
Business highlights
Slide 28: Strategy implementation
Strategy implementation Operational excellence Î Toyota Group « Excellent Quality Performance Award » Innovation Î Park4U™ – 2008 PACE Award winner (Fourth PACE award in a row) – Allianz « Genius » Award Î StARS micro-hybrid – Announced the €700m contract from PSA – Offered on Mercedes A & B class Î
Slide 29: New orders
New orders ORDER INTAKE/ X OE SALES 1.2x 1.3x €5.0bn €5.1bn Others Innovative products H1-2007 H1-2008 July 29, 2008 I 29
Slide 30: Strategy implementation
Strategy implementation Expansion in Russia Î First joint-venture (climate control) Î Expect 3 more JVs by year-end Î €500m sales potential by 2013 Portfolio alignment Î Disposal on the truck engine cooling business to EQT for €77m Î ~50% of the €2bn disposal program now completed July 29, 2008 I 30
Slide 31: Outlook
Outlook
Slide 32: Addressing the H2-2008 challenges
Addressing the H2-2008 challenges Global car production decelerating Expanding fast in emerging further markets; strong aftermarket Price competitiveness Productivity gains, successful turnarounds (VC, VLS, VWS) Customer choice for smaller car/fuel efficient cars Strong market positions with volume
Slide 33: Contact Investor Relations
Contact Investor Relations Rémy Dumoulin 43, rue Bayen F-75848 Paris Cedex 17 France Tel.: +33 (0) 1.40.55.29.30 Fax: +33 (0) 1.40.55.20.40 E-mail: remy.dumoulin@valeo.com Web site: www.valeo.com July 29, 2008 I 33
Slide 34: Back-up
Back-up
Slide 35: Quarterly P&L
Quarterly P&L 2008 2007 2006 (in euro million) 2Q 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q Net Sales 2,407 2,435 2,397 2,214 2,472 2,472 2,341 2,125 2,483 2,487 Other operating revenues 37 35 41 31 35 27 35 28 28 23 Total operating revenues 2,444 2,470 2,438 2,245 2,507 2,499 2,376 2,153 2,511 2,510 Gross m
Slide 36: Share Information
Share Information Share Data Bloomberg Ticker FR FP Reuters Ticker VLOF.PA ISIN Number FR 000130338 Shares outstanding as per 30.06.2008 78,209,617 ADR Data Ratio (ordinary share: ADR) 1:2 Bloomberg Ticker VLEEY US Reuters Ticker VLEEY PK ISIN Number US 9191343048 Type Level 1 Ex
Slide 37: Enabling a better automotive world
a Enabling a better automotive world