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Valeo — Q3 2009 Earnings Presentation

41 slides from Valeo's earnings presentation, Oct 20, 2009

1. Slide 1: Q3-2009 Results

   Q3-2009 Results Jacques Aschenbroich – CEO October 20, 2009

2. Slide 2: Agenda

   Agenda 1 Quarter highlights 2 Q3-09 Financials 3 Business developments 4 Outlook Q3-2009 Results _ October 20, 2009 I 2 I

3. Slide 3: Quarter highlights

   Quarter highlights

4. Slide 4: Return to a positive net income in Q3

   Return to a positive net income in Q3 „ Positive net income of €4 million Î First time, after 3 consecutive quarters of losses „ Margins reach highest levels for a 3rd quarter since 2005 Î Gross margin at 16.2% of sales (+1.7pt vs Q2) Î Operating margin at 3.6% of sales (+2.8pts vs Q2) Î Positive op

5. Slide 5: Improved business environment

   Improved business environment „ Full impact of scrapage incentives Î Including the US program „ Strong rebound of Asian markets (yoy change) Î China + 39%, Korea +14% and India +12% Q3-2009 Results – October 20, 2009 I 5

6. Slide 6: Worldwide automotive production

   Worldwide automotive production yoy changes in % Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 +4 +3 -2 -3 Q4-08 Q1-09 Q2-09 Q3-09 Europe -29% -40% -28% -13% -21 -23 Asia -13% -25% -9% +14% -34 North America -27% -52% -49% -21% South America -27% -18% -10% -7% World -21% -34% -23% -3% Q3-2009 Results –

7. Slide 7: Financial highlights

   Financial highlights „ Financials Q3 Q1-09 Q2-09 Q3-09 Î Improving sales trend (yoy) -33% -23% -8% Î Gross margin improvement (% of sales) 11.4% 14.5% 16.2% Î Operating margin Improvement (M€) (66) 15 68 Î Operating margin (% of sales) -4.1% 0.8% 3.6% Î Free Cash Flow* generation (M€) (88) 84 6 Î Ne

8. Slide 8: Year to date key figures

   Year to date key figures In euro million 9 months 9 months 2008 2009 ▲ Total sales 6,927 5,385 -22% Gross margin 1,115 763 -32% as % of sales 16.1% 14.2% -1.9pt Operating margin 268 17 -94% as % of sales 3.9% 0.3% -3.6pts Net income 106 (209) na Free cash flow* 104 2 -98% Net debt 735 817 +11% * Bef

9. Slide 9: Outlook

   Outlook „ Automobile production revised upwards Î H2: slight increase (vs -7%) Î Full year: -13% (vs -17%) „ On the basis of this scenario, Î H2 net income close to breakeven Î Cash consumption for 2009 significantly lowered – Less than €100 million (after restructuring costs) „ Cost reduction progr

10. Slide 10: Q3-2009 Financials

    Q3-2009 Financials

11. Slide 11: Quarterly Sales

    Quarterly Sales In euro million +3.5% 1,848 1,913 Q2-2009 Q3-2009 Q3-2009 Results – October 20, 2009 I 11

12. Slide 12: Geographic mix Q3-09

    Geographic mix Q3-09 OEM passenger cars (yoy change) Market -13% -6%* Market -21% Europe -20%* 62% of sales North America Market +14% 11% of sales +13%* Asia 18% of sales Market -7% -6%* South America Worldwide Q3-2009 9% of sales Valeo* -6% Market -3% *At same perimeter & exchange rate Q3-2009 Resu

13. Slide 13: Stable customer mix

    Stable customer mix In euro million) End of September (% of sales) German 29% French* 26% Asian** 19% US customers 17% * Excluding Nissan ** Including Nissan Q3-2009 Results – October 20, 2009 I 13

14. Slide 14: Quarterly Results

    Quarterly Results In euro million Q3-08 Q1-09 Q2-09 Q3-09 ▲ Total sales 2,079 1,624 1,848 1,913 -8% Gross margin 318 185 268 310 -3% % of sales 15.3% 11.4% 14.5% 16.2% +0.9pt Net R&D (111) (114) (120) (114) +3% % of sales -5.4% -7.0% -6.5% -6,0% -0.5pt SG&A expenses (142) (137) (133) (128) -10% % of

15. Slide 15: Gross margin

    Gross margin In euro million and % of sales Sales (in € million) 3 000 20% 19% 2 500 2,437 2,411 18% 2,079 1,913 2 000 1,750 1,848 17% 1,624 16% 1 500 15% 1 000 14% Gross margin (in € million and % of sales) 13% 500 450 20 12% 406 0 11% 391 Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 400 19 350 18 318

16. Slide 16: Gross margin walkdown

    Gross margin walkdown As % of sales -0.7pt +2.6pts 15.3% -2.5pts 16.2% +1.5pt Volume Raw material Cost Others Q3-08 drop impact reductions Q3-09 Q3-2009 Results – October 20, 2009 I 16

17. Slide 17: Operating margin

    Operating margin In Euro million and % of sales Sales (in euro million) 3 000 20% 19% 2 500 2,437 2,411 18% 2,079 2 000 1,913 17% 1,750 1,848 1,624 16% 1 500 15% 1 000 14% Operating margin 13% (in € million and % of sales) 500 12% 140 6 0 11% 120 4.7% 5 Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 100

18. Slide 18: Sustained R&D efforts

    Sustained R&D efforts In euro million and % of sales In % of sales +0.7pt 6.0% In € million 5.3% Net R&D +3% 111 114 Q3-2008 Q3-2009 Q3-2008 Q3-2009 Q3-2009 Results – October 20, 2009 I 18

19. Slide 19: SG&A expenses adjusted to sales

    SG&A expenses adjusted to sales In euro million and % of sales In % of sales -0.1pt 6.8% 6.7% 2.0% 2.0% In € million -0.1pt -10% 4.8% 4.7% 142 Selling 128 Expenses Selling Q3-2008 Q3-2009 42 Expenses 38 Administ. Administ. Expenses Expenses Administ. 100 Expenses -10% 90 Q3-2008 Q3-2009 Q3-2009 Resu

20. Slide 20: Cost reduction plan on track

    Cost reduction plan on track In euro million Q4-08 Q1-09 Q2-09 Q3-09 Cost savings program €500 million in 2009 144 183 130 60 Headcount reduction Since November 2008 Permanent employees (1,400) (1,800) (1,300) (600) Cash outlays (10) (23) (46) (54) Q3-2009 Results – October 20, 2009 I 20

21. Slide 21: Operating margin walkdown

    Operating margin walkdown As % of sales +1.6pt -0.4pt -3.6pts +1.5pt Variable costs 3.1% 3.6% Fix costs +1.4pt Volume Raw material Cost Others Q3-08 drop impact reductions Q3-09 Q3-2009 Results – October 20, 2009 I 21

22. Slide 22: Q3 Results (cont.)

    Q3 Results (cont.) in euro million Q3-08 Q1-09 Q2-09 Q3-09 ▲ Sales 2,079 1,624 1,848 1,913 -8% Operating margin 65 (66) 15 68 +5% as % of sales 3.1% -4.1% 0.8% 3.6% +0.5pt Other income & expenses (15) (17) (20) (9) -40% as % of sales -0.7% -1.0% -1.1% -0.5% +0.2pt Operating income 50 (83) (5) 59 +18

23. Slide 23: Cash flow & Balance sheet

    Cash flow & Balance sheet

24. Slide 24: Continued focus on cash management

    Continued focus on cash management „ Positive contribution of working capital „ Tight control of Capex Î 78% of depreciation Î Emerging countries representing 60% of Capex „ Net financial debt reduction of €24 millions Î Despite restructuring costs Q3-2009 Results – October 20, 2009 I 24

25. Slide 25: Working capital

    Working capital Working capital (in % of sales) In euro million Working capital -5.6% -5.6% -€46M -€46M June-09 Sept-09 June-09 Sept-09 450 Inventories 468 1,205 Customers 1,249 (1,474) Suppliers (1,562) (536) Other WC (556) (355) (401) Q3-2009 Results – October 20, 2009 I 25

26. Slide 26: Strict control of capex

    Strict control of capex Capitalized R&D In euro million +3% Capex 33 34 -37% Q3-2008 Q3-2009 Tangible investments 155 -48% 98 122 64 Q3-2008 Q3-2009 Q3-2008 Q3-2009 Q3-2009 Results – October 20, 2009 I 26

27. Slide 27: Capex YTD

    Capex YTD Capitalized R&D In euro million +11% Capex 119 107 -28% 9 months 2008 9 months 2009 Tangible investments 467 -40% 335 360 216 9 months 2008 9 months 2009 9 months 2008 9 months 2009 Q3-2009 Results – October 20, 2009 I 27

28. Slide 28: Free Cash Flow

    Free Cash Flow In euro million Q3-08 Q1-09 Q2-09 Q3-09 EBITDA 190 73 156 192 Restructuring and social costs (23) (23) (46) (54) Working capital 9 6 171 12 Capex (156) (133) (123) (115) Others (39) (11) (74) (29) Free cash flow (19) (88) 84 6 (before interest payments) Q3-2009 Results – October 20, 2

29. Slide 29: Net debt over EBITDA ratio

    Net debt over EBITDA* ratio Shareholders equity and net debt In euro million Net Debt Shareholders Equity excl. minority interests Net Debt EBITDA (12 rolling months) 1,311 821 841 1,128 1,161 817 792 821 841 817 Gearing 75% Gearing 70% Gearing 63% 518 520 31/12/2008 30/06/2009 30/09/2009 Leverage L

30. Slide 30: Business highlights

    Business highlights

31. Slide 31: Business highlights

    Business highlights „ Operational excellence Î 10 ppm Î 26% of sites at 0 ppb „ Major innovations presented by all Business Groups at the IAA Frankfurt Auto Show Î Range of solutions for the various stages of hybridization up to electric vehicule Î Beamatic® Premium Î Aquablade® Î Park4U® latest dev

32. Slide 32: BeamAtic Premium

    BeamAtic Premium • Projector Module in L-Shaped Beam Position The Comfort of driving permanently in High Beam without glaring the other road users Q3-2009 Results – October 20, 2009 I 32

33. Slide 33: Hybridization Roadmap

    Hybridization Roadmap From Stop-Start to Electric Drivetrain -100% -25% ELECTRIC FULL HYBRID and DRIVELINE PLUG-INs -15% MILDHYBRID -12% MICRO - MILD HYBRID with Ultracapacitors MVEG cycle -6% MICRO-HYBRID Full Electric Drive Part Electric Drive Torque Assistance Regenerative Braking Stop & Start Q3

34. Slide 34: Outlook

    Outlook

35. Slide 35: Management priorities

    Management priorities „ Implementation of the new organization „ Cost reduction program on track, vs pre-crisis situation Î €500 million to be achieved Î €600 million full year target confirmed „ Selective investments Î Capex significantly below depreciation Î Focus investment –emerging countries re

36. Slide 36: Outlook

    Outlook „ Automobile production revised upwards Î H2: slight increase (vs -7%) Î Full year: -13% (vs -17%) „ On the basis of this scenario, Î H2 net income close to breakeven Î Cash consumption for 2009 significantly lowered – Less than €100 million (after restructuring costs) Q3-2009 Results – Octo

37. Slide 37: Contact 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 Q3-2009 Results – October 20, 2009 I 37

38. Slide 38: Back-up

    Back-up

39. Slide 39: Quarterly P&L

    Quarterly P&L new format 2008 2009 2007 new format new format (in euro million) 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q „ Net Sales 2,472 2,472 2,214 2,397 Other operating revenues 27 35 31 41 „ Total operating revenues / Sales 2,499 2,507 2,245 2,438 2,437 2,411 2,079 1,750 1,624 1,848 1,913 „ Gross margi

40. Slide 40: Share Information

    Share Information Share Data ƒ Bloomberg Ticker FR FP ƒ Reuters Ticker VLOF.PA ƒ ISIN Number FR 000130338 ƒ Shares outstanding as per 30.09.2009 78,209,617 ADR Data ƒ Ratio (ordinary share: ADR) 1:2 ƒ Bloomberg Ticker VLEEY US ƒ Reuters Ticker VLEEY PK ƒ ISIN Number US 9191343048 ƒ Type Level 1 ƒ Ex

41. Slide 41: Enabling a better automotive world

    a Enabling a better automotive world

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