Slide 1: H1 2019 Results
H1 2019 RESULTS JACQUES ASCHENBROICH – CHAIRMAN & CEO July 24, 2019
Slide 2: Focus on margin improvement and free cash flow generation
FOCUS ON MARGIN IMPROVEMENT COMPARED TO H2 18 AND FREE CASH FLOW GENERATION THANKS TO COST-SAVING AND CAPEX REDUCTION PLANS H1 Sales €9,776m down 1% as reported Operating margin (excl. JV & associates) €514m or 5.3% of sales H1 OEM sales up 0.5pts vs H2 2018 down 3% like for like 4pts outperformance
Slide 3: Acceleration of OEM sales outperformance in Q2
ACCELERATION OF OEM SALES OUTPERFORMANCE IN Q2 TOTAL SALES OF €4.9bn, DOWN 1% AS REPORTED DOWN 2% LIKE FOR LIKE OEM SALES DOWN 3% AS REPORTED DOWN 4% LIKE FOR LIKE, 4 POINT OUTPERFORMANCE AFTERMARKET SALES DOWN 3% AS REPORTED DOWN 4% LIKE FOR LIKE July 24, 2019
Slide 4: Outperformance improvement thanks to start of production on new contracts
OUTPERFORMANCE IMPROVEMENT THANKS TO START OF PRODUCTION ON NEW CONTRACTS OEM sales like for like In percentage points +4pts** +4pts** +3pts** +2pts** 0pts* H1 18 H2 18 H1 19 Q1 19 Q2 19 *IHS estimates ** IHS estimates - China Passenger Car Association (CPCA) estimates, for China 4 July 24, 2019
Slide 5: 4 points OEM sales outperformance in a difficult environment
4 POINTS OEM SALES OUTPERFORMANCE IN A DIFFICULT ENVIRONMENT Q2 19 4 pts 332 outperformance 504 4,935 €m 4,099 OEM Aftermarket Miscellaneous Sales Reported -3% -3% +37% -1% Like for like -4% -4% +35% -2% Exchange rates +1.4% Exchange rates 0.0% Exchange rates +2.1% Exchange rates +1.3% Scope -0.2% S
Slide 6: 4 points OEM sales outperformance (like for like)
4 POINTS OEM SALES OUTPERFORMANCE (LIKE FOR LIKE) Q2 19 OEM sales(2) Like for like OEM -4% 49% of Valeo sales(2) sales(2) OEM -3% World 20% of Valeo sales(2) sales(2) Europe (1) +6% North NorthAmerica America OEM sales** +6% Outperformance Outperformance Production*** +4% +3pts vs IHS (3) +4pts vs I
Slide 7: In Asia, -1 point OEM sales outperformance
IN ASIA, -1 POINT OEM SALES OUTPERFORMANCE (LIKE FOR LIKE) Q2 19 OEM Like for like 26% of Asian sales(2) Sales(2) OEM -9% 29% of Valeo sales(2) sales(2) Japan -12% OEM Asia (1) 31% of Asian sales(2) Sales(2) Outperformance -3% -15pts vs IHS(3) South Korea Outperformance -1pt vs IHS(2) OEM 34% of Asi
Slide 8: Every business group is outperforming the market
EVERY BUSINESS GROUP IS OUTPERFORMING THE MARKET Outperformance +6pts +3pts +3pts +4pts CDA VIS 20% 30% Group €4.9bn PTS 26% THS 24% Q2 total sales 1,512 1,299 1,187 In €m % of Q2 19 sales 974 Comfort & Driving Powertrain Thermal Visibility Assistance Reported +1% -3% -1% 0% OEM sales Like for like
Slide 9: Acceleration of OEM sales outperformance in H1
ACCELERATION OF OEM SALES OUTPERFORMANCE IN H1 TOTAL SALES OF €9.8bn, DOWN 1% AS REPORTED DOWN 2% LIKE FOR LIKE OEM SALES DOWN 2% AS REPORTED DOWN 3% LIKE FOR LIKE, 4 POINT OUTPERFORMANCE AFTERMARKET SALES DOWN 4% AS REPORTED DOWN 4% LIKE FOR LIKE July 24, 2019
Slide 10: 4 points OEM sales outperformance in a difficult environment
4 POINTS OEM SALES OUTPERFORMANCE IN A DIFFICULT ENVIRONMENT H1 19 4 pts 10 000 outperformance 551 9 000 1,005 8 000 7 000 6 000 €m 5 000 9,776 4 000 8,220 3 000 2 000 1 000 0 OEM Aftermarket Miscellaneous Sales Reported -2% -4% +23% -1% Like for like -3% -4% +21% -2% Exchange rates +1.9% Exchange r
Slide 11: 4 points OEM sales outperformance (like for like)
4 POINTS OEM SALES OUTPERFORMANCE (LIKE FOR LIKE) H1 19 OEM sales(2) Like for like OEM -3% 49% of Valeo sales(2) sales(2) OEM -2% World 20% of Valeo sales(2) sales(2) Europe (1) +6% North NorthAmerica America OEM sales** +6% Outperformance Outperformance Production*** +4% +3pts vs IHS (3) +4pts vs I
Slide 12: In Asia, -1 point OEM sales outperformance
IN ASIA, -1 POINT OEM SALES OUTPERFORMANCE (LIKE FOR LIKE) H1 19 OEM Like for like 27% of Asian sales(2) Sales(2) OEM -8% 29% of Valeo sales(2) sales(2) Japan -11% OEM Asia (1) 27% of Asian sales(2) Sales(2) 0% Outperformance -11pts vs IHS(3) South Korea Outperformance -1pt vs IHS(3) OEM 36% of Asia
Slide 13: Balanced geographic positioning
BALANCED GEOGRAPHIC POSITIONING OEM sales by production region % of OEM sales Eastern Eastern Europe & Europe & Africa Africa 16% 17% Western Western Europe Europe Asia excl. 33% 32% 58% in Asia China 59% in Asia Asia excl. & emerging 19% China & emerging countries 18% countries US US China 8% China
Slide 14: Diverse customer portfolio
DIVERSE CUSTOMER PORTFOLIO % of OEM sales Other Other 6% 5% French French 14% 15% German German 30% 31% American American 17% 19% Asian Asian Asian** Asian** 32% 31% 26% 26% H1 18 H1 19 14 July 24, 2019
Slide 15: Every business group is outperforming the market
EVERY BUSINESS GROUP IS OUTPERFORMING THE MARKET Outperformance +6pts +3pts +3pts +3pts CDA VIS 20% 30% Group €9.8bn PTS 26% THS 24% 3,014 H1 total sales 2,565 2,330 1,938 In €m % of H1 19 sales Comfort & Driving Powertrain Thermal Visibility Assistance Reported +2% -4% -1% -1% OEM sales Like for li
Slide 16: Improvement of operating margin and net income
IMPROVEMENT OF OPERATING MARGIN EXCL. JV & ASSOCIATES OF 0.5PTS VS H2 2018 TO €514M OR 5.3% OF SALES JV & ASSOCIATES OF €(107)M OR (1.1%) OF SALES IMPROVEMENT OF NET INCOME AS A % OF SALES OF 0.7PTS VS H2 2018 TO €162M OR 1.7% OF SALES July 24, 2019
Slide 17: Gross margin of €1,754m or 17.9% of sales
GROSS MARGIN OF €1,754M OR 17.9% OF SALES DOWN 0.2PTS VS H2 2018 As a % of sales €1,754m +5% €1,676m +30bps -30bps +10bps -30bps 18.1% 17.9% H2 18 Volume/ Operational Depreciation R&D H1 19 inflation inefficiency sales NB: rounded figures 17 July 24, 2019
Slide 18: R&D expenditure at 8.0% of sales
R&D EXPENDITURE AT 8.0% OF SALES DOWN 0.5PTS VS H2 2018 R&D expenditure In €m and as a % of sales Capitalized development expenditure In €m and as a % of sales 369 401 786 0% 785 4.0% 4.1% H2 18 H1 19 Amortization and impairment of capitalized development expenditure (net of subsidies) In €m and as
Slide 19: Strict control of SG&A expenses at 4.7% of sales
STRICT CONTROL OF SG&A EXPENSES AT 4.7% OF SALES DOWN 0.1PTS VS H2 2018 SG&A In €m and as a % of sales +3% 455 442 Selling Selling expenses expenses €155m €158m 4.8% -10bps 4.7% Admin. Admin. expenses expenses Selling Selling €284m €300m expenses expenses H2 18 H1 19 1.7% 1.6% Admin. Admin. expenses
Slide 20: Operating margin excl. JV & associates of €514m
OPERATING MARGIN EXCL. JV & ASSOCIATES OF €514M OR 5.3% OF SALES UP 0.5PTS VS H2 2018 As a % of sales +15% €514m €448m +10bps -10bps* +50bps 4.8% 5.3% H2 18 Gross R&D SG&A H1 19 margin expenses * Rounded figures 20 July 24, 2019
Slide 21: Operating margin of €514m or 5.3% of sales
OPERATING MARGIN* OF €514M OR 5.3% OF SALES UP 0.5PTS VS H2 2018 H1 18 H2 18 H1 19 9,863 Total sales (€m) 9,261 9,776 +6% 1,998 Gross margin 1,676 1,754 +5% 20.3% As a % of sales 18.1% 17.9% -20bps 774 R&D expenditure 786 785 0% 7.8% As a % of sales 8.5% 8.0% -50bps 469 SG&A 442 455 +3% 4.8% As a
Slide 22: Net income of €162m or 1.7% of sales
NET INCOME OF €162M OR 1.7% OF SALES UP 0.7PTS VS H2 2018 H1 18 H2 18 H1 19 9,863 Total sales (€m) 9,261 9,776 +6% 727 Operating margin incl. JV & Associates 365 407 +12% 7.4% As a % of sales 3.9% 4.2% +30bps (18) Other income & expenses (38) (30) -21% (0.2%) As a % of sales (0.4%) (0.3%) +10bps 7
Slide 23: Excluding non-recurring items, EPS up 45% vs H2 2018
EXCLUDING NON-RECURRING ITEMS, EPS UP 45% VS H2 2018 H1 18 H2 18 H1 19 Change 453 Net income (€m) 93 162 +74% €1.91 EPS €0.39 €0.68 +74% 463 Net income (€m) (excluding non-recurring items) 136 192 +41% €1.95 EPS (excluding non-recurring items) €0.55 €0.80 +45% 23 July 24, 2019
Slide 24: ROCE and ROA of 12% and 8% respectively
ROCE AND ROA OF 12 % AND 8% RESPECTIVELY H1 18 FY 18 H1 19 9,863 Total sales 19,124 9,776 727 Operating margin* 1,092 407 26% ROCE 19% 12% 17% ROA 12% 8% * Including joint ventures and associates 24 July 24, 2019
Slide 25: EBITDA of €1,218m or 12.5% of sales; free cash flow of €237m
EBITDA OF €1,218M OR 12.5% OF SALES FREE CASH FLOW GENERATION OF €237M July 24, 2019
Slide 26: EBITDA of €1,218m or 12.5% of sales
EBITDA OF €1,218M OR 12.5% OF SALES UP 1PT VS H2 2018 In €m and as a % of sales H1 18* Business Groups H2 18* H1 19* 14.9 Comfort & Driving Assistance 13.1 14.6 1,218 13.9 Powertrain 12.3 12.4 1,069 12.3 Thermal 9.3 11.2 12.7 Visibility 9.3 10.7 11.5% 12.5% 13.6 Group 11.5 12.5 *As a % of sales H2 1
Slide 27: On track to reduce capex by more than €100m
ON TRACK TO MEET OBJECTIVE OF REDUCING CAPEX* BY MORE THAN €100M H1 19 In €m and as a % of sales 7.5% -120bps 6.3% -€96m IFRS 16 -14% 18 Right of use H1 18 H1 19 696 600 H2 18 H1 19 * Excluding capitalized R&D 27 July 24, 2019
Slide 28: Free cash flow generation of €237m
FREE CASH FLOW GENERATION OF €237M H1 18 H2 18 H1 19 1,341 EBITDA (€m) 1,069 1,218 12.5% of sales (141) Change in operating working capital 228 262 Slower activity in China (18) Restructuring & social costs (13) (10) Decrease in inventories (151) Other operating items (incl. taxes) (129) (235) (
Slide 29: Balance sheet
BALANCE SHEET July 24, 2019
Slide 30: Balance sheet
BALANCE SHEET Net debt to EBITDA Shareholders’ equity and net debt 2,877 4,522 4,571 4,475 IFRS 16 impact 2,877 2,559 2,410 2,435 IFRS 2,291 2,248 2,287 16impact 2,248 2,435 2,291 June 30, Dec 31, June 30, 2018 2018 2019 Gearing Gearing Gearing Gearing 51% 49% 55% 64%* June 30, 2018 0 Dec 31, 2018 0
Slide 31: Debt maturity profile
DEBT MATURITY PROFILE 4000 Maturity Outstanding Coupon amount Euro private placement Nov 2019 €350m 0% 3500 Non-dilutive convertible bond June 2021 USD 575m 0% Undrawn credit lines EMTN Sept. 2022 €600m 0.375% 3000 3.6 year EMTN January 2023 €500m 0.625% maturity Schuldschein April 2023 €336m Eurib
Slide 32: H1 2019 order intake of 1.3x OEM sales or €11.1bn
H1 2019 ORDER INTAKE OF 1.3X OEM SALES OR €11.1BN July 24, 2019
Slide 33: Order intake of €11.1bn or 1.3x OEM sales
ORDER INTAKE OF €11.1BN or 1.3X OEM sales Order intake* €bn Innovation fueling future organic growth as a % of order intake* 14,0 12,0 10,0 8,0 Innovation 42% (1) 6,0 10.2 11.1 4,0 2,0 0,0 H2 18 H1 19 (1) Products and technologies sold by less than 3 years excl. 1.3x** 1.3x** Valeo Siemens eAutomoti
Slide 34: Order intake/OEM sales ratio of 1.3x
ORDER INTAKE/OEM SALES RATIO OF 1.3X Order intake of €11.1bn OEM sales of €8.2bn 17% SA 3% 20% SA Order NA Asia Asia 2% intake/OEM excl. China NA Asia excl. €1.8bn 33% €1.6bn China sales ratio 16% €3.7bn Asia 18% 30% €2.5bn Asia 1.5x Of which China 1.9x China 12% 24% 30% Europe 1.3x China with local
Slide 35: 2019 Outlook
2019 OUTLOOK July 24, 2019
Slide 36: 2019 Outlook
2019 OUTLOOK Thanks to the roll-out of a program to reduce costs and capital expenditure, the favorable trend in raw material prices and the start of production on new contracts, Valeo confirms its guidance despite a stronger than anticipated decline in the automotive market, which is expected to co
Slide 37: Back-up
BACK-UP IFRS 16 38 H1 2019 results as compared to H1 2018 40 Business Group information 47 July 24, 2019
Slide 38: IFRS 16 impact
IFRS 16 IMPACT July 24, 2019
Slide 39: Impacts of IFRS 16 – effective as of January 1, 2019
IMPACTS OF IFRS 16 – EFFECTIVE AS OF JANUARY 1, 2019 On January 13, 2016, the IASB published IFRS 16 – “Leases”. IFRS 16 introduces major changes in the principles for measuring, recognizing and presenting leases in the financial statements of lessees. The Group is currently finalizing its assessmen
Slide 40: H1 2019 results as compared to H1 2018
H1 2019 RESULTS AS COMPARED TO H1 2018 July 24, 2019
Slide 41: R&D expenditure
R&D EXPENDITURE R&D expenditure In €m and as a % of sales Capitalized development expenditure In €m and as a % of sales 401 347 774 +1% 785 3.5% 4.1% H1 18 H1 19 Amortization and impairment of capitalized development expenditure (net of subsidies) In €m and as a % of sales 184 137 +20bps 7.8% 8.0% 1
Slide 42: SG&A expenses
SG&A EXPENSES SG&A In €m and as a % of sales 469 -3% 455 Selling Selling expenses expenses €158m €155m 4.8% -10bps 4.7% Admin. Admin. expenses expenses Selling €311m €300m Selling expenses expenses H1 18 H1 19 1.6% 1.6% Admin. Admin. expenses -10bps expenses 3.2% 3.1% H1 18 H1 19 42 July 24, 2019
Slide 43: EBITDA
EBITDA In €m and as a % of sales 2000 1800 1600 Business Groups H1 18* H1 19* 1400 1,341 1,218 Comfort & Driving Assistance 14.9 14.6 1200 1000 Powertrain 13.9 12.4 800 Thermal 12.3 11.2 600 400 Visibility 12.7 10.7 200 13.6% 12.5% Group 13.6 12.5 0 H1 18 H1 19 *As a % of sales 43 July 24, 2019
Slide 44: Recorded capex
RECORDED CAPEX* H1 19 In €m and as a % of sales 6.5% -20bps 6.3% -€41m -6% 18 IFRS 16 H1 18 H1 19 Right of use 641 600 H1 18 H1 19 * Excluding capitalized R&D 44 July 24, 2019
Slide 45: Total order intake
TOTAL ORDER INTAKE Order intake* €bn Innovation fueling future organic growth as a % of order intake* 14,0 12,0 10,0 Innovation 8,0 42% (1) 14.0 6,0 10.2 11.1 4,0 2,0 0,0 H1 18 H2 18 H1 19 (1) Products and technologies sold by less than 3 years excl. 1.6x** 1.3x** 1.3x** Valeo Siemens eAutomotive, F
Slide 46: Total order intake
TOTAL ORDER INTAKE H1 order intake*** €bn Valeo Siemens eAutomotive 3.0 4.7 Cumulative €10.5bn order intake at year-end 14.9 14.0 12.8 10.7 11.1 9. 1 7.4 7.7 7.3 6.3 42% relating to 4.8 CAGR** 4.3 4.3 4.7 Innovative products 3.0 +7% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 20
Slide 47: Business group information
BUSINESS GROUP INFORMATION July 24, 2019
Slide 48: Comfort & Driving Assistance
COMFORT & DRIVING ASSISTANCE Outperformance +7pts +6pts +6pts Market share* and competitors: 2018 key figures: OEM sales growth 0% -2% -1% Like for like • Sales: €3.6bn (19% of Group sales) - Comfort & Driving Assistance: • EBITDA: 14.0% (22% of Group EBITDA) Valeo no. 2 • 24,600 employees 974 Conti
Slide 49: Powertrain Systems
POWERTRAIN SYSTEMS Outperformance +3pts +3pts +3pts 2018 key figures: OEM sales growth Market share* and competitors: Like for like -4% -5% -4% • Sales: €5.0bn (26% of Group sales) - Electrical Systems: Valeo no. 1 • EBITDA: 13.1% (28% of Group EBITDA) Valeo + Denso + Bosch/ZMJ ~ 70%* • 24,400 emplo
Slide 50: Thermal Systems
THERMAL SYSTEMS Outperformance +4pts +3pts +3pts 2018 key figures: OEM sales growth -3% -5% -4% • Sales: €5.0bn (26% of Group sales) Like for like Market share* and competitors: • EBITDA: 10.6% (20% of Group EBITDA) Thermal Systems: Valeo no. 2 • 24,700 employees 1,187 Denso + Valeo + Hanon + Mahle
Slide 51: Visibility Systems
VISIBILITY SYSTEMS Outperformance +3pts +4pts +4pts Market share* and competitors: 2018 key figures: OEM sales growth Like for like -4% -4% -4% • Sales: €5.7bn (29% of Group sales) - Lighting Systems: Valeo no. 1 • EBITDA: 11.1% (27% of Group EBITDA) Valeo + Koito + Magnetti Marelli ~ 58%* • 37,300
Slide 52: Segment information
SEGMENT INFORMATION Comfort & H1 2019 Driving Assistance Powertrain Thermal Visibility (€m) Systems Systems Systems Systems Others Total Sales: 1,938 2,565 2,330 3,014 (71) 9,776 ● segment (excluding Group) 1,925 2,503 2,301 2,968 79 9,776 ● intersegment (Group) 13 62 29 46 EBITDA 282 319 262 324 31
Slide 53: Glossary
GLOSSARY Valeo order intake corresponds to business awarded by automakers during the period (including joint ventures accounted for based on Valeo’s share in net equity) less any cancellations, based on Valeo’s best reasonable estimates in terms of volumes, selling prices and project lifespans. Unau
Slide 54: Contacts – Investor Relations
CONTACTS Investor Relations Valeo 43, rue Bayen F-75848 Paris Cedex 17 France Thierry Lacorre E-mail: valeo.corporateaccess.mailbox@valeo.com Website: www.valeo.com 54 July 24, 2019
Slide 55: Share information
SHARE INFORMATION Share Data • Bloomberg Ticker FR FP • Reuters Ticker VLOF.PA • ISIN Number FR 0013176526 • Shares outstanding as of June 30, 2019 241,036,743 ADR Data • Ticker/trading symbol VLEEY • CUSIP Number 919134304 • Exchange OTC • Ratio (ADR: ord) 1:2 • Depositary Bank J.P. Morgan • Contac
Slide 56: 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 57: Valeo – Smart technology for smarter cars
Valeo SMART TECHNOLOGY FOR SMARTER CARS