Slide 1: H1-2010 Results
H1-2010 Results Jacques Aschenbroich – CEO July 27, 2010
Slide 2: Agenda
Agenda 1 H1-10 Highlights 2 OE sales outperforming the market in each region 3 Highest operating margin recorded in the last 10 years 4 Strong cash flow generation and significant debt reduction 5 2010 outlook 6 Ahead of the 2013 Strategic Plan July 27, 2010 I 2 H1-10 Results I
Slide 3: H1-10 Highlights
H1-10 Highlights July 27, 2010 I 3 H1-10 Results I
Slide 4: H1-10 highlights
H1-10 highlights OE sales outperforming the market in each region Order intake at a record level Operating margin of 6.1%, the highest level in 10 years Positive impact of break-even point decrease Turnaround of the Visibility Systems Business Group Strong free cash flow generation of €291M Net fina
Slide 5: H1-10 Key figures
H1-10 Key figures H1-08 H1-09 H1-10 ▲H1-10/H1-09 Total sales (M€) 4,848 3,472 4,787 +38% OE Sales (M€) 4,026 2,743 3,957 +44% Worldwide automotive production – light 36.7 26.3 36.5 +39% vehicles (M units) Gross margin (as % of sales) 16.4% 13.0% 17.9% +4.9pts Operating margin (as % of sales) 4.2% -1
Slide 6: OE sales outperforming the market in each region
OE sales outperforming the market in each region July 27, 2010 I 6 H1-10 Results I
Slide 7: Worldwide automotive production
Worldwide automotive production Continued improvement Worldwide automotive production (*) YoY change in % H1-08 H2-08 H1-09 H2-09 H1-10 39% 8% 3% -12% Automotive production by region (*) -28% YoY change in % H1-08 H2-09 ▲ H1-10 ▲ (M units) (M units) H2-09/H2-08 (M units) H1-10/H1-09 Europe +Africa 1
Slide 8: OE sales
OE sales World H1-10 Outperforming the market in each region Valeo* +40% Production +39% Production +72%** Production +23%** +86%* +31%* North America Europe 12% of sales 61% of sales Production +43%** +59%* Production +17%** Asia +19%* 19% of sales South America 8% of sales * At same perimeter & ex
Slide 9: Asian OE sales
Asian OE sales Outperforming the market in each country Production +43%** +59%* Asia Production +47%** Production +37%** 19% of sales +55%* +49%* Korea Japan Production +47%** 19% of sales 32% of sales +72%* China Production +36%** 40% of sales +89%* India 4% of sales * At same perimeter & exchange
Slide 10: Customer mix
Customer mix Increasing position with German and Asian customers Customers H1-08 H1-09 H1-10 (% of OE sales) German 25% 29% 27% French* 25% 26% 24% Asian** 18% 19% 21% American 19% 16% 18% * Excluding Nissan ** Including Nissan July 27, 2010 I 10 H1-10 Results I
Slide 11: Sales by Business Group
Sales by Business Group Powertrain and Thermal Business Groups outperforming the market Comfort & Driving Assistance Powertrain In M€ In M€ Sales Sales +35% +41% 848 1,344 627 952 Worldwide Worldwide Production production +39%* +39%* H1-09 H1-10 H1-09 H1-10 Thermal Visibility In M€ In M€ Sales Sales
Slide 12: H1-10 sales
H1-10 sales Exchange rates impact In € million Sales +38% 4,848 4,787 Perimeter +0.2% 3,472 Currencies +3.3% Sales at same perimeter and +34% exchange rate H1-08 H1-09 H1-10 Main exchange rates variation vs Euro : Appreciation of Real Brazil, Polish Zloty and South Korean Won July 27, 2010 I 12 H1-1
Slide 13: Order intake
Order intake Record order intake at €6.5 billion Customers H1-10 (% of order intake) German 31% French* 24% Asian** 18% American 23% Order intake * Excluding Nissan (Order Intake / OE Sales) ** Including Nissan 1.64x 1.52x 1.45x 1.29x 2007 2008 2009 H1-10 July 27, 2010 I 13 H1-10 Results I
Slide 14: Highest operating margin recorded in the last 10 years
Highest operating margin recorded in the last 10 years July 27, 2010 I 14 H1-10 Results I
Slide 15: H1-10 results
H1-10 results Highest operating margin recorded in the last 10 years In million euros H1-08 H1-09 H1-10 ▲ Total sales 4,848 3,472 4,787 +38% Gross margin 797 453 856 +89% % of sales 16.4% 13.0% 17.9% +4.9pts Net R&D (276) (234) (267) +14% % of sales -5.7% -6.7% -5.6% +1.1pt SG&A expenses (318) (270)
Slide 16: Gross margin walkdown
Gross margin walkdown As % of sales -0.8pts +1.0pt +4.7pts 17.9% 13.0% Volume Raw material Productivity gains H1-09 increase & mix product impact H1-10 July 27, 2010 I 16 H1-10 Results I
Slide 17: Worldwide headcount evolution
Worldwide headcount evolution Flexibility of the cost structure vs situation end of H1-2008 Permanents Temporaries Global headcount 3000 0 -3000 -6000 -9000 -12000 -15000 -18000 -21000 Jun 08 Dec 08 Jun 09 Dec 09 Jun 10 July 27, 2010 I 17 H1-10 Results I
Slide 18: Gross margin
Gross margin In euro million and as % of sales Sales 6000 (in € million) 0,2 4,848 0,19 5000 4,787 0,18 4,027 3,829 4000 0,17 3,472 0,16 3000 0,15 Gross margin 2000 0,14 0,13 1000 0,12 900 856 20 0 0,11 797 H1-08 H2-08 H1-09 H2-09 H1-10 800 19 685 700 17.9% 18 600 17 530 16.4% 17.0% 500 453 16 400 1
Slide 19: Net R&D expenses
Net R&D expenses as % of sales -0.1pt R&D efforts sustained 6.7% In € million -3% 5.7% 5.6% 276 267 H1-08 H1-09 H1-10 234 H1-08 H1-09 H1-10 July 27, 2010 I 19 H1-10 Results I
Slide 20: SG&A expenses
SG&A expenses New organization implementation on track As % of sales -0.4pt In € million -7% 7.8% 6.6% 2.3% 6.2% 2.0% 1.8% 5.5% 318 4.6% 4.4% 297 Selling 270 Expenses Selling 94 Selling Expenses H1-08 H1-09 H1-10 Expenses 87 79 Admin. Admin. Admin. Expenses Expenses Expenses 224 191 210 H1-08 H1-09
Slide 21: Operating margin
Operating margin Highest margin recorded in the last 10 years Sales 6000 (in € million) 0,2 0,19 4,848 4,787 5000 0,18 4,027 4000 3,829 0,17 3,472 0,16 3000 0,15 2000 0,14 Operating margin 1000 0,13 (in € million & as % of sales) 0,12 350 7 0 0,11 6.1% H1-08 H2-08 H1-09 H2-09 H1-10 300 6 250 4.2% 4.
Slide 22: H1-10 Results
H1-10 Results Strong improvement of net income In € million H1-08 H1-09 H1-10 ▲ Total sales 4,848 3,472 4,787 +38% Operating margin 203 (51) 292 na as % of sales 4.2% -1.5% 6.1% +7.6pts Other income & expenses (21) (37) (31) -16% as % of sales -0.4% -1.1% -0.6% +0.5pt Operating income 182 (88) 261 n
Slide 23: Strong cash flow generation and significant debt reduction
Strong cash flow generation and significant debt reduction July 27, 2010 I 23 H1-10 Results I
Slide 24: Strong cash generation of €291 M
Strong cash generation of €291 M Key factors Operating performance EBITDA at €564 M (11.8 % of sales) Free cash flow Operating working capital of Further improvement by €41 M to - €341 M €291 M Tangible investments Limited to 60% of depreciation in H1 2010 Net financial debt Reduced by €284 M to €43
Slide 25: Working capital and Capex
Working capital and Capex Under strict management Further improvement of working capital In € million - €41M H1-09 H1-10 Tangible capex < 60 % of depreciation (300) In € million -16% (341) 152 128 H1-09 H1-10 July 27, 2010 I 25 H1-10 Results I
Slide 26: Strong cash generation
Strong cash generation Net financial debt reduced by €284 M to €438 M over H1-10 in € million H1-08 H1-09 H1-10 EBITDA 503 229 564 Operating working capital 39 177 32 Restructuring & social costs (39) (69) (54) Other operational items (84) (85) (27) Capex (296) (256) (219) Free cash flow 123 (4) 291
Slide 27: Debt ratios
Debt ratios Target: back to “Investment grade” Shareholders’ equity and net debt Net debt (M€) Shareholders’ equity (M€) excluding minority interests Net financial debt over EBITDA 1,468 Net debt (M€) EBITDA 12 months rolling (M€) 1,233 1,128 841 1,005 722 438 841 Gearing Gearing Gearing 75% 59% 30%
Slide 28: Financial resources
Financial resources Cash available to be used for 2011 debt maturity reimbursement Liquidity secured by 2400 Undrawn credit lines € 1.1 billion outstanding with 2.5 years maturity Cash € 1.1 billion 1900 LT financial debt Outstanding : €1.6 billion 1400 Portion at fixed rate: 71% Average maturity: 2
Slide 29: 2010 outlook
2010 outlook July 27, 2010 I 29 H1-10 Results I
Slide 30: Worldwide automotive production in 2010
Worldwide automotive production in 2010 2010 production forecasts revised upwards (change YoY) Full year previous revised Europe (& Africa) -2% +6% Asia (& others) +9% +18% North America +24% +30% South America +15% +12% Worldwide +8% +16% July 27, 2010 I 30 H1-10 Results I
Slide 31: 2010 outlook
2010 outlook Production forecasts revised upwards Europe & Africa: increase of 6% Asia & others continued improvement of 18% North America: strong recovery of +30% South America: continued improvement of 12% Flexibility of the cost structure maintained 4 Business Groups organization deployment on tr
Slide 32: Ahead of the 2013 Strategic Plan
Ahead of the 2013 Strategic Plan July 27, 2010 I 32 H1-10 Results I
Slide 33: €10 Bn sales target in 2013
€10 Bn sales target in 2013 Main growth levers Asian and North American production ahead of the Plan In 2013, production in Europe and North America expected to stay below pre-crisis level €1 Bn of 2013 OE sales related to CO2 emission reduction €308 M in H1-10 Growth in Asia and emerging countries
Slide 34: CO2 emission reduction
CO2 emission reduction Powertrain Systems Business Group: Torque Converter development High hydraulic performances for automatic transmissions Enhanced driving experience High standardization level Torque converters production and installed capacity Superior shifting quality Installed capacity Quart
Slide 35: i-StARS
i-StARS Second generation of Stop Start system: control electronics integrated into the electrical machine Cut off of the engine as soon as the vehicle’s speed falls below 8 km/h with an automated transmission and 20 km/h with a manual transmission CO2 emissions reduced by 5g per kilometer on averag
Slide 36: Growth in Asia and in the emerging countries
Growth in Asia and in the emerging countries Presence of all Business Groups in China (40% of Asian sales) Eastern Europe 15 production sites Western 4 R&D centers North Europe America 49 production sites 11 production sites 30 R&D centers Asia 31 production sites 5 R&D centers 13 R&D centers Africa
Slide 37: EBITDA by Business Group
EBITDA by Business Group Convergence of Visibility Systems with other Business Groups performance H1-10 Comfort & Driving Assistance as % of sales 11.8 % Powertrain as % of sales 9.7% Thermal as % of sales 13.3% Visibility 14% as % of sales 11.4% 12% TOTAL 11.8% 10% 8% 6% 4% 2013 2013 Group Group 2%
Slide 38: Operating margin: target of 6% to 7%
Operating margin: target of 6% to 7% In H1-10, highest margin recorded in the last 10 years Sales outperformance vs production OE sales outperformance in all regions Operating margin 2010 H1 = 6.1% / FY > 5% New organization In Europe, crucial step achieved Visibility Business Group recovery Converg
Slide 39: Capital turnover of 4.7
Capital turnover of 4.7 In H1-10, strict management of capital employed Capital employed of €1.9 billion in H1-10 Working capital further improved by €41 M Capital turnover* at (€341 M) H1-10 = 4.7x Strict control of capex < 80% of depreciation in 2010 Capital turnover Capital employed Target 2013 =
Slide 40: ROCE
ROCE H1-2010 profitability in line with 2013 objective 2009 H1-10 2013 ∆ 2013/2009 Total sales €7.5 bn €4.8 bn €10 bn +33% Operating margin 1.8% 6.1% 6-7% + 4-5pt Capital turnover 3.9 4.7* 5 +1.1 ROCE** 7.1% 25%* ≥ 30% > +20pt * Calculated on a 12 month rolling basis ** Ebit / capital employed exclu
Slide 41: H1-10 highlights
H1-10 highlights OE sales outperforming the market in each region Order intake at a record level Operating margin of 6.1%, the highest level in 10 years Positive impact of break-even point decrease Turnaround of the Visibility Systems Business Group Strong free cash flow generation of €291M Net fina
Slide 42: 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 July 27, 2010 I 42 H1-10 Results I
Slide 43: Back-up
Back-up July 27, 2010 I 43 H1-10 Results I
Slide 44: Half year P&L
Half year P&L 2008 2009 2010 (in € million) H1 H2 H1 H2 H1 Total sales 4,848 3,829 3,472 4,027 4,787 Gross margin 797 530 453 685 856 as % of sales 16.4% 13.8% 13.0% 17.0% % R&D expenditures (276) (225) (234) (239) (267) Selling & administrative expenses (318) (278) (270) (282) (297) Other income &
Slide 45: Highlights by segment
Highlights by segment H1-09 and H1-10 Security and Driving Assistance Powertrain Thermal Visibility (In millions of euros) Systems Systems Systems Systems Other TOTAL First-half 2010 Net sales • segment (excluding Group) 832 1 333 1 437 1 174 11 4 787 • intersegment (Group) 16 11 10 12 (49) - (1) EB
Slide 46: Share Information
Share Information Share Data Bloomberg Ticker FR FP Reuters Ticker VLOF.PA ISIN Number FR 000130338 Shares outstanding as per 30.06.2010 78,209,617 ADR Data Ticker/trading symbol VLEEY CUSIP Number 919134304 Exchange OTC Ratio (ADR: ord) 1:2 Depositary Bank J.P. Morgan July 27, 2010 I 46 H1-10 Resul
Slide 47: Automotive technology, naturally
— Automotive technology, naturally