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Valeo — H1 2016 Earnings Presentation
44 slides from Valeo's earnings presentation, Jul 26, 2016
Slide 1: H1 2016 Results
H1 2016 Results Jacques Aschenbroich Chairman and CEO July 26, 2016 July 26, 2016 I 1
Slide 2: The New Valeo: a virtuous circle
The New Valeo: a virtuous circle H1 2016 Year-on- H1 15 H1 16 year Net R&D (as a % of sales) 5.5% 6.0% +0.5pts Order intake (€bn) 10.7 12.8 +20% Innovative products (in a % of order intake) 30% 45% +15pts Sales (€bn) 7.3 8.1 +11% Gross margin (as a % of sales) 17.5% 18.3% +0.8pts Operating margin* (
Slide 3: Q2: acceleration in growth
Q2: acceleration in growth +12% like-for-like(1) Sales of €4.2bn +13% as reported +13% like-for-like(1) OEM sales of €3.7bn +15% as reported OEM sales outperformance Growth(1) Outperformance(2) World +13% +11pts Acceleration in Europe +16% +10pts growth China +9% +5pts Asia (excluding China) +14% +1
Slide 4: The New Valeo: less cyclical thanks to outperformance
The New Valeo: less cyclical thanks to outperformance in all production regions and Business Groups H1 highlights Fueled by Order intake(1) of €12.8bn +20% innovation +11% as reported Sales of €8.1bn +11% like-for-like(2) +13% as reported OEM sales of €7.1bn +11.5% like-for-like(2 Less cyclical than
Slide 5: The New Valeo: strong improvement in profitability
The New Valeo: strong improvement in profitability H1 highlights Operating margin* of €647m 8.0% of sales up 20% Strong improvement in Net income of €422m 5.2% of sales up 23% profitability EPS of €1.79 up 22% EBITDA(1) of €1,052m 12.9% of sales up 15% Free cash flow(1) of €339m up 11% Significant i
Slide 6: 2016 outlook
2016 outlook Based on the following assumptions: An increase in global automotive production of around 2.5%, including: Europe: around 2% China: around 5% North America: around 2% Raw material prices and exchange rates in line with current levels Thanks to vigorous sales growth and the strong outper
Slide 7: Half year order intake of €12.8bn, up 20%
Half year order intake of €12.8bn, up 20% confirming high growth potential July 26, 2016 I 7
Slide 8: Acceleration in order intake up 20% to €12.8bn
Acceleration in order intake up 20% to €12.8bn… … confirming Valeo’s strong future capacity to outperform automotive production Innovation fueling future organic growth as a % of order intake** Order intake** €bn Innovation 45% (1) 9,4 8.4 (1) Products and technologies sold by less than 3 years 7.4
Slide 9: Acceleration in order intake fueling future market outperformance
Acceleration in order intake fueling future market outperformance Chinese OEMs represent 22% of Chinese OEM sales and 43% of Chinese order intake % of H1 2016 OEM sales* % of H1 2016 order intake* SA 24% €0.2bn Asia excl. Asia 21% SA Asia China Asia NA 37% 2% excl. €1.7bn NA China 27% €3.1bn €1.6bn
Slide 10: Record high order intake sustained by high level of innovations
Record high order intake sustained by high level of innovations Strong positioning of technologies for CO2 emissions reduction Internal combustion engine Stop-Start System Cabin filters Dual mass Flywheel Air intake module Dual-clutch Active Grill Shutter Two-vane rotary Lighting business compressor
Slide 11: Record high order intake sustained by high level of innovations
Record high order intake sustained by high level of innovations Strong positioning of technologies for CO2 emissions reduction Hybrid electric powertrain DC/DC converter Battery chargers Battery thermal management module Power electronics box inverter 48V Electric compressor July 26, 2016 I 11
Slide 12: Record high order intake sustained by high level of innovations
Record high order intake sustained by high level of innovations Strong positioning of technologies for intuitive driving On-board telematics Sensors Cruise4U® Camera 360Vue® co-developed with Laser scanner Park4U® Radars LaneGuide® Hand-free access Valeo InBlue® and start Virtual Key system System J
Slide 13: Acceleration in sales growth throughout H1
Acceleration in sales growth throughout H1 Sales of €8.1bn, up 11% like-for-like up 11% as reported OEM sales up 11.5% like-for like 10-point outperformance, up 13% as reported Aftermarket sales up 6% like-for-like up 4% as reported July 26, 2016 I 13
Slide 14: Acceleration in sales growth in Q2
Acceleration in sales growth in Q2 H1 sales up 11% like-for-like (up 11% as reported) to €8.1bn Like-for-like +10% +12% +11% 8,130 €m 3,917 4,213 Q1 16 Q2 16 H1 16 Reported +9% +13% +11% Q1-2015 3,581 Q2-2015 3,717 H1-2015 7,298 Exchange rates -1.1% Exchange rates -2.5% Exchange rates -1.8% Scope +0
Slide 15: Acceleration in OEM sales growth in Q2
Acceleration in OEM sales growth in Q2 H1 OEM sales up 11.5% like-for-like (up 13% as reported) to €7.1bn Improvement in aftermarket sales (up 6% and up 7% like-for-like respectively in Q1 and Q2) OEM sales Aftermarket +10%* +13%* +11.5%* *Like-for-like +6%* +7%* +6%* 845 411 434 Q1 16 Q2 16 H1 16 7
Slide 16: OEM sales accelerated in Q2 leading to outperformance improvement
OEM sales accelerated in Q2 leading to outperformance improvement to 11 percentage points in Q2 from 9 percentage points in Q1 OEM Q2 sales** Like-for-like +13% OEM World 52% of Valeo sales Production***+2% sales** OEM Europe* +16% 22% of Valeo sales sales** Outperf. +11pts Production*** +6% +9% Nor
Slide 17: Outperformance in all Asian countries
Outperformance in all Asian countries Q2 Like-for-like OEM 24% of total sales sales* OEM 17% of Asian sales sales* +11% Asia Japan -5% Production** +1% Production** -6% OEM 25% of Asian sales sales* Outperf. +10pts Outperf. +1pt +26% Korea Production** -5% Outperf. +31pts OEM 50% of Asian sales sale
Slide 18: OEM sales acceleration throughout H1
OEM sales acceleration throughout H1 Outperforming the global market by 10 percentage points Higher content per car due to increased added value OEM H1 sales** Like-for-like +11.5% OEM World 51% of Valeo sales Production***+1.5% sales** OEM Europe* +13% 22% of Valeo sales sales** Outperf. +10pts Pro
Slide 19: Outperformance in all Asian countries
Outperformance in all Asian countries H1 Like-for-like OEM 25% of total sales sales* OEM 18% of Asian sales sales* +11% Asia Japan -3% Production** +1% Production** -7% OEM 24% of Asian sales sales* Outperf. +10pts Outperf. +4pts +25% Korea Production** -4% Outperf. +29pts OEM 50% of Asian sales sal
Slide 20: Balanced geographic positioning
Balanced geographic positioning Asia and emerging markets accounted for 53% of OEM sales OEM sales by production region Eastern Eastern Europe & Europe & Africa Africa 15% 16% Western Europe Western 35% Europe 54% in Asia 53% in Asia 35% & emerging Asia & emerging Asia 26% 25% countries countries US
Slide 21: Balanced customer portfolio
Balanced customer portfolio % of OEM sales Other Other 6% 6% French* German French* German 16% 30% 16% 30% American American 23% 22% Asian** Asian** Asian** Asian** 26% 25% 29% 26% H1 2015 H1 2016 * Excluding Nissan ** Including Nissan July 26, 2016 I 21
Slide 22: Outperformance in all Business Groups
Outperformance in all Business Groups Group sales accelerated throughout H1 particularly at Powertrain CDA and Thermal VIS 20% 28% Successful integration of the acquisitions, peiker and Spheros Group €8.1bn H1 2016 OEM sales growth PTS total sales (like-for-like) 25% THS growth 27% (year-on-year) Q1
Slide 23: Operating margin, Net income
Operating margin* up 20% to €647m (8.0% of sales) Net income up 23% to €422m (5.2% of sales) * incl. JV & Associates July 26, 2016 I 23
Slide 24: Gross margin up 16% to €1,488m or 18.3% of sales
Gross margin up 16% to €1,488m or 18.3% of sales Improvement driven by volume impact €1,488m +16% €1,280m -0.2pts +0.1pts -0.2pts +0.2pts +0.9pts 18.3% 17.5% H1 15 Product Depreciation South America Other including Perimeter H1 16 mix/Volume/ linked exchange rates inflation to growth NB: rounded fig
Slide 25: 21% increase in net R&D expenditure, to 6.0% of sales
21% increase in net R&D expenditure, to 6.0% of sales, up 50bps to sustain record high order intake Capitalized development expenditure Net R&D In €m and as a % of sales In €m and as a % of sales 191 209 173 2.4% 2.6% 2.6% +21% 485 H1 15 H2 15 H1 16 402 +50bps Amortization of capitalized development
Slide 26: SG&A expenses down 30bps to 4.7% of sales
SG&A expenses down 30bps to 4.7% of sales SG&A In €m and as a % of sales 363 384 Selling Selling expenses expenses -10bps 124 115 or 1.5% or 1.6% Admin. Admin. expenses -20bps expenses 248 260 or 3.4% or 3.2% H1 15 H1 16 -30bps 5.0% 4.7% July 26, 2016 I 26
Slide 27: Operating margin up 20% to €647m or 8.0% of sales
Operating margin* up 20% to €647m or 8.0% of sales €647m +20% €538m -0.1pts -0,4pts +0.3pts +0.8pts 8.0% 7.4% H1-15 Gross Net R&D SG&A Perimeter H1 16 margin (R&D, SG&A) * Including joint ventures and associates NB: rounded figures July 26, 2016 I 27
Slide 28: Net income up 23% to €422m or 5.2% of sales
Net income up 23% to €422m or 5.2% of sales H1 15 H1 16 Total sales (€m) 7,298 8,130 +11% Operating margin excl. JV & Associates (€m) 515 619 +20% As a % of sales 7.1% 7.6% +50bps JV & Associates (€m) 23 28 +22% As a % of sales 0.3% 0.3% 0bp Operating margin incl JV & Associates (€m) 538 647 +20% As
Slide 29: Net income up 23%
Net income up 23% Excluding non-recurring items, net income up 26% H1 15 H1 16 Change Net income (€m) 344 422 +23% EPS €1.47 €1.79 +22% Net income (€m) (excluding non-recurring items) 357 451 +26% EPS (excluding non-recurring items) €1.53 €1.91 +25% July 26, 2016 I 29
Slide 30: ROCE at 36%
ROCE at 36% H1 15 H1 16 Total sales €7.3bn €8.1bn Operating margin* 7.4% 8.0% ROCE 32% 36% ROA 21% 21% * Including joint ventures and associates July 26, 2016 I 30
Slide 31: Free cash flow of €339m
Free cash flow of €339m July 26, 2016 I 31
Slide 32: EBITDA margin up 40bps or 15% to 12.9% of sales
EBITDA margin up 40bps or 15% to 12.9% of sales As a % of sales H1 15 H1 16 In €m & as a % of sales Comfort & Driving Assistance 14.4 14.5 Powertrain 12.1 12.7 12.9% Thermal 11.1 10.1 12.5% Visibility 11.8 13.9 11.6% TOTAL 12.5 12.9 1052 913 734 H1 14* H1 15 H1 16 +43% *Restated in accordance with I
Slide 33: Recorded capex including capitalized R&D of €619m
Recorded capex including capitalized R&D of €619m Supporting record high order intake (as a % of sales) In €m 7.4% 7.6% +16% Capex* 5.0% 5.0% 619 535 Capital. R&D 2.4% 2.6% H1 15 H1 16 Capex* 410 362 173 Capitalized R&D 209 H1 15 H1 16 * excluding capitalized R&D July 26, 2016 I 33
Slide 34: Free cash flow of €339m
Free cash flow of €339m H1 15 H1 16 EBITDA (€m) 913 1,052 +15% Operating working capital (€m) 48 40 Restructuring & employee-related costs (€m) (11) (18) Other operating items (incl. taxes) (€m) (105) (128) Of which: Taxes (81) (133) Pensions (16) (11) Cash from operating activities* (€m) 845 946 Ca
Slide 35: Strong balance sheet
Strong balance sheet July 26, 2016 I 35
Slide 36: Leverage & gearing ratios less than 0.4x and 21% respectively
Leverage & gearing ratios less than 0.4x and 21% respectively Group ratings confirmed by S&P and Moody’s Leverage: net debt/EBITDA Gearing: net debt/stockholders’ equity Stockholders’ equity (€m) Net debt (€m) Net debt (€m) EBITDA 12 months rolling (€m) excluding non-controlling interests After taki
Slide 37: Debt maturity profile lengthened to 5.9 years
Debt maturity profile lengthened to 5.9 years from 4.3 years at end-2015 3000 Undrawn 2500 credit lines 3.5-year maturity 2000 1500 Cash & Average maturity: 5.9 years cash equivalents 1000 500 New New issue issue 0 2016 2017 2018 … 2021 … 2024 … 2026 BEI Financing Private Placements EMTN non dilutiv
Slide 38: 2016 outlook
2016 outlook July 26, 2016 I 38
Slide 39: 2016 outlook
2016 outlook Based on the following assumptions: An increase in global automotive production of around 2.5%, including: Europe: around 2% China: around 5% North America: around 2% Raw material prices and exchange rates in line with current levels Thanks to vigorous sales growth and the strong outper
Slide 40: 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 Website: www.valeo.com July 26, 2016 I 40
Slide 41: Share Information
Share Information Share Data Bloomberg Ticker FR FP Reuters Ticker VLOF.PA ISIN Number FR 0013176526 Shares outstanding as of June 30, 2016 238,387,620 ADR Data Ticker/trading symbol VLEEY CUSIP Number 919134304 Exchange OTC Ratio (ADR: ord) 1:2 Depositary Bank J.P. Morgan Contact at J.P. Morgan – A
Slide 42: Glossary
Glossary 1) Order intake corresponds to business awarded by automakers during the period (including joint ventures at least 50%-owned by the Group) less any cancellations, based on Valeo’s best reasonable estimates in terms of volumes, selling prices and project lifespans. based on Valeo's best reas
Slide 43: Safe Harbor Statement
Safe Harbor Statement Statements contained in this press release, 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 r
Slide 44: Valeo: Automotive technology, naturally
Valeo Automotive technology, naturally EN