Valeo Se · EURONEXT:FR
Valeo — Investor Day (December 2019)
119 slides from Valeo's investor day presentation, December 2019
Slide 1: Valeo Investor Day Paris 2019
Slide 2: A Successful Transformation
A SUCCESSFUL TRANSFORMATION
Slide 3: Jacques Aschenbroich, Chairman & CEO
JACQUES ASCHENBROICH CHAIRMAN & CHIEF EXECUTIVE OFFICER
Slide 4: Agenda
AGENDA 11H00 - 13H00 A SUCCESSFUL TRANSFORMATION 11H00 - 11H30 : JACQUES ASCHENBROICH - A SUCCESSFUL TRANSFORMATION 11H30 - 11H45 : HANS-PETER KUNZE - PLATFORMS DRIVE OUR CONTENT PER CAR INCREASE 11H45 - 12H10 : CHRISTOPHE PERILLAT - DRIVING THE PERFORMANCE 12H10 - 12H30 : ROBERT CHARVIER - FOCUS ON
Slide 5: Executive presenters
JACQUES ASCHENBROICH CHAIRMAN AND CHIEF EXECUTIVE OFFICER CHRISTOPHE ROBERT PERILLAT CHARVIER CHIEF OPERATING OFFICER CHIEF FINANCIAL OFFICER HANS-PETER KUNZE EXECUTIVE VICE PRESIDENT, SALES & BUSINESS DEVELOPMENT 5
Slide 6: Business group presidents and CTOs
XAVIER MARC DUPONT VRECKO POWERTRAIN COMFORT & DRIVING ASSISTANCE SYSTEMS BUSINESS GROUP SYSTEMS BUSINESS GROUP PRESIDENT PRESIDENT MICHEL JOACHIM FORISSIER MATHES POWERTRAIN SYSTEMS COMFORT & DRIVING CHIEF TECHNICAL OFFICER ASSISTANCE SYSTEMS CHIEF TECHNICAL OFFICER 6
Slide 7: Group leadership team
MAURIZIO CHRISTOPHE FRANCISCO FRANÇOIS MARTINELLI LE LIGNÉ MORENO BORDES VISIBILITY SYSTEMS BUSINESS VISIBILITY SYSTEMS THERMAL SYSTEMS BUSINESS THERMAL SYSTEMS BUSINESS GROUP PRESIDENT CHIEF TECHNICAL OFFICER GROUP PRESIDENT GROUP CHIEF TECHNICAL OFFICER ERIC JEAN-FRANÇOIS ERIC ANTOINE BRUNO SCHULE
Slide 8: A Successful Transformation
A SUCCESSFUL TRANSFORMATION 8
Slide 9: A Successful Transformation
A SUCCESSFUL TRANSFORMATION WE CREATED #1 POSITION IN ELECTRIFICATION AND ADAS THANKS TO 12 NEW KEY ~5 PTS SALES TECHNOLOGICAL PLATFORMS OUTPERFORMANCE EXPANDING OUR COMPETITIVE EDGE FOCUS ON THROUGH HIGH BARRIERS TO ENTRY PROFIT & CASH LEADING TO A STRONG INCREASE OF OUR CONTENT PER CAR 9
Slide 10: #1 in Electrification and #1 in ADAS
A SUCCESSFUL TRANSFORMATION #1 #1 IN ELECTRIFICATION IN ADAS 2 OUT OF 3 1 OUT OF 4 EUROPEAN OEMs HV LAUNCHES IN 2019-2022 PRODUCED VEHICLES IN 2019 EQUIPPED WITH OUR HV SOLUTIONS EQUIPPED WITH OUR ADAS SOLUTIONS 10
Slide 11: Overperforming most of our peers in growth and EBITDA
OVERPERFORMING MOST OF OUR PEERS IN GROWTH AND EBITDA Sales Growth (base 100 – 2015) EBITDA evolution (base 100 – 2015) 131 132 130 Valeo 127 Valeo CAGR: +9% CAGR: +9% 121 117 Valeo Peers 116 114 CAGR: +7% 115 111 108 Valeo Peers CAGR: +4% WW Auto. Prod. 100 107 106 CAGR: +2% 100 100 104 100 2015 20
Slide 12: Unique technological platforms with high barriers to entry
WE HAVE INVESTED TO CREATE UNIQUE TECHNOLOGICAL PLATFORMS WITH HIGH BARRIERS TO ENTRY -0.5 * 1.2 Cumulated Free Cash Flow 2017-2019 (€bn) 0.7 NEW KEY TRADITIONAL TECHNOLOGICAL VALEO PRODUCTS * only Valeo PLATFORMS 12
Slide 13: New key technological platforms are main driver for future growth
THOSE NEW KEY TECHNOLOGICAL PLATFORMS ARE OUR MAIN DRIVER FOR FUTURE GROWTH AND OUTPERFORMANCE OF THE MARKET ADDITIONAL SALES 2022 -0.5 €2.6bn * 1.2 FREE CASH FLOW Cumulated Free Cash Flow BREAKEVEN 2017-2019 (€bn) 0.7 2022 NEW KEY TRADITIONAL TECHNOLOGICAL VALEO PRODUCTS * only Valeo PLATFORMS 13
Slide 14: Valeo Siemens eAutomotive investment in unique platforms
VALEO SIEMENS e-AUTOMOTIVE HAS INVESTED TO CREATE UNIQUE TECHNOLOGICAL PLATFORMS WITH HIGH BARRIERS TO ENTRY * -1.2 Cumulated Free Cash Flow 2017-2019 (€bn) * financing 50% Valeo 50% Siemens 14
Slide 15: Valeo Siemens eAutomotive: the emergence of a leader
VALEO SIEMENS e-AUTOMOTIVE THE EMERGENCE OF A LEADER SALES 2022 SALES 2024 -1.2 €1.4bn >€2.0bn * EBITDA 2022 EBITDA 2024 -1.2 8% >12% Cumulated Free Cash Flow 2017-2019 (€bn) FREE CASH FLOW BREAKEVEN 2022 ONGOING NEGOTIATION ON NEW PROJECTS AND RENEWALS * financing 50% Valeo 50% Siemens 15
Slide 16: 12 new key technological platforms in electrification and ADAS
WE HAVE INVESTED IN 12 NEW KEY TECHNOLOGICAL PLATFORMS TO CREATE AND COMPLETE A UNIQUE PRODUCT PORTFOLIO IN ELECTRIFICATION AND ADAS ELECTRIFICATION ADAS High voltage E-thermal 48V E-MACHINE BATTERY E-MACHINE FRONT & E-AXLE LIDAR COOLING & E-AXLE CAMERA SCALA® INVERTER E-THERMAL DRIVER DCDC AUTONOMO
Slide 17: Expanding our competitive edge through high barriers to entry
EXPANDING OUR COMPETITIVE EDGE THROUGH HIGH BARRIERS TO ENTRY HIGHLY STANDARDIZED HARDWARE & WE LEVERAGE OUR 12 NEW KEY SOFTWARE PLATFORMS TECHNOLOGICAL PLATFORMS FOR EACH NEW PROJECT GROSS R&D EXPENDITURE 1ST PROJECT BASE 100 100. 75. 50. 25. 0. 1 2 3 4 5 CUSTOMER PROJECT 17
Slide 18: Market pushes towards electrification, safer and smart mobility
MARKET PUSHES TOWARDS ELECTRIFICATION SAFER MOBILITY SMART MOBILITY 18
Slide 19: Market pushes towards electrification
MARKET PUSHES TOWARDS ELECTRIFICATION REGULATIONS CITIES ARE NEW OFFER IS READY CONSUMERS PUSH REGULATORS INCREASINGLY OPEN ~1 million 700 >300 42% electric cars in EU city access regulations new xEV models of consumers would in 2020 to avoid in UE until 2024 consider an EV for CO2 penalties their n
Slide 20: Less CO2, less diesel, more electrification
MARKET PUSHES TOWARDS ELECTRIFICATION - CO2 - DIESEL = + ELECTRIFICATION UE C02 EMISSIONS REDUCTION PROPOSAL (g/km) % OF DIESEL TAKE RATE IN EUROPE -27% < 130 ACTUAL OEM CO2 EMISSIONS 52% 120 50% 118 ~118 CO2 REDUCTION SCHEMES 45% 117 -37.5% 95 37% 32% 59 2015 2016 2017 2018 2019 2020 2025 2030 2015
Slide 21: Electrification for both 48V and high voltage solutions
MARKET PUSHES TOWARDS ELECTRIFICATION FOR BOTH 48V & HIGH VOLTAGE SOLUTIONS 74% 45% 16% 23 22 7% 9% % % 40% 34% 84 % 55 % 26% 2020 2025 2030 48V ELECTRIFICATION* HIGH VOLTAGE ELECTRIFICATION** INTERNAL COMBUSTION ENGINE * Incl. 48V and 12V+12V ** Incl. HV BEV, PHEV, FCEV & FHEV 21 Source: IHS McKins
Slide 22: Successful new platforms already in SOP in 2019
WE HAVE DEVELOPED SUCCESSFUL NEW KEY TECHNOLOGICAL PLATFORMS ALREADY IN SOP IN 2019 CONTENT PER CAR RATIO CUMULATED OI 48V ELECTRIFICATION >40% X2 7.5bn€ market share 48V in 2022 1 OUT OF 3 CONTENT PER CAR RATIO CUMULATED OI EUROPEAN OEMs HV E-THERMAL LAUNCHES IN SOLUTIONS X2 2bn€ 2019-2022 EQUIPPED
Slide 23: Market pushes towards safer mobility
MARKET PUSHES TOWARDS SAFER MOBILITY REGULATION TECHNOLOGY CONSUMER PUSH SOCIETAL GOAL 50% No fatalities or of consumers serious injuries Active safety push Technology is ready recognize High through road safety standards as accidents biggest driver SOURCE: McKinsey ACES survey 2019 23
Slide 24: Safer mobility will drive ADAS market growth
SAFER MOBILITY WILL BE DRIVING ADAS MARKET GROWTH LEVEL 1 LEVEL 2 LEVEL 2 LEVEL 3 LEVEL 4 DRIVER ADVANCED PARTIAL ADVANCED LEVEL PARTIAL 2+ CONDITIONAL HIGH ASSISTANCE AUTOMATION AUTOMATION AUTOMATION AUTOMATION THERMAL IMAGING LIDAR LIDAR LIDAR RADAR RADAR RADAR RADAR CAMERA OR RADAR CAMERA CAMERA
Slide 25: We built successful platforms for ADAS
WE BUILT SUCCESSFUL PLATFORMS FOR ADAS CUMULATED ORDER INTAKE 2017-2019 >€11Bn SYSTEM 18% CAGR 2019-2022 SOFTWARE ~€3.2Bn SALES IN 2022 COMPONENT 1 OUT OF 4 PRODUCED VEHICLES IN 2019 EQUIPPED WITH OUR ADAS SOLUTIONS 25
Slide 26: We built successful platforms for ADAS
WE BUILT SUCCESSFUL PLATFORMS FOR ADAS CUMULATED ORDER INTAKE 2017-2019 >€11Bn 18% CAGR 2019-2022 ~€3.2Bn SALES IN 2022 26
Slide 27: Market pushes towards smart mobility
MARKET PUSHES TOWARDS SMART MOBILITY MOBILITY NEEDS ARE DIFFERENT BUSINESS INVESTMENT FLOW IS ROBOTAXIS ARE A INCREASING MODELS EMERGE INCREASING IN DIGITAL REALITY MOBILITY PKT* is expected to 46% $35Bn Waymo launched grow by of US vehicle trips first rides in invested in 2018 in 30% are < 5km Phoe
Slide 28: Smart mobility opportunities to leverage our platforms
SMART MOBILITY OFFERS MANY OPPORTUNITIES TO LEVERAGE OUR PLATFORMS LAST MILE DELIVERY E-MICROMOBILITY ROBOTAXIS ROBOSHUTTLES COOPERATIONS FIRST ORDERS FIRST ORDERS FIRST ORDERS 28
Slide 29: Ready to leverage platforms in a challenging environment
WE ARE READY TO LEVERAGE OUR NEW KEY TECHNOLOGICAL PLATFORMS IN A CHALLENGING ENVIRONMENT WORLDWIDE AUTOMOTIVE PRODUCTION (M vehicles) IHS Markit November 2019 Excluding LCV China 91.0 90.7 BASE SCENARIO (IHS MARKIT) 90.3 CAGR 2019-2022: +2% 88.6 PESSIMISTIC SCENARIO 85.1 85.5 ~88 CAGR 2019-2022: +1
Slide 30: ~5 pts sales outperformance
~5PTS SALES OUTPERFORMANCE 2020 – 2022 Back to outperformance +8pts STRONG INCREASE +6pts OF OUR +4pts +4pts CONTENT PER CAR +1pts +0pt H1 2017 H2 2017 H1 2018 H2 2018 H1 2019 Q3 2019 30
Slide 31: Strong increase of our content per car
~5PTS SALES OUTPERFORMANCE STRONG INCREASE OF OUR CONTENT PER CAR* SOP 2019 SOP 2019 SOP 2019 SOP 2019 SILVERADO 208 e-208 GOLF 8 ID.3** X1.6 X1.3 X2.9 X3.4 X4.5 *Ratio : Valeo + VSeA (average content per car new vehicle )/(average content per car previous generation) **Ratio : Valeo + VSeA (average
Slide 32: Reducing gross R&D expenditure
LEVERAGING OUR NEW KEY TECHNOLOGICAL PLATFORMS TO REDUCE OUR GROSS R&D EXPENDITURE Gross R&D expenditure (In percentage of sales) 10.8% 10.6%* 9.5% 9.4% 2016 2017 2018 2019 2020 2021 2022 2023 2024 *estimated 2019 32
Slide 33: Optimizing capital expenditure
LEVERAGING OUR NEW KEY TECHNOLOGICAL PLATFORMS TO OPTIMIZE CAPITAL EXPENDITURE CAPITAL EXPENDITURE (In percentage of sales) 7.1% 7.0% 6.0% 5.6% 5.9%* 2016 2017 2018 2019 2020 2021 2022 2023 2024 *estimated 2019 33
Slide 34: Increasing EBITDA
INCREASING IN EBITDA >15% EBITDA IN % OF SALES 2022 EBITDA 12.8% IN % OF SALES 2019* *estimated 2019 34
Slide 35: Doubling our free cash flow generation
DOUBLING OUR FREE CASH FLOW GENERATION CUMULATED €[1.3-1.5]bn FREE CASH FLOW 2020-2022 CUMULATED FREE CASH FLOW €0.7bn 2017-2019* *estimated 2019 35
Slide 36: Doubling our free cash flow generation
DOUBLING OUR FREE CASH FLOW GENERATION MAINTAIN DIVIDEND POLICY CUMULATED FREE CASH FLOW 2020-2022 €[1.3-1.5]bn SUPPORT VSeA DEVELOPMENT DELEVERAGE OUR BALANCE SHEET 36
Slide 37: Active management of our portfolio
WE WILL PURSUE THE ACTIVE MANAGEMENT OF OUR PORTFOLIO 37
Slide 38: Sustainability is in our DNA
SUSTAINIBILITY IS IN OUR DNA #1* #1 #1* ENVIRONMENTAL, SOCIAL AND CORPORATE GOVERNANCE PERFORMANCE RANKING OF GLOBAL AUTOMOTIVE SUPPLIERS 38 * excl. Tyres companies
Slide 39: A Successful Transformation
A SUCCESSFUL TRANSFORMATION WE CREATED #1 POSITION IN ELECTRIFICATION AND ADAS THANKS TO 12 NEW KEY ~5 PTS SALES TECHNOLOGICAL PLATFORMS OUTPERFORMANCE EXPANDING OUR COMPETITIVE EDGE FOCUS ON THROUGH HIGH BARRIERS TO ENTRY PROFIT & CASH LEADING TO A STRONG INCREASE OF OUR CONTENT PER CAR 39
Slide 40: Smart technology for smarter mobility
SMART TECHNOLOGY FOR SMARTER MOBILITY
Slide 41: Platforms drive our content per car increase
PLATFORMS DRIVE OUR CONTENT PER CAR INCREASE
Slide 42: Hans-Peter Kunze
HANS-PETER KUNZE EXECUTIVE VICE PRESIDENT, SALES & BUSINESS DEVELOPMENT
Slide 43: We will outperform the market
WE WILL OUTPERFORM THE MARKET WORLDWIDE AUTOMOTIVE PRODUCTION* Base scenario 2019-2022: +2% CAGR VALEO SALES OUTPERFORMANCE 2020-2022: ~5 PTS WORLDWIDE AUTOMOTIVE PRODUCTION Pessimistic scenario 2019-2022: +1% CAGR 43 *IHS Markit November 2019, excluding LCV China
Slide 44: Balanced customers portfolio
WE WILL OUTPERFORM THE MARKET THANKS TO OUR BALANCED CUSTOMERS PORTFOLIO NORTH AMERICA EUROPE ASIA 17% 14% 27% 9% 33% HEAVY DUTIES 44 2022 Valeo sales by OEM origin
Slide 45: Global presence
WE WILL OUTPERFORM THE MARKET THANKS TO OUR GLOBAL PRESENCE NORTH SOUTH EUROPE & ASIA EXCL. AMERICA AMERICA AFRICA CHINA CHINA 21% 3% 44% 14% 18% 45 2022 Valeo sales by destination
Slide 46: Strategy matching customers' strategies
OUR ELECTRIFICATION AND ADAS STRATEGY IS MATCHING WITH THE ONES OF OUR CUSTOMERS 46
Slide 47: Supporting customers' electrification and ADAS investments
OUR ELECTRIFICATION AND ADAS STRATEGY IS SUPPORTING THE ONES OF OUR CUSTOMERS €3bn BY 2020 €6bn BY 2023 €60bn BY 2024 €11bn BY 2022 €32bn €12bn BY 2022 BY 2025 €20bn €14bn BY 2030 BY 2023 MAJOR INVESTMENTS FOR A COMPLETE TRANSFORMATION 47
Slide 48: New key technological platforms for a unique product portfolio
WE HAVE INVESTED IN 12 NEW KEY TECHNOLOGICAL PLATFORMS TO CREATE A UNIQUE PRODUCT PORTFOLIO ELECTRIFICATION ADAS High voltage E-thermal 48V E-MACHINE BATTERY E-MACHINE FRONT & E-AXLE LIDAR COOLING & E-AXLE CAMERA SCALA® INVERTER E-THERMAL DRIVER DCDC AUTONOMOUS INTERIOR MONITORING POD ON-BOARD HEAT
Slide 49: Software resources for intelligent products
WE HAVE INVESTED IN SOFTWARE RESOURCES TO CREATE INTELLIGENT PRODUCTS IN ELECTRIFICATION AND ADAS Verification and Validation Requirements Lines of Code Concept of Operation and Operations maintenance 4 000 Requirements System 600 000 48V and Verification architecture 48V and Validation Detailed Int
Slide 50: Major order intake in innovative technologies
WITH THIS PRODUCT PORTFOLIO WE HAVE WON MAJOR ORDER INTAKE IN INNOVATIVE TECHNOLOGIES 33,7 Incl. bn€ ORDER INTAKE 28,6 INNOVATION (bn€) bn€ Incl. % OF ORDER INTAKE 59% Incl. 27,6 24,2 53% bn€ 53% bn€ 9,6 bn€ X3 30% X2 WITHIN 10 YEARS WITHIN 10 YEARS 2008 2017 2018 2008 2018 50
Slide 51: Content per car example #1: Silverado
A STRONG INCREASE OF OUR CONTENT PER CAR EXAMPLE #1: SILVERADO MAIN TECHNOLOGIES SURROUND X 1.6 VIEW CAMERAS LED HEADLAMP AC MODULE SOP 2019 51 Ratio : Valeo + VSeA (average content per car new vehicle) / (average content per car previous generation)
Slide 52: Content per car example #2: 208 ICE
A STRONG INCREASE OF OUR CONTENT PER CAR EXAMPLE #2: 208 ICE MAIN TECHNOLOGIES LED HEADLAMP X 1.3 PASSIVE ENTRY/START AUTOMATED PARKING SOP 2019 52 Ratio : Valeo + VSeA (average content per car new vehicle) / (average content per car previous generation)
Slide 53: Content per car example #3: e-208
A STRONG INCREASE OF OUR CONTENT PER CAR EXAMPLE #3: e-208 MAIN TECHNOLOGIES LED HEADLAMP X 2.9 PASSIVE ENTRY/START AUTOMATED PARKING HEAT PUMP SOP 2019 BATTERY THERMAL MANAGEMENT 53 Ratio : Valeo + VSeA (average content per car new vehicle) / (average content per car previous generation)
Slide 54: Content per car example #4: Golf 8
A STRONG INCREASE OF OUR CONTENT PER CAR EXAMPLE #4: GOLF 8 MAIN TECHNOLOGIES FRONT CAMERA X 3.4 PIXEL HEADLAMP 48V SOP 2019 AC MODULE 54 Ratio : Valeo + VSeA (average content per car new vehicle) / (average content per car previous generation)
Slide 55: Content per car example #5: ID.3
A STRONG INCREASE OF OUR CONTENT PER CAR EXAMPLE #5: ID.3 MAIN TECHNOLOGIES FRONT CAMERA X 4.5 INVERTER HIGH VOLTAGE HEATER SOP 2019 BATTERY THERMAL MANAGEMENT 55 Ratio : Valeo + VSeA (average content per car ID.3) / (average content per car Golf 7)
Slide 56: Content per car example #6: premium car
A STRONG INCREASE OF OUR CONTENT PER CAR EXAMPLE #6: PREMIUM CAR MAIN TECHNOLOGIES HIGH VOLTAGE X 5.8 DRIVETRAIN SYSTEM LIDAR SCALA® TO BE LAUNCHED SOON AC MODULE 56 Ratio : Valeo + VSeA (average content per car new vehicle) / (average content per car previous generation)
Slide 57: Investments in platforms generate leading positions
OUR INVESTMENTS IN PLATFORMS GENERATE LEADING POSITIONS 2 OUT OF 3 1 OUT OF 4 EUROPEAN OEMs HV LAUNCHES IN 2019-2022 PRODUCED VEHICLES IN 2019 EQUIPPED WITH OUR HV SOLUTIONS EQUIPPED WITH OUR ADAS SOLUTIONS 57
Slide 58: Standardization leading to cross-customer applications
STANDARDIZATION OF OUR PLATFORMS LEADING TO CROSS-CUSTOMERS APPLICATIONS 6.2M UNITS BOOKED WITH 15 OEM BRANDS FOR DELIVERIES IN 2020-2022 48V E-MACHINE & E-AXLE PLATFORM 58
Slide 59: Standardization leading to large scale effects
STANDARDIZATION OF OUR PLATFORMS LEADING TO LARGE SCALE EFFECTS 17.5M UNITS BOOKED WITH 10 OEM BRANDS FOR DELIVERIES IN 2020-2022 FRONT CAMERA PLATFORM 59
Slide 60: Standardization as growth opportunity across car lines
STANDARDIZATION IS AN OPPORTUNITY FOR GROWTH ACROSS CAR LINES AND BRANDS AVERAGE AVERAGE CONTENT CONTENT X 1.6 X 4.2 208 CORSA SOP 2019 SOP 2019 LED AUTOMATED BATTERY THERMAL HEAT HEADLAMP PARKING MANAGEMENT PUMP 60
Slide 61: Growth opportunities through OEM partnerships
FURTHER GROWTH OPPORTUNITIES UNDERWAY THROUGH OEMs PARTNERSHIPS NORTH AMERICA EUROPE ASIA 61
Slide 62: Outperform the market thanks to technological platforms
WE WILL OUTPERFORM THE MARKET THANKS TO OUR TECHNOLOGICAL PLATFORMS
Slide 63: Driving the performance
THE PERFORMANCE SMART TECHNOLOGY FOR SMARTER MOBILITY
Slide 64: Christophe Perillat, COO
CHRISTOPHE PERILLAT CHIEF OPERATING OFFICER
Slide 65: Performance of our inflation balance, development, manufacturing
PERFORMANCE PERFORMANCE PERFORMANCE OF OUR INFLATION IN DEVELOPMENT IN MANUFACTURING BALANCE 65
Slide 66: After peaks in gross R&D and capex
AFTER PEAKS IN GROSS R&D & CAPITAL EXPENDITURES… Order intake 27.6 27.6 EXTRAORDINARY ORDER INTAKE (€bn) 23.6 24.2 24.2 LEVEL FROM 2016 TO MID 2018 23.6 20.1 2015 2016 2017 2018 OI SOP Peak Sales CAPEX Gross Research and Development expenditure 10.8% 10.8% (In % of sales) 10.3% 10.3% TDE 9.5% 9.5% Y
Slide 67: Strong reaction to market drop since mid 2018
…WE DEMONSTRATED STRONG REACTION TO THE MARKET DROP OF 10% SINCE MID 2018 Gross R&D expenditure (In % of sales) 10.8% 10.8% COMPENSATION FROM CUSTOMERS 10.5%* 10.5% 10.3% 10.3% COST AND CAPEX REDUCTION PLANS 9.5% 9.5% H2 CAPEX SAVING PLAN : 100M€ 2018 2016 2017 2018 6.0% 2019 COST SAVING PLAN : 100M
Slide 68: Ready to react quickly to slower market evolution
WE ARE READY TO REACT QUICKLY TO A SLOWER MARKET EVOLUTION WORLDWIDE AUTOMOTIVE PRODUCTION (M vehicles) IHS Markit November 2019 Excluding LCV China 91.0 SECURE NEW PROJECTS LAUNCHES 90.3 90.7 88.6 AND BE READY FOR A PESSIMISTIC SCENARIO 85.1 ~88 COMPENSATION FROM CUSTOMERS COST AND CAPEX REDUCTION
Slide 69: Performance of our inflation balance
PERFORMANCE PERFORMANCE PERFORMANCE OF OUR INFLATION IN DEVELOPMENT IN MANUFACTURING BALANCE 69
Slide 70: Sustained positive inflation balance
SUSTAINED POSITIVE INFLATION BALANCE SELLING PRICE SALARY EVOLUTION INFLATION PURCHASING PRICE EVOLUTION 70
Slide 71: Sustained positive inflation balance: pricing
SUSTAINED POSITIVE INFLATION BALANCE PRICING POWER OF INNOVATIONS SELLING PRICE SALARY SELECTIVITY OF ORDER INTAKE EVOLUTION INFLATION STRICT FINANCIAL DISCIPLINE PRICE INDEXATION PURCHASING PRICE EVOLUTION 71
Slide 72: Sustained positive inflation balance: salary
SUSTAINED POSITIVE INFLATION BALANCE SELLING PRICE SALARY EVOLUTION INFLATION HIGH ATTRACTIVENESS THANKS TO OUTPERFORMING GROWTH PURCHASING PRICE EVOLUTION AMONG THE TOP ELECTRONIC TIERS 1 72
Slide 73: Performance in development
PERFORMANCE PERFORMANCE PERFORMANCE OF OUR INFLATION IN DEVELOPMENT IN MANUFACTURING BALANCE 73
Slide 74: Platforms allow reduced gross R&D expenditure
BECAUSE PLATFORMS HAVE BEEN DEVELOPED, WE CAN NOW REDUCE OUR GROSS R&D EXPENDITURE Gross R&D expenditure (In percentage of sales) 10.8% 10.6%* 9.5% 9.4% 2016 2017 2018 2019 2020 2021 2022 2023 2024 *estimated 2019 74
Slide 75: Efficiency through platforms
EFFICIENCY COST COMPETITIVE THROUGH FOOTPRINT PLATFORMS 75
Slide 76: Efficiency through platforms
EFFICIENCY COST COMPETITIVE THROUGH FOOTPRINT PLATFORMS 76
Slide 77: 12 new key technological platforms
WE HAVE INVESTED IN 12 NEW KEY TECHNOLOGICAL PLATFORMS TO CREATE AND COMPLETE A UNIQUE PRODUCT PORTFOLIO IN ELECTRIFICATION AND ADAS ELECTRIFICATION ADAS High voltage E-thermal 48V E-MACHINE BATTERY E-MACHINE FRONT & E-AXLE LIDAR COOLING & E-AXLE CAMERA SCALA® INVERTER E-THERMAL DRIVER DCDC AUTONOMO
Slide 78: Investments in new key technological platforms
INVESTMENTS HAVE BEEN MADE IN 12 NEW KEY TECHNOLOGICAL PLATFORMS HIGHLY STANDARDIZED HARDWARE & SOFTWARE 12 NEW KEY WORLDWIDE INCLUDING R&D AND INDUSTRIAL EXPERTISE TECHNOLOGICAL SUPPORTED BY STATE OF PLATFORMS THE ART PRODUCT LIFECYCLE MANAGEMENT 78
Slide 79: Standardized hardware and software platforms
HIGHLY STANDARDIZED HARDWARE & SOFTWARE PLATFORMS CREATING HIGH BARRIER TO ENTRY 85% 85% STANDARDIZED STANDARDIZED HARDWARE SOFTWARE 79
Slide 80: 48V e-machine and e-axle platform leverage
WE LEVERAGE THE 48V e-MACHINE & e-AXLE PLATFORM FOR EACH NEW PROJECT GROSS R&D 100. EXPENDITURE 1ST PROJECT BASE 100 75. 50. 25. €7.5bn ORDER INTAKE CUSTOMER 0. 1 2 3 4 5 PROJECT AFTER SOP AFTER SOP AFTER SOP SOP 2020 SOP 2021 80
Slide 81: Front camera platform leverage
WE LEVERAGE THE FRONT CAMERA PLATFORM FOR EACH NEW PROJECT GROSS R&D 100. EXPENDITURE 1ST PROJECT BASE 100 75. 50. 25. >€4bn ORDER INTAKE 0. 1 2 3 4 5 CUSTOMER PROJECT AFTER SOP AFTER SOP SOP 2020 SOP 2020 SOP 2021 81
Slide 82: High voltage inverter platform leverage
WE LEVERAGE THE HIGH VOLTAGE INVERTER PLATFORM FOR EACH NEW PROJECT GROSS R&D 100. EXPENDITURE 1ST PROJECT BASE 100 75. 50. 25. €4.2bn ORDER INTAKE 0. 1 2 3 4 5 CUSTOMER PROJECT AFTER SOP AFTER SOP AFTER SOP SOP 2020 SOP 2020 82
Slide 83: High barriers to entry and platform leverage
WE CREATED HIGH BARRIERS TO ENTRY AND WE LEVERAGE OUR 12 NEW KEY TECHNOLOGICAL PLATFORMS FOR EACH NEW PROJECT GROSS R&D 100. EXPENDITURE 1ST PROJECT BASE 100 75. 50. 25. 0. 1 2 3 4 5 CUSTOMER PROJECT 83
Slide 84: Cost competitive footprint
EFFICIENCY COST COMPETITIVE THROUGH FOOTPRINT PLATFORMS 84
Slide 85: R&D hourly rate decreasing thanks to cost competitive footprint
AVERAGE R&D HOURLY RATE IS DECREASING THANKS TO COST COMPETITIVE FOOTPTRINT COST COMPETITIVE RATIO CAIRO & CHENNAI TAKE-OFF IN % OF ENGINEERS’ HEADCOUNT ENGINEERS’ HEADCOUNT 60% 8 000 58% 57% 53% 4 600 49% 48% 46% 45% 350 2015 2016 2017 2018 2019 2020 2021 2022 2010 2019 2024 85
Slide 86: Successful transformation towards software
WHILE THE TRANSFORMATION TOWARDS SOFTWARE IS SUCCESSFUL Series 1 44% SOFTWARE HC EVOLUTION % of total R&D HC 38% 31% -% 11 500 9 000 11% 7 000 2 000 2013 2019 2022 2024 STATE OF THE ART A-SPICE LEVEL 86
Slide 87: Performance in manufacturing
PERFORMANCE PERFORMANCE PERFORMANCE OF OUR INFLATION IN DEVELOPMENT IN MANUFACTURING BALANCE 87
Slide 88: Obsession for customer satisfaction
OBSESSION FOR CUSTOMER SATISFACTION IN 2018 104 +33% 2.9PPM 0 KM IN 2018 AWARDS VS 2016 STATE OF THE ART PROJECT MANAGEMENT 88
Slide 89: Capital expenditure at 6% of sales
CAPITAL VALEO EXPENDITURE AT FACTORY OF THE 6% OF SALES NEAR FUTURE COST SG&A COMPETITIVE OPTIMIZATION FOOTPRINT 89
Slide 90: Capital expenditure can be optimized
BECAUSE INVESTMENTS ARE NOW MARGINAL IN MATURE PRODUCTS, CAPITAL EXPENDITURE CAN BE OPTIMIZED CAPITAL EXPENDITURE (In percentage of sales) CAPITAL EXPENDITURE 7.1% AT 6% OF SALES 6.0% 5.6% 7.0% 5.9%* VALEO FACTORY OF THE NEAR FUTURE 2016 2017 2018 2019 2020 2021 2022 2023 2024 *estimated 2019 COST C
Slide 91: Valeo factory of the near future
IN 2015, WE LAUNCHED VALEO FACTORY OF THE NEAR FUTURE CAPITAL EXPENDITURE AT 6% OF SALES VALEO FACTORY OF THE NEAR FUTURE AUTOMATION DIGITIZATION COST COMPETITIVE 5 YEARS LATER, WE ARE PROUD OF FOOTPRINT SG&A OPTIMIZATION VALEO FACTORY OF TODAY 91
Slide 92: Valeo factory of today: automation
VALEO FACTORY OF TODAY MAKES OUR PLANTS MORE EFFICIENT CAPITAL EXPENDITURE AT 6% OF SALES NUMBER OF ROBOTS VALEO FACTORY OF THE NEAR FUTURE 13 300 11 500 AUTOMATION 6 900 COST COMPETITIVE FOOTPRINT 2015 2017 2019 SG&A OPTIMIZATION ROBOTIC DENSITY: 3X AUTOMOTIVE INDUSTRY 92
Slide 93: Valeo factory of today: digitization
VALEO FACTORY OF TODAY MAKES OUR PLANTS MORE EFFICIENT CAPITAL EXPENDITURE AT 6% OF SALES VALEO FACTORY OF THE NEAR FUTURE DIGITIZATION SUPPLIER RECEIVING UPSTREAM ASSEMBLY SHIPPING CUSTOMER PROCESS COST COMPETITIVE FOOTPRINT MANUFACTURING EXECUTION SYSTEM e VISUAL e KANBAN e BUILT TO TRUCK RECORDER
Slide 94: Valeo factory of today and more to come
VALEO FACTORY OF TODAY MAKES OUR PLANTS MORE EFFICIENT AND MORE TO COME… CAPITAL EXPENDITURE AT 6% OF SALES AND MORE TO COME... BIG DATA IN CONNECTED BLOCKCHAIN MANUFACTURING WATCH VALEO FACTORY OF THE NEAR FUTURE DIGITIZATION COST COMPETITIVE FOOTPRINT IMPROVED QUICKER INTEGRATED SG&A INTEGRATED RE
Slide 95: A cost competitive footprint
A COST COMPETITIVE FOOTPRINT CAPITAL EXPENDITURE AT 6% OF SALES COST COMPETITIVE RATIO % OF HC DIRECT LABOR 70% VALEO FACTORY OF THE NEAR FUTURE 68% 66% 65% COST COMPETITIVE FOOTPRINT 2019 2020 2021 2022 SG&A OPTIMIZATION 95
Slide 96: SG&A are optimized
SG&A ARE OPTIMIZED CAPITAL EXPENDITURE AT 6% OF SALES TOTAL SG&A COSTS (%OF SALES) VALEO FACTORY 4.8% 4.8% OF THE NEAR FUTURE 4.7%* 4.7% 4.6% 4.5% COST COMPETITIVE 4.4% 4.4% FOOTPRINT SG&A 2018 2019 2020 2021 2022 OPTIMIZATION *estimated 2019 96
Slide 97: Thanks to our very committed team
THANKS TO OUR VERY COMMITTED TEAM CERTIFIED PROMOTING PROMOTING CORPORATE “TOP EMPLOYERS” DIVERSITY EMPLOYEE SOCIAL SHAREHOLDING RESPONSIBILITY GENDER DIVERSITY 45% OF OUR WW EMPLOYEES 100% OF VALEO’ SITES ORGANIZE 5 ARE SHAREHOLDERS INITIATIVES FOR LOCAL COMMUNITIES TH YEAR RUNNING GENERATIONAL DIV
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Slide 99: Focus on profit & cash generation
FOCUS ON PROFIT & CASH GENERATION
Slide 100: Robert Charvier, CFO
ROBERT CHARVIER CHIEF FINANCIAL OFFICER
Slide 101: Valeo 2019 Investor Day: perimeter
VALEO 2019 INVESTOR DAY ALL DATA RELATED TO 2019 - 2022 ARE BASED ON ON THE CURRENT PERIMETER* VALEO SIEMENS E-AUTOMOTIVE IS CONSOLIDATED AT EQUITY 101 * After withdrawal of top column module segment
Slide 102: A challenging environment
A CHALLENGING ENVIRONMENT SHARP DROP OF THE AUTOMOTIVE …LEADING TO A COMPLETE CHANGE OF THE PRODUCTION SINCE 2018… AUTOMOTIVE ENVIRONMENT VERSUS OUR ASSUMPTIONS RELEASED DURING OUR -1.5% IN 2018 (-5% IN H2 2018) VALEO INVESTOR DAY 2017 -6.0% IN 2019 WORLDWIDE AUTOMOTIVE INVESTOR DAY ESTIMATED DELTA
Slide 103: Heavy R&D investment to drive transformation
DURING THIS PERIOD WE HAVE HEAVILY INVESTED IN R&D TO DRIVE VALEO’S TRANSFORMATION Gross Research and Cumulated FCF 2017- 1.9 Development expenditure 2019 Excluding VSeA (€bn) (€bn) 1.6 +21 -0.5 1.2 % 0.7 Traditional Key technological Valeo products platforms 2016 2019 (same perimeter) Share of net
Slide 104: Market assumptions
MARKET ASSUMPTIONS WORLDWIDE AUTOMOTIVE PRODUCTION (M vehicles) IHS Markit November 2019 Excluding LCV China 91.0 90.7 BASE SCENARIO (IHS MARKIT) 90.3 CAGR 2019-2022: +2% 88.6 PESSIMISTIC SCENARIO 85.1 85.5 ~88 CAGR 2019-2022: +1% 2016 2017 2018 2019 2020 2021 2022 104
Slide 105: Sales are increasing in all our markets
SALES ARE INCREASING IN ALL OUR MARKETS Valeo Total sales Valeo OEM sales Valeo Valeo Other sales (€bn) (€bn) aftermarket sales (€bn) (€bn) +>12 +>12 Series 1 Series 1 % % >2.1 >21.5 >18.3 >1.2 ~19.3 ~16.3 ~1.9 ~1.1 2019 2022 2019 2022 2019 2022 2019 2022 CAGR: CAGR LIKE FOR LIKE: CAGR LIKE FOR LIKE
Slide 106: Outperforming the market by ~5 points per year
OUTPERFORMING THE MARKET BY ~5 POINTS / BY YEAR Valeo OEM sales Valeo OEM sales (In €bn) (In €bn) >18.3 +>12% 84% ~16.3 >18.3 15.4 Booked Business 2019 2022 2022 CAGR LIKE FOR LIKE: SECURED GROWTH: ~+7% 84% OF OUR 2022 INCLUDING OEM SALES • ADAS: +18% ARE BOOKED • 48V: +59% 106
Slide 107: Gaining market share in aftermarket
WE ARE GAINING MARKET SHARE IN AFTERMARKET IN AN EVOLVING ECOSYSTEM Valeo aftermarket sales (€bn) OEM MARKET SHARE & PORTFOLIO INCREASE GEOGRAPHICAL EXPANSION IN ASIA ~1.9 >2.1 AND AMERICA IAM ACTORS CONSOLIDATION WITH RISKS & OPPORTUNITIES 2019 2022 ACCIDENT RATE DECREASE AND HIGHER PRODUCT RELIABI
Slide 108: Profitability to improve by ~150bps 2019-2022
PROFITABILITY WILL IMPROVE BY ~150BPS BETWEEN 2019 AND 2022 Total Sales Operating margin (€bn) Before JV & Associates In % of sales -0.3% 0.4% ~7.0% 0.6% 0.8% Series 1 5.5%* +11% >21.5 ~19.3 2019 2022 2019 Vol-mix Plant efficiency R&D exp +SG&A Contingencies Subtotal 2022 CAGR +4% by year * after on
Slide 109: Profitability stress test in pessimistic scenario
PROFITABILITY STRESS TEST IN CASE OF A PESSIMISTIC SCENARIO INCREASE RESTRUCTURING PLANS MAINTAIN PERSONAL COST/SALES CONSTANT 2022 TARGET OF OPERATING MARGIN WOULD RANGE [6.7% - 7%] 109
Slide 110: R&D efficiency offsets increase of depreciation
R&D EFFICIENCY AND PLATFORM ORGANIZATION WILL OFFSET THE INCREASE OF DEPRECIATION In % of sales Depreciation Standardization from platforms of capitalized R&D Cost competitive footprint ~100bps 7.9% 7.8% ~10bps ~100bps R&D expenses Capitalization Depreciation Efficiency R&D expenses 2019* 2022 * est
Slide 111: Capital expenditure optimized at 6%
CAPITAL EXPENDITURE OPTIMIZED AT 6% CAPITAL EXPENDITURE (In percentage of sales) 7.1% 6.0% 5.6% 7.0% 5.9%* 2016 2017 2018 2019 2020 2021 2022 2023 2024 ADAPTATION TO NEW MARKET FORECAST STRICT FINANCIAL DISCIPLINE IN ORDER INTAKE WORLDWIDE CAPACITY MANAGEMENT BUY VS MAKE * estimated 2019 111
Slide 112: EBITDA improvement between 2019 and 2022
PROFITABILITY WILL IMPROVE BY ~150BPS BETWEEN 2019 AND 2022 Total Sales Series 1 EBITDA (€bn) (in % of sales) +11 >15 2022 % >21.5 % ~19.3 2019* 12.8% 2019 2022 CAGR +4% by year EVERY BUSINESS GROUP WILL POSITIVELY CONTRIBUTE TO PROFITABILITY INCREASE * estimated 2019 112
Slide 113: Doubling our free cash flow generation
DOUBLING OUR FREE CASH FLOW GENERATION FREE CASH FLOW CUMULATED (in €bn) [1.3-1.5] 2020-2022 INCREASING EBITDA CUMULATED 2017-2019* >0.7 OPTIMIZED RECORDED CAPEX CASH 2022 CONVERSION >15% WORKING CAPITAL RATE REQUIREMENT INCREASE (in % of EBITDA) ~11.8 2019* % * estimated 2019 113
Slide 114: Doubling our free cash flow generation
DOUBLING OUR FREE CASH FLOW GENERATION MAINTAIN DIVIDEND POLICY CUMULATED FREE CASH FLOW €[1.3-1.5]bn SUPPORT VSeA DEVELOPMENT 2020-2022 DELEVERAGE OUR BALANCE SHEET 114
Slide 115: Debt maturity profile
DEBT MATURITY PROFILE LEVERAGE RATIO GEARING RATIO ~1.8% AVERAGE EFFECTIVE INTEREST RATE 0.93 ~0.7 49% ~40% 2018 2022 2018 2022 Average maturity: 4.0 years 600m€ Undrawn credit lines 212m€ 1.1 Mds 336m€ euros 3.0 year maturity 600m€ 500m€ 700m€ 600m€ 600m€ 470m€ 31/12/2019 2020 2021 2022 2023 2024 2
Slide 116: Valeo Siemens eAutomotive: the emergence of a leader
VALEO SIEMENS e-AUTOMOTIVE THE EMERGENCE OF A LEADER VSeA SALES EBITDA 2022 (€bn) >2.0 8% >1.4 ~450M€ FREE CASH FLOW BREAKEVEN EBITDA 2024 FINANCING BY VALEO OVER 2020 - 2021 2022 >0.3 12% 2019 2022 2024 2 MAJOR CONTRACTS IN PRODUCTION END OF 2019 AND S1 2021 STRONG DECREASE OF R&D AS OF 2021 (R&D F
Slide 117: 2022 financial targets
2022 FINANCIAL TARGETS 2019* 2022 SALES (€bn) ~ 19.3 >21.5 EBITDA ~ 12.8% >15% OPERATING MARGIN BEFORE JV ~ 5.5%** ~ 7% CASH CONVERSION RATE (% EBITDA) 11.8% >15% FREE CASH FLOW 2020-2022 € [1.3-1.5]bn * estimated 2019 ** after one off effect linked to october 2019 GM strike in North America 117
Slide 118: 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
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