Slide 1: FY-2008 Results
FY-2008 RESULTS Thierry Morin – Chairman & CEO February 13, 2009
Slide 2: Agenda
Agenda 1 Q4’08 financial review 2 FY 2008 financial review 3 Business highlights 4 Outlook February 13, 2009 – FY-2008 Results I 2 I
Slide 3: 2008 Market environment
2008 Market environment Financial crisis / general credit crunch Global automotive production collapse starting in H2 08. Î Valeo’s reference market down by 6% for the year Raw material prices decline in H2 High foreign exchange rate volatility February 13, 2009 – FY-2008 Results I 3 I
Slide 4: Valeo's reference market quarterly evolution 2008 vs 2007
Valeo’s reference market quarterly evolution 2008 vs 2007 Automotive Production +2.8% +1.7% -4.4% -25.2% Q1 Q2 Q3 Q4 February 13, 2009 – FY-2008 Results I 4 I
Slide 5: Q4'08 financial review
Q4’08 financial review added |
Slide 6: Q4'08 key figures
Q4’08 key figures In euro million Q4-2008 Q4-2007 Change Total operating revenues 1,789 2,438 -26.6% Gross margin 208 386 -46.1% as a % of net sales 11.9% 16.1% - 4.2 pts Operating margin (38) 96 na as a % of total operating revenues -2.1% 3.9% - 6.0 pts Net income (313) 50 na as a % of total operat
Slide 7: Operating margin walkdown
Operating margin walkdown As % of total operating revenues +0.5% 3.9% -0.4% +8.0% -2.1% -14.1% Raw Pass through / Productivity/Cost Q4’07 material Contract renewal Activity adjustment Q4’08 price February 13, 2009 – FY-2008 Results I 7 I
Slide 8: Q4 Crisis action plan
Q4 Crisis action plan End June End Sept. End Dec. Change 2008 2008 2008 Q4-2008 (7,200) Headcount 59,700 58,400 51,200 -12% 647 664 543 (121) Inventories (m€) -18% 7.3% 7.2% 6.2% -1.0 pt Prices - - - +1.0 pt February 13, 2009 – FY-2008 Results I 8 I
Slide 9: FY 2008 financial review
FY 2008 financial review
Slide 10: 2008 highlights
2008 highlights Continued margin increase until Q3 Î Compressors turnaround Î Closure of the Rochester Plant Î Raw material stabilization Free Cash Flow increase Proactivity demonstrated in Q4 Î Headcount adjustment plan Some positives for the year Î Raw material tailwinds Î Record order intake Î St
Slide 11: Full Year key figures
Full Year key figures In euro million 2008 2007 Change Total operating revenues 8,815 9,689 -9.0% Gross margin 1,314 1,497 -12.2% as a % of net sales 15.2% 15.7% - 0.5 pt Operating margin 230 346 -33.5% as a % of total operating revenues 2.6% 3.6% -1.0 pt Net income (207) 81 na as a % of total opera
Slide 12: Total operating revenues
Total operating revenues In euro million -4.3% FY-2007 FY-2008 -9.0% Perimeter -0.7% 9,689 8,815 Forex -1.5% Prices* -2.5% Volumes* -4.3% *at identical functions February 13, 2009 – FY-2008 Results I 12 I
Slide 13: 2008 OE light vehicles net sales geographical trends
2008 OE light vehicles net sales Geographical trends Market -4% Market -16% -12%* -14%* Europe North America 66% of total Sales 12% of total Sales Market +1% +11%* Asia Market +5% 15% of total Sales +5%* South America 7% of total Sales Valeo sales *At same perimeter & exchange rate February 13, 2009
Slide 14: Sales by customers – OE light vehicles
Sales by customers – OE light vehicles A same perimeter & exchange rates -11% FY-2007 FY-2008 = -13% +3% -13% -4% -7% -40% -12% +11% -9% VW largest customer in Q4 February 13, 2009 – FY-2008 Results I 14 I
Slide 15: Results
Results In euro million 2008 2007 Change Total operating revenues 8,815 9,689 -9.0% Gross margin 1,314 1,497 -12.2% as a % of net sales 15.2% 15.7% -0.5 pt February 13, 2009 – FY-2008 Results I 15 I
Slide 16: Raw material impact
Raw material impact % of sales - cumulative Gross impact Net impact Yearly average 5.1 4.7 4.7 4.6 4.7 4.5 4.5 4.3 4.3 4.2 3.6 2.0 1.8 2.1 2.2 2.2 2.2 1.8 1.9 1.8 1.8 0.7 1.6 1.7 1.1 0.5 2004 2005 2006 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2007 2008 February 13, 2009 – FY-2008 Results I 16 I
Slide 17: Headcount reduction
Headcount reduction -10,000 61,200 59,700 58,400 51,200 Dec-2007 June-08 Sept-08 Dec-08 February 13, 2009 – FY-2008 Results I 17 I
Slide 18: Results (cont.)
Results (cont.) In euro million 2008 2007 Change R&D expenses (net) (488) (534) -8.6% % of total operating revenues 5.5% 5.5% SG&A (596) (617) -3.2% % of total operating revenues 6.8% 6.4% Total overhead (1,084) (1,151) -5.8% % of total operating revenues 12.3% 11.9% Other income (expenses) (282) (2
Slide 19: R & D Costs
R & D Costs In euro millions and % of total operating revenues 668 -4% 639 (6.9%) (7.2%) 134 Customer funding +13% 151 Net costs Valeo -9% Net costs Valeo 534 488 5,5% 5,5% 2007 2008 February 13, 2009 – FY-2008 Results I 19 I
Slide 20: Operating margin walkdown
Operating margin walkdown % of total operating revenues +0.4 Pt 3.4% 3.8% +0.3 -0.1 +2.8 9 months 9 months 2007 2008 3.6 2.6 -4.0 Pass 2007 Raw through / Productivity/ 2008 3.9% -6 Pts material Contract Volume / Cost price renewal Activity adjustment -2.1% Q4-2007 Q4-2008 February 13, 2009 – FY-2008
Slide 21: Results (cont.)
Results (cont.) In euro million 2008 2007 Change Operating income (52) 319 na Cost of net debt (45) (51) -11.8% Other financial expenses (59) (46) +28.3% Associates 9 8 +12.5% Income before taxes (147) 230 na Taxes (51) (83) -38.6% Effective tax rate 37.4% Non strategic activities (1) (59) -98.3% Mi
Slide 22: Cash flow / Balance sheet
Cash flow / Balance sheet
Slide 23: Net financial debt walkdown
Net financial debt walkdown 2008 2007 In euro million • Gross operating cash flow 623 765 • Cash Tax -71 -85 • Change in working capital 178 -42 • Operating cash flow 730 638 • Interest paid -34 -47 • Acquisitions of intangible assets -160 -138 • Acquisition of tangible assets (net) -453 -388 +39 +1
Slide 24: Working Capital Evolution
Working Capital Evolution In euro million +27 Evolution between 2007 and 2008 Working Capital -224 M€ at same perimeter & exchange rate -178 M€ -197 Working capital = inventories + accounts and notes receivable + other current assets + taxes recoverable – accounts and notes payable – taxes payable –
Slide 25: Inventories
Inventories In Euro million and in % of annualized revenues +38 M€ 647 -104 M€ 609 543 6.4% 6.4% 6.2% end-2007 H1-2008 end-2008 February 13, 2009 - FY-2008 results I 25
Slide 26: Capex
Capex In euro million and in % of total operating revenues +10% 638 7.2% 582 6.0% 147 122 Capitalized R&D 460 Industrial 491 investments 2007 2008 February 13, 2009 - FY-2008 results I 26
Slide 27: Shareholders equity and net debt
Shareholders equity and net debt In euro million 1,752 1,782 Shareholders Equity 1,362 incl. minority interests Net Debt 968 799 821 Gearing Gearing Gearing 55%* 1,263 45%* 968 60%* 31/12/2006 31/12/2007 31/12/2008 *Excluding minority interest : 2006 - 56% 2007 - 46% 2008 - 63% February 13, 2009 - F
Slide 28: Debt structure
Debt structure (Dec. 2008) € 1,482m In euro million EMTN 596 LT debt Océane 24/06/2013 € 1,290m 444 Syndicated Net debt Short 01/01/2011 loan € 821m Term debt 222 Others 166 29/07/2012 6 2009 2010 2011 2012 2013 ● Average maturity: 3.5 years Cash. ● 83% fixed € 661m ST debt ● Average cost: 4.9% € 19
Slide 29: Liquidity Situation
Liquidity Situation No debt reimbursement before January 2011 €661m cash available at YE 2008 Short term debt Î Commercial paper amount reduced to 34m€ Î Short term loans and overdrafts: 132m€ €1.2bn confirmed credit lines Î With 10 banks (Aa2 rated on average) Î Debt/ equity <120% covenant Î No dra
Slide 30: Business highlights
Business highlights
Slide 31: Business and corporate development
Business and corporate development Incremental business line expansion in India/ Russia Portfolio adjustments: Î Disposal of the truck engine cooling business to EQT – ~50% of the €2bn disposal program now completed – Further divestitures to come, market permitting February 13, 2009 - FY-2008 result
Slide 32: Technology Breakthroughs
Technology Breakthroughs Public funding opportunities Î OSEO: 55m€ funding for powertrain advanced technologies Innovation Î Park4U™: 18 contracts Î Several major contracts for micro-hybrid technology February 13, 2009 - FY-2008 results I 32
Slide 33: Quality
Quality 65% of sites 69% of sites single digit ppm single digit ppm Including Including 15 % of sites 25 % of sites at 0 ppm at 0 ppm 2007 2008 VALEO has been awarded for the first time Toyota “Excellence Quality Performance Award” February 13, 2009 - FY-2008 results I 33
Slide 34: Solid order intake
Solid order intake In billion euros ORDER INTAKE/ X OE SALES 1.3x 1.3x 1.4x 9.9 10.1 10.1 45% with German Others OEMs 32% Innovative products 2006 2007 2008 February 13, 2009 - FY-2008 results I 34
Slide 35: Outlook
Outlook
Slide 36: 2009 Highlights: Trading conditions
2009 Highlights : Trading conditions Challenging macro environment: currency volatility, credit crunch Further drop in automotive market: Î S1: - 30%; Î 2009: - 20% Raw material prices ebbing Potential financial issues among industry players: OEMs, suppliers, etc. February 13, 2009 - FY-2008 results
Slide 37: Valeo's action plan
Valeo’s action plan Costs reduction initiatives Î Headcount adjustment plan implementation Î Selectivity on all expenses: R&D, discretionary expenses Î Raw material: significant tailwinds starting in Q1 09 Cash spending under control Î Working capital management Î Significant capex reduction in 2009
Slide 38: Headcount adjustment plan
Headcount adjustment plan 5,000 permanent workforce reduction Î 55%/45% productive/structure Î 2/3 in Europe Costs fully in 2008 accounts Î 10m€ charges in 2008 Î €230m provisioned in 2008 accounts (cash out by YE 2009) Savings: €200m annualized gains in H2’09 February 13, 2009 - FY-2008 results I 3
Slide 39: Financial Outlook
Financial Outlook 2009 Î Operating margin loss expected in H1 09 Î Group’s breakeven point aligned with market contraction by year end Î Limited cash spending Î Dividend suspension in 2009 Mid-term scenario Î End of crisis assumption: 2011 Portfolio management to be continued, market permitting Febr
Slide 40: Contact Investor Relations
Contact Investor Relations Acting Vincent Marcel 43, rue Bayen F-75848 Paris Cedex 17 France Tel.: +33 (0) 1.40.55.20.39 Fax: +33 (0) 1.40.55.20.40 E-mail: vincent.marcel@valeo.com Web site: www.valeo.com February 13, 2009 - FY-2008 results I 40
Slide 41: Back-up
Back-up
Slide 42: Quarterly P&L
Quarterly P&L 2008 2007 2006 (in euro million) 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q Net Sales 1,746 2,076 2,407 2,435 2,397 2,214 2,472 2,472 2,341 2,125 2,483 2,487 Other operating revenues 43 36 37 35 41 31 35 27 35 28 28 23 Total operating revenues 1,789 2,112 2,444 2,470 2,438 2,245 2,507 2,4
Slide 43: Share Information
Share Information Share Data Bloomberg Ticker FR FP Reuters Ticker VLOF.PA ISIN Number FR 000130338 Shares outstanding as per 31.12.2008 78,209,617 ADR Data Ratio (ordinary share: ADR) 1:2 Bloomberg Ticker VLEEY US Reuters Ticker VLEEY PK ISIN Number US 9191343048 Type Level 1 Ex
Slide 44: Enabling a better automotive world
a Enabling a better automotive world