MainFirst Automotive Conference IAA 2007
Thierry Morin Chairman & CEO
September 11, 2007 1
IAA Conference September 11, 2007
Agenda
Valeo committed to enabling a better automotive world H1-2007 financials Strategy update
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IAA Conference September 11, 2007
The Automotive Dilemna
The Valeo answers
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IAA Conference September 11, 2007
The automotive dilemma
Growing vehicle production Number Number of of Vehicles Vehicles 62.1
63.6
66.1
68.0
70.8
74.2
76.9
80.0
82.4
84.8
87.3
Total in ml
18 000 000
W.Europe
16 000 000
N.America
14 000 000
China
12 000 000
Japan
10 000 000
E.Europe 8 000 000
6 000 000
4 000 000
S.America
2 000 000
0 2 004
2 005
2 006
2 007
2 008
2 009
2 010
2 011
2 012
2 013
2 014
Year Year
Source: J.D. Powers 5
IAA Conference September 11, 2007
Car park set to double over the next 25 years million million
1,200 m estimated by 2030
1200
1000
800
Currently est. 630 m
600
400
200
0 1900
1920
1940
1960
6
1980
2000
2020
Year Year IAA Conference September 11, 2007
Climate Change: CO2 Emissions CO CO22 (ppm) (ppm) in in atmosphere atmosphere 600
500
400
300
200
1000
1200
1400
1600
1800
2000
Year Year
Source: Intergovernmental Panel on Climate Change 7
IAA Conference September 11, 2007
CO2 Emissions: Breakdown AIR; AIR; 3% 3% ROAD; ROAD; 18% 18%
SHIP; SHIP; 2% 2% Other; Other; 1% 1%
Others; Others; 5% 5% ENERGY; ENERGY; 45% 45%
RESIDENTIAL; RESIDENTIAL; 8% 8%
INDUSTRY; INDUSTRY; 18% 18%
Total transportation sector: 24 % of WW CO22 emission Source: International Energy Agency 8
IAA Conference September 11, 2007
CO2 Regulation
Europe: 120g CO22/km by 2012 95g CO22/km by 2020 European European Commission Commission Jan. Jan. 10, 10, 2007 2007
Japan: 16,8 km/l by 2015 Council Council for for transport transport Policy Policy February February 2007 2007
USA: 35 MPG by 2020 Senate Senate Bill Bill June June 21, 21, 07 07
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IAA Conference September 11, 2007
Accident Statistics Road safety evolution in EU
July 2006 Source EU Commission
More than 100 people do not come back home everyday 10
IAA Conference September 11, 2007
Government Safety Goals
Japan:
50% reduction in road fatalities by 2013
Australia: 40% reduction in road fatalities by 2010
USA:
33% reduction in road crashes by 2008
Europe:
50% reduction in road fatalities by 2010
Governments are reacting 11
IAA Conference September 11, 2007
Valeo answers
Valeo Domains-
Reconciling automobiles and safety by reinforcing the active aspects of accident prevention and avoidance. Reconciling automobiles and the environment by contributing to the creation of cleaner, more fuel-efficient vehicles. Reconciling automobiles and well-being by making vehicles easier to use and enhancing driver and passenger comfort.
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IAA Conference September 11, 2007
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IAA Conference September 11, 2007
Valeo has adapted solutions Power on Demand
Low consumption A/C compressor
- 3%
Thermal Management
- 4%
THEMIS™ Transmission Automation
DUAL CLUTCH transmission
Air Systems
Cooled EGR system
Hybridization
MICRO HYBRID
Engine Operation
- 30- 40% Feasible!
-3-5%
UltimateCooling™
- 4-6% - 5-7%
(from StopStart to Regenerative braking)
-6-15% -15-20%
CAMLESS System
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IAA Conference September 11, 2007
Burden for OEMs- Opportunity for suppliers
Powertrain value will significantly grow Î
OEMs have no choice: Î
We expect + €1,000 to €1,500 average for 2012
Best “cost-to-performance” solutions will be their priority
Suppliers who have good solutions portfolio will immediately benefit from this trend
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IAA Conference September 11, 2007
IAA highlights
StARS
StARS: micro-hybrid starter-alternator
RS on A t S dard tan T s Now MAR hd S om w fort
Fuel savings: up to 28% in congested urban traffic
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IAA Conference September 11, 2007
Blind spot detection system
PACE Award 2007
Initial contracts for 2008 GM Buick et Cadillac Blind spot detection
New contract to be announced shortly 19
IAA Conference September 11, 2007
Park4U™
Ultrasonic technologybased driving assistance system
World premiere on the VW Touran. Now on VW Tiguan and Touran Cross
9 new contracts with 5 European Brands
Introducing the new generation in Frankfurt 20
IAA Conference September 11, 2007
H1- 2007 financials
Half-year key figures H1-2007
H1-2006*
Change
Total operating revenues
5,286
5,309
-0.4%
Operating income
169 3.2%
169 3.2%
= =
71
94
-24.5%
Basic earnings per share (€)
0.92
1.23
-25.2%
Return on capital employed*
12.4%
12.0%
+0.4pt
940
1,053
-10.7%
In euro million
as % of total op. revenues Net income
Net financial debt
* Operating income margin as a % of capital employed excluding goodwill
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IAA Conference September 11, 2007
Net financial debt walkdown in euro million
(17)
968
(78) (18)
Free cash flow
Net debt 31/12/2006
940
85
Dividends
Capital increase
Others
Net debt 30/06/2007
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IAA Conference September 11, 2007
Shareholder’s equity and net debt in euro million
1,833
1,752
Gearing: 55%
Gearing: 51%
968
940
December 31, 2006
June 30, 2007
Shareholder's Equity incl. minority interests
Net Debt
* adjusted 24
IAA Conference September 11, 2007
Return on capital employed analysis
In euro million
H1-2007
H1-2006
Change
Capital employed
2,500
2,597
(3.7%)
Annualized revenues
9,688
9,733
(0.5)%
Asset turn (x)
3.88
3.75
0.13
Operating income margin
3.2%
3.2%
0.0%
ROCE
12.4%
12.0%
0.4%
* Capital employed excludes goodwill 25
IAA Conference September 11, 2007
Strategy update
Portfolio management
Focus on technology through the Domain approach Î
Active portfolio management – Acquisitions: JCEED, Connaught Electronics (€473msales) – Disposals: Motors & Actuators, Wiring (€798m sales)
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IAA Conference September 11, 2007
Acquisition of Connaught Electronics Ltd.
Expert in camera– based vision solutions for lowspeed maneuvering
300 employees in 2 sites in Ireland and the Czech Republic
2007 sales: €37 million
Strengthens
the Driving Assistance Domain
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IAA Conference September 11, 2007
Planned disposal of the wiring harness business
Part of Valeo €2bn sales disposal plan by end of 2008
Disposal following successful restructuring
Rationale of the disposal
Î
Low value added
Î
Lack of customer diversification
Î
No value added to our Domain approach
Closing completed by year-end
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IAA Conference September 11, 2007
Remains focused on long term value creation
Portfolio reshuffling
Reiterate 2010 financial objectives Î
6%+ operating margin Î Above 4.5x asset turn at constant perimeter
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IAA Conference September 11, 2007
Back up
Share Information Share Data / ADR Data Share Data Bloomberg Ticker Reuters Ticker ISIN Number Shares outstanding as per 30.06.2007
FR FP VLOF.PA FR 000130338 78,149,729
ADR Data Ratio (ordinary share: ADR) Bloomberg Ticker Reuters Ticker ISIN Number Type Exchange Sponsor
1:2 VLEEY US VLEEY PK US 9191343048 Level 1 OTC JP Morgan Chase
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IAA Conference September 11, 2007
Quarterly P&L (in euro million) NET SALES Other operating revenues TOTAL OPERATING REVENUES GROSS MARGIN as % of net sales Research & Development expenditure Selling expenses Administrative expenses Other income & expenses OPERATING INCOME as % of operating revenues Cost of net debt Other financial income and expense Equity in net earnings of associates INCOME BEFORE INCOME TAXES Income taxes INCOME FROM CONTINUING OPERATIONS Non-strategic activities NET INCOME FOR THE PERIOD Minority interests NET INCOME ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
2Q-2007 2,611 35 2,646 414 15.9% (177) (50) (114) (18) 90 3.4% (15) (10) 5 70 (28) 42 0 42 (4) 38
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1Q-2007 2,612 28 2,640 396 15.2% (175) (50) (121) 1 79 3.0% (13) (10) 0 56 (22) 34 0 34 (1) 33
2Q-2006 2,627 28 2,655 420 16.0% (171) (50) (118) (1) 108 4.1% (15) 16 3 112 (30) 82 (10) 72 (1) 71
1Q-2006 2,630 24 2,654 415 15.8% (174) (51) (122) (31) 61 2.3% (16) (7) 2 40 (14) 26 (1) 25 (2) 23
IAA Conference September 11, 2007
Contact
Investor Relations Rémy Dumoulin 43, rue Bayen F-75848 Paris Cedex 17 France Tel.: +33 (0) 1.40.55.29.30 Fax: +33 (0) 1.40.55.20.40 E-mail:
[email protected] Web site: www.valeo.com
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IAA Conference September 11, 2007
