Delivering sustainable performance, towards 2013 objectives Jacques Aschenbroich – CEO Paris Auto Show Investor Conference September 29, 2010
Agenda Back to organic growth 1 Best-in-class in terms of ROCE 2 Sustainability of operating performance 3 Better than expected 2010 production 4 forecasts September 29, 2010 I 2 I
Back to organic growth � Order intake at a record level � Outperforming the market in each region � Outperforming the market in each Asian country � Rebalancing geographical exposure � Rebalancing client exposure September 29, 2010 I 3 I
Record order intake at €6.5 billion At a margin level in line with long term Group objectives Customers H1-10 (% of order intake) German 31% French* 24% Asian** 18% Order intake (Order Intake / OE Sales) American 23% * Excluding Nissan ** Including Nissan 1.64x 1.52x 1.45x 1.29x 2007 2008 2009 H1-10 September 29, 2010 I 4 I
Outperforming the market in each region World H1-10 OE sales Valeo* +40% Production +39% Production +72%** Production +23%** +86%* +31%* North America Europe 12% of sales 61% of sales Production +43%** +59%* Asia Production +17%** +19%* 19% of sales South America 8% of sales * At same perimeter & exchange rates ** JD Power estimates September 29, 2010 I 5 I
Outperforming the market in each country Asian OE sales Production +43%** +59%* Asia Production +47%** Production +37%** 19% of sales +49%* +55%* Japan Korea 32% of sales Production +47%** 19% of sales +72%* China 40% of sales Production +36%** +89%* India 4% of sales * At same perimeter & exchange rates ** JD Power estimates September 29, 2010 I 6 I
Rebalanced geographical exposure In % of OE sales 61% 67% Europe Europe & Africa & Africa 8% 8% South South America America 9% 12% 16% 19% North North Asia & Asia & America America Others Others H1-09 H1-10 September 29, 2010 I 7 I
Rebalanced client exposure In % of OE sales 29% 27% German German 24% 26% French* French* 18% 16% 21% 19% American Asian** Asian** American H1-09 H1-10 * Excluding Nissan ** Including Nissan September 29, 2010 I 8 I
Best-in-class in terms of ROCE � Operating margin at highest level in 10 years � Flexibility of the cost structure � Strong free cash flow generation � Back to investment grade � Full transformation of operating margin into cash September 29, 2010 I 9 I
Highest operating margin recorded in the last 10 years With sales close to pre-crisis level Sales (in € million) 6000 0,2 0,19 4,848 4,787 5000 0,18 4,027 3,829 4000 0,17 3,472 0,16 3000 0,15 2000 0,14 Operating margin 0,13 1000 (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 4.6% 5 4.2% 292 200 4 Significant margin improvement 184 203 150 3 further to 100 2 break-even point reduction 0.7% 50 1 27 0 0 ����� ����� ����� ����� ����� (51) -50 -1 -1.5% -100 -2 September 29, 2010 I 10 I
Flexibility of the cost structure Better fit with current environnement Worldwide headcount evolution 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 September 29, 2010 I 11 I
Strong free cash flow generation of €291 M H1-10 figures 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 €438 M by June 30, 2010 September 29, 2010 I 12 I
Target : back to investment grade V aleo rating upgraded to Ba1 stable outlook (July 29, 2010) Shareholders’ equity and net debt Net financial debt over EBITDA Shareholders’ equity (M€) Net debt ( M€) excluding minority interests 1,468 Net debt (M€) EBITDA 12 months rolling (M€) 1,233 1,128 1,005 841 722 438 841 Gearing Gearing Gearing 59% 75% 30% 722 June 670 December June 30/2010 31/2009 30/2009 518 *Covenant net financial debt / EBITDA of 3.25 438 Leverage Leverage Leverage 1.1x 1.6x 0.4x* June December June 30/2009 31/2009 30/2010 September 29, 2010 I 13 I
Full transformation of operating margin into cash H1-10 key achievements 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% -1.5% 6.1% +7.6pts EBITDA (as % of sales) 10.4% 6.6% 11.8% +5.2pts Net result (as % of sales) 2.1% -6.1% +9.5pts 3.5% Free cash flow* (M€) 123 (4) 291 na Net cash flow (M€) 177 (49) 241 na Net financial debt (M€) 621 841 438 -48% ROCE** 17% -1% 25% * Before interest payments ** Operating margin / capital employed excluding goodwill, 12 months rolling September 29, 2010 I 14 I
Sustainability of operating performance Ahead of 2013 targets � 82% of 2013 OE sales already in order book � Growth � in Asia and emerging countries � of CO 2 emission reduction related products � New organization on track � Visibility Systems Business Group turnaround � Confidence in sustainability of current financial performance in normal market conditions September 29, 2010 I 15 I
82% of 2013 OE sales already in the order book €10 Bn sales target in 2013 � Order intake at a record level of 1.64 or €6,478 M � Asian, North and South American production ahead of the Plan � In 2013, production in Europe and North America expected to stay below pre-crisis level September 29, 2010 I 16 I
New organization Implementation on track Better fit with client requirements � Worldwide organization � Global tender offers � Contribution to organic growth Fixed cost reduction � Centralization of support functions � Positive impact on operating margin of at least 100bp (vs 2009) CAPEX optimization � 60% Asia and emerging countries oriented � Limited to around 4.5 % of sales � Strict management of capital employed � Depreciation under control : positive impact on operating margin ~100bp (vs 2009) September 29, 2010 I 17 I
Visibility Systems Business Group turnaround Convergence of Visibility Systems BG with other Business Groups performance H1-10 Comfort & Driving Assistance 11.8 % as % of sales Powertrain 9.7% as % of sales Thermal 13.3% as % of sales Visibility 11.4% as % of sales 14% 12% TOTAL 11.8% 10% 8% 6% 4% 2013 Group 2013 Group Average Average 2% from 12% to 13% from 12% to 13% 0% H1-08 H2-08 H1-09 H2-09 H1-10 Comfort and Driving Assistance Systems Powertrain Systems Thermal Systems Visibility Systems September 29, 2010 I 18 I
Confidence in sustainability of current financial performance in normal market conditions In line with 2013 objectives ∆ 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 ≥ 30% ROCE** 7.1% 25%* > +20pt * Calculated on a 12 month rolling basis ** Ebit / capital employed excluding goodwill September 29, 2010 I 19 I
Better than expected 2010 market forecasts Q3 sales and full year 2010 guidance to be presented on October 21, 2010 Full year (change YoY) previous revised +6% +10% Europe (& Africa) +18% +22% Asia (& others) +30% +34% North America +12% +12% South America +16% +19% Worldwide With Valeo outperforming its main markets September 29, 2010 I 20 I
September 29, 2010 I 21 I
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