IAA ConferenceSeptember 11, 20071
September 11, 2007
MainFirst Automotive ConferenceIAA 2007
Thierry MorinChairman & CEOThierry MorinChairman & CEO
IAA ConferenceSeptember 11, 20072
Agenda
Valeo committed to enabling a better automotive world
H1-2007 financials
Strategy update
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The Automotive Dilemna
The Valeo answers
The Automotive Dilemna
The Valeo answers
The automotive dilemma
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Growing vehicle production
Number of VehiclesNumber of Vehicles
Source: J.D. Powers
62.1 63.6 66.1 68.0 70.8 74.2 76.9 80.0 82.4 84.8 87.3Totalin ml
YearYear
W.Europe
China
Japan
E.Europe
S.America
N.America
0
2 000 000
4 000 000
6 000 000
8 000 000
10 000 000
12 000 000
14 000 000
16 000 000
18 000 000
2 004 2 005 2 006 2 007 2 008 2 009 2 010 2 011 2 012 2 013 2 014
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0
200
400
600
800
1000
1200
1900 1920 1940 1960 1980 2000 2020
Car park set to double over the next 25 years
millionmillion
YearYear
0
200
400
600
800
1000
1200
1900 1920 1940 1960 1980 2000 2020
Currently est. 630 m
1,200 m estimated by 2030
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Climate Change: CO2 Emissions
CO2 (ppm) in atmosphereCO2 (ppm) in atmosphere
1000 1200 1400 1600 1800 2000
200
300
400
500
YearYear
600
Source: Intergovernmental Panel on Climate Change
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CO2 Emissions: Breakdown
Total transportation sector: 24 % of WW CO2 emissionTotal transportation sector: 24 % of WW CO2 emission
ENERGY; 45%ENERGY; 45%
INDUSTRY; 18%INDUSTRY; 18%
RESIDENTIAL; 8%RESIDENTIAL; 8%
Others; 5%Others; 5%
Other; 1%Other; 1%
AIR; 3%AIR; 3%SHIP; 2%SHIP; 2%ROAD; 18%ROAD; 18%
Source: International Energy Agency
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Europe: 120g CO2/km
by 201295g CO2/km
by 2020European Commission
Jan. 10, 2007
Europe: 120g CO2/km
by 201295g CO2/km
by 2020European Commission
Jan. 10, 2007
USA: 35 MPG by 2020
Senate Bill June 21, 07
USA: 35 MPG by 2020
Senate Bill June 21, 07
Japan: 16,8 km/lby 2015
Council for transport Policy
February 2007
Japan: 16,8 km/lby 2015
Council for transport Policy
February 2007
CO2 Regulation
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Accident Statistics
More than 100 people do not come back home everyday More than 100 people do not come back home everyday
Road safety evolution in EURoad safety evolution in EU July 2006Source EU Commission
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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
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 Governments are reacting
Valeo answers
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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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Valeo has adapted solutions
- 30- 40% Feasible!
Power onDemand
Power onPower onDemandDemand
ThermalManagement
ThermalThermalManagementManagement
TransmissionAutomation
TransmissionTransmissionAutomationAutomation
HybridizationHybridizationHybridization
EngineOperation
EngineEngineOperationOperation
- 4%
- 3%
-6-15%
-3-5%
- 4-6%
-15-20%
MICRO HYBRID (from StopStart to Regenerative braking)MICRO HYBRID (from StopStart to Regenerative braking)
DUAL CLUTCHtransmission
DUAL CLUTCHtransmission
THEMIS™THEMIS™
Low consumptionA/C compressorLow consumptionA/C compressor
UltimateCooling™UltimateCooling™
CAMLESS SystemCAMLESS System
Air SystemsAir SystemsAir Systems - 5-7%Cooled EGR systemCooled EGR system
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Burden for OEMs- Opportunity for suppliers
Powertrain value will significantly growWe expect + €1,000 to €1,500 average for 2012
OEMs have no choice: Best “cost-to-performance” solutions will be their priority
Suppliers who have good solutions portfolio will immediately benefit from this trend
IAA highlights
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StARS
StARS: micro-hybrid starter-alternator
Fuel savings: up to 28% in congested urban traffic
StARS
Now standard on
SMART
fortwo mhd
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Blind spot detection system
PACE Award 2007
Initial contracts for 2008 GM Buick et Cadillac
Blind spot detection
New contract to be announced shortly
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Park4U™
Ultrasonic technology-based driving assistance system
World premiere on the VW Touran. Now on VW Tiguan and Touran Cross
9 new contracts with 5 European BrandsIntroducing the new generation in Frankfurt
H1- 2007 financials
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Half-year key figures
ChangeIn euro million
Total operating revenues
Operating incomeas % of total op. revenues
Net income
Basic earnings per share (€)
Return on capital employed*
Net financial debt
H1-2006*H1-2007
5,309
1693.2%
94
1.23
12.0%
1,053
5,286
1693.2%
71
0.92
12.4%
940
-0.4%
==
-24.5%
-25.2%
+0.4pt
-10.7%
* Operating income margin as a % of capital employed excluding goodwill
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Net financial debt walkdownin euro million
968(78)
(18)
(17)
94085
Net debt31/12/2006
Freecash flow Capital
increase
Dividends Others
Net debt30/06/2007
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December 31, 2006 June 30, 2007
Shareholder's Equity incl. minority interests Net Debt
Shareholder’s equity and net debt
1,752
968
Gearing: 55% Gearing: 51%
940
1,833in euro million
* adjusted
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Return on capital employed analysis
* Capital employed excludes goodwill
ChangeIn euro million H1-2006H1-2007
2,500
9,688
3.88
3.2%
12.4%
Capital employed
Annualized revenues
Asset turn (x)
Operating income margin
ROCE
2,597
9,733
3.75
3.2%
12.0%
(3.7%)
(0.5)%
0.13
0.0%
0.4%
Strategy update
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Portfolio management
Focus on technology through the Domain approachActive portfolio management
– Acquisitions: JCEED, Connaught Electronics (€473msales)– Disposals: Motors & Actuators, Wiring (€798m sales)
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Acquisition of Connaught Electronics Ltd.
Strengthens the Driving Assistance Domain
Expert in camera– based vision solutions for low-speed maneuvering
300 employees in 2 sites in Ireland and the Czech Republic
2007 sales: €37 million
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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 disposalLow value addedLack of customer diversificationNo value added to our Domain approach
Closing completed by year-end
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Remains focused on long term value creation
Portfolio reshuffling
Reiterate 2010 financial objectives6%+ operating marginAbove 4.5x asset turn at constant perimeter
Back up
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Share InformationShare Data / ADR Data
Share DataBloomberg TickerReuters TickerISIN NumberShares outstanding as per 30.06.2007
FR FPVLOF.PAFR 00013033878,149,729
ADR DataRatio (ordinary share: ADR)Bloomberg TickerReuters TickerISIN NumberTypeExchangeSponsor
1:2VLEEY USVLEEY PKUS 9191343048Level 1OTCJP Morgan Chase
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Quarterly P&L
(in euro million) 1Q-20061Q-2007 2Q-2006NET SALESOther operating revenuesTOTAL OPERATING REVENUESGROSS MARGIN
as % of net salesResearch & Development expenditureSelling expensesAdministrative expensesOther income & expensesOPERATING INCOME
as % of operating revenuesCost of net debtOther financial income and expenseEquity in net earnings of associatesINCOME BEFORE INCOME TAXES
Income taxesINCOME FROM CONTINUING OPERATIONSNon-strategic activitiesNET INCOME FOR THE PERIODMinority interestsNET INCOME ATTRIBUTABLE TO EQUITYHOLDERS OF THE COMPANY
2Q-20072,627
282,655420
16.0%(171)(50)(118)(1)108
4.1%(15)163
112(30)82
(10)72(1)71
2,63024
2,654415
15.8%(174)(51)(122)(31)61
2.3%(16)(7)2
40(14)26(1)25(2)23
2,61135
2,646414
15.9%(177)(50)(114)(18)90
3.4%(15)(10)
570
(28)420
42(4)38
2,61228
2,640396
15.2%(175)(50)(121)
179
3.0%(13)(10)
056
(22)340
34(1)33
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Contact
InvestorInvestor RelationsRelations
Rémy DumoulinRémy Dumoulin43, rue 43, rue BayenBayenFF--75848 Paris Cedex 1775848 Paris Cedex 17FranceFranceTel.: +33 (0) 1.40.55.29.30Tel.: +33 (0) 1.40.55.29.30Fax: +33 (0) 1.40.55.20.40Fax: +33 (0) 1.40.55.20.40EE--mailmail: : [email protected]@valeo.comWeb site: Web site: www.valeo.comwww.valeo.com