ASUCCESSFULTRANSFORMATION
JACQUES ASCHENBROICHCHAIRMAN & CHIEF EXECUTIVE OFFICER
AGENDA
4
11H00 - 13H00A SUCCESSFUL TRANSFORMATION
11H00 - 11H30 : JACQUES ASCHENBROICH - A SUCCESSFUL TRANSFORMATION11H30 - 11H45 : HANS-PETER KUNZE - PLATFORMS DRIVE OUR CONTENT PER CAR INCREASE 11H45 - 12H10 : CHRISTOPHE PERILLAT - DRIVING THE PERFORMANCE12H10 - 12H30 : ROBERT CHARVIER - FOCUS ON PROFIT & CASH GENERATION12H30 - 13H00 : Q&A
13H00 – 13H45LUNCH
13H45 - 15H45FOCUS ON NEW TECHNOLOGICAL PLATFORMS
13H45 - 14H50 : XAVIER DUPONT & MICHEL FORISSIER - LEADERSHIP IN ELECTRIFICATION14H50 - 15H55 : MARC VRECKO & JOACHIM MATHES - LEADERSHIP IN ADAS15H55 - 16H20 : WRAP-UP
16H20 - 18H00SHOWROOM VISIT
5
JACQUES ASCHENBROICH
ROBERT CHARVIER
CHRISTOPHE PERILLAT
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
CHIEF FINANCIAL OFFICERCHIEF OPERATING OFFICER
HANS-PETERKUNZE
EXECUTIVE VICE PRESIDENT,SALES & BUSINESS DEVELOPMENT
6
XAVIER DUPONT
MARC VRECKO
MICHEL FORISSIER
POWERTRAIN SYSTEMS BUSINESS GROUP
PRESIDENT
COMFORT & DRIVING ASSISTANCE SYSTEMS BUSINESS GROUP
PRESIDENT
POWERTRAIN SYSTEMS CHIEF TECHNICAL OFFICER
JOACHIM MATHES
COMFORT & DRIVINGASSISTANCE SYSTEMS
CHIEF TECHNICAL OFFICER
FRANÇOISBORDES
THERMAL SYSTEMS BUSINESS GROUP CHIEF TECHNICAL
OFFICER
CHRISTOPHE LE LIGNÉ
VISIBILITY SYSTEMSCHIEF TECHNICAL OFFICER
FRANCISCOMORENO
THERMAL SYSTEMS BUSINESS GROUP PRESIDENT
MAURIZIO MARTINELLI
VISIBILITY SYSTEMS BUSINESS GROUP PRESIDENT
ERIC SCHULER
VALEO SERVICE PRESIDENT
BRUNOGUILLEMET
SENIOR VICE-PRESIDENT,HUMAN RESOURCES
THIERRY LACORRE
FINANCIAL RELATIONS DIRECTOR
ERIC ANTOINE FREDETTE
GENERAL COUNSEL
GEOFFREY BOUQUOT
CORPORATE STRATEGY AND EXTERNAL RELATIONS
VICE-PRESIDENT
FABIENNE DE BRÉBISSON
COMMUNICATIONVICE-PRESIDENT
CATHERINE DELHAYE
CHIEF ETHICS ANDCOMPLIANCE OFFICER
7
JEAN-FRANÇOIS TARABBIA
GROUPCHIEF TECHNICAL OFFICER
A SUCCESSFULTRANSFORMATION
8
A SUCCESSFUL TRANSFORMATION
9
~5 PTS SALES OUTPERFORMANCEFOCUS ON PROFIT & CASH
WE CREATED #1 POSITIONIN ELECTRIFICATION AND ADAS
THANKS TO 12 NEW KEYTECHNOLOGICAL PLATFORMS
EXPANDING OUR COMPETITIVE EDGE THROUGH HIGH BARRIERS TO ENTRY
LEADING TO A STRONG INCREASEOF OUR CONTENT PER CAR
A SUCCESSFUL TRANSFORMATION
10
#1IN ELECTRIFICATION
#1IN ADAS
2 OUT OF 3EUROPEAN OEMs HV LAUNCHES IN 2019-2022
EQUIPPED WITH OUR HV SOLUTIONS
1 OUT OF 4PRODUCED VEHICLES IN 2019
EQUIPPED WITH OUR ADAS SOLUTIONS
OVERPERFORMING MOST OF OUR PEERSIN GROWTH AND EBITDA
11
100
116
132130
100 100
115111
2015 2016 2017 2018
Peers includes Bosch Auto, Denso, Continental Auto excl. tyres, ZF, Magna, AptivSource : Capital IQ, Peers publications
Sales Growth (base 100 – 2015) EBITDA evolution (base 100 – 2015)
100
114
127131
100
108
117121
100104
107 106
2015 2016 2017 2018
ValeoCAGR: +9%
Valeo PeersCAGR: +7%
WW Auto. Prod.CAGR: +2%
ValeoCAGR: +9%
Valeo PeersCAGR: +4%
12
WE HAVE INVESTED TO CREATE UNIQUE TECHNOLOGICAL PLATFORMS WITH HIGH BARRIERS TO
ENTRY
1.2
0.7
-0.5
TRADITIONAL PRODUCTS
NEW KEY TECHNOLOGICAL
PLATFORMSVALEO
Cumulated Free Cash Flow 2017-2019 (€bn)
*
* only Valeo
13
THOSE NEW KEY TECHNOLOGICAL PLATFORMSARE OUR MAIN DRIVER FOR FUTURE GROWTH AND
OUTPERFORMANCE OF THE MARKET
1.2-0.5
Cumulated Free Cash Flow 2017-2019 (€bn)
€2.6bn
2022FREE CASH FLOW
BREAKEVEN
ADDITIONALSALES 2022
0.7
*
* only ValeoTRADITIONAL
PRODUCTSNEW KEY
TECHNOLOGICAL PLATFORMS
VALEO
14
VALEO SIEMENS e-AUTOMOTIVE HAS INVESTED TO CREATE UNIQUE TECHNOLOGICAL PLATFORMS
WITH HIGH BARRIERS TO ENTRY
Cumulated Free Cash Flow 2017-2019 (€bn)
-1.2*
* financing 50% Valeo 50% Siemens
15
VALEO SIEMENS e-AUTOMOTIVETHE EMERGENCE OF A LEADER
€1.4bn
8%EBITDA 2022
SALES 2022
>€2.0bnSALES 2024
>12%EBITDA 2024
2022FREE CASH FLOW
BREAKEVEN
Cumulated Free Cash Flow 2017-2019 (€bn)
-1.2
-1.2*
* financing 50% Valeo 50% Siemens
ONGOING NEGOTIATION ON NEW PROJECTS AND RENEWALS
ADASELECTRIFICATION
WE HAVE INVESTED IN 12 NEW KEY TECHNOLOGICAL PLATFORMSTO CREATE AND COMPLETE A UNIQUE PRODUCT PORTFOLIO
IN ELECTRIFICATION AND ADAS
16
High voltage
HEAT PUMP
E-THERMALINTERIOR
BATTERY COOLING
E-thermal
DCDC
E-MACHINE& E-AXLE
48V
DRIVER MONITORING
FRONT CAMERA
AUTONOMOUS POD
LIDARSCALA®
ON-BOARD CHARGER
INVERTER
E-MACHINE& E-AXLE
EXPANDING OUR COMPETITIVE EDGE THROUGH HIGH BARRIERS TO ENTRY
17
CUSTOMER PROJECT
GROSS R&D EXPENDITURE1ST PROJECT BASE 100
0.
25.
50.
75.
100.
1 2 3 4 5
HIGHLY STANDARDIZED HARDWARE & SOFTWARE PLATFORMS
WE LEVERAGE OUR 12 NEW KEY TECHNOLOGICAL PLATFORMSFOR EACH NEW PROJECT
18
MARKET PUSHES TOWARDS
ELECTRIFICATIONSAFER MOBILITYSMART MOBILITY
MARKET PUSHES TOWARDS ELECTRIFICATION
19
REGULATIONSPUSH
CITIES ARE NEW REGULATORS
OFFER IS READY CONSUMERSINCREASINGLY OPEN
~1 millionelectric cars in EUin 2020 to avoidCO2 penalties
700city access regulationsin UE
>300new xEV modelsuntil 2024
42%of consumers would consider an EV for their next car
SOURCE: www.urbanaccessregulations.euMcKinsey ACES survey 2019
MARKET PUSHES TOWARDS ELECTRIFICATION
20
52%50%
45%
37%
32%
2015 2016 2017 2018 09 2019YTD
% OF DIESEL TAKE RATE IN EUROPEUE C02 EMISSIONS REDUCTION PROPOSAL (g/km)
- CO2- DIESEL
=+ ELECTRIFICATION
2015
95
2020 203020252016 2017
117
59
<-27%ACTUAL OEM CO2 EMISSIONS
2018
CO2 REDUCTION SCHEMES
-37.5%
130~118
120
2019
118
MARKET PUSHES TOWARDS ELECTRIFICATION FOR BOTH 48V & HIGH VOLTAGE SOLUTIONS
21
HIGH VOLTAGE ELECTRIFICATION**48V ELECTRIFICATION*
INTERNAL COMBUSTION ENGINE
84%
7% 9%
2020
26%
34%40%
2030
55%
23%
22%
2025
* Incl. 48V and 12V+12V** Incl. HV BEV, PHEV, FCEV & FHEVSource: IHS McKinsey Valeo estimation
45%74%
16%
WE HAVE DEVELOPED SUCCESSFULNEW KEY TECHNOLOGICAL PLATFORMS ALREADY IN SOP IN 2019
22
48V ELECTRIFICATIONCONTENT PER CAR RATIO
X2CUMULATED OI
7.5bn€
HIGH VOLTAGEELECTRIFICATION
CONTENT PER CAR RATIO
X9CUMULATED OI
11bn€* Incl. 48V and 12V+12V** Incl. HV BEV, PHEV, FCEV & FHEV
E-THERMAL SOLUTIONS
CONTENT PER CAR RATIO
X2CUMULATED OI
2bn€
>40%market share 48V in 2022
1 OUT OF 3EUROPEAN
OEMs HV LAUNCHES IN
2019-2022EQUIPPED
WITH OUR HV e-thermal
SOLUTIONS
1 OUT OF 2EUROPEAN
OEMs HV LAUNCHES IN
2019-2022EQUIPPED
WITH HV VSeA SOLUTIONS
MARKET PUSHES TOWARDS SAFER MOBILITY
23
REGULATION TECHNOLOGY CONSUMER PUSH SOCIETAL GOAL
Active safety push Technology is ready
50% of consumers recognize High safety standards as biggest driver
No fatalities or serious injuries through road accidents
SOURCE: McKinsey ACES survey 2019
SAFER MOBILITY WILL BE DRIVING ADAS MARKET GROWTH
24
1TYPE OF SENSORS
UP TO€200
2TYPES OF SENSORS
€500
3TYPES OF SENSORS
€2 000
4TYPES OF SENSORS
€10 000+CONTENT PER CAR
CAMERA OR RADAR CAMERA
RADAR
CAMERA
RADAR
LIDAR
CAMERA
RADAR
LIDAR
THERMALIMAGING
LEVEL 2ADVANCED PARTIAL
AUTOMATION
ADAS AD
LEVEL 1DRIVER
ASSISTANCE
LEVEL 3CONDITIONALAUTOMATION
LEVEL 4HIGH
AUTOMATION
2TYPES OF SENSORS
€500
LEVEL 2ADVANCED PARTIAL
AUTOMATIONLEVEL 2+
LIDAR
CAMERA
RADAR
3TYPES OF SENSORS
€2 000
WE BUILT SUCCESSFUL PLATFORMS FOR ADAS
25
CUMULATEDORDER INTAKE 2017-2019
>€11Bn
~€3.2BnSALES IN 2022
SYSTEM
COMPONENT
SOFTWARE
18%CAGR2019-2022
1 OUT OF 4PRODUCED VEHICLES IN 2019
EQUIPPED WITH OUR ADAS SOLUTIONS
WE BUILT SUCCESSFUL PLATFORMS FOR ADAS
26
CUMULATEDORDER INTAKE 2017-2019
>€11Bn
~€3.2BnSALES IN 2022
18%CAGR2019-2022
MARKET PUSHES TOWARDS SMART MOBILITY
27
MOBILITY NEEDS ARE INCREASING
DIFFERENT BUSINESS MODELS EMERGE
INVESTMENT FLOW IS INCREASING IN DIGITAL MOBILITY
ROBOTAXIS ARE A REALITY
PKT* is expected to grow by 30%between2010 & 2050
$35Bninvested in 2018 in venture transportation technology
*PKT: PASSENGER x KM TRAVELLEDsource : McKinsey ACES Survey 2019
46% of US vehicle tripsare < 5km
Waymo launchedfirst rides in Phoenix without safety drivers
SMART MOBILITY OFFERS MANY OPPORTUNITIESTO LEVERAGE OUR PLATFORMS
28
LAST MILE DELIVERY E-MICROMOBILITY ROBOTAXIS ROBOSHUTTLES
FIRST ORDERS FIRST ORDERS FIRST ORDERSCOOPERATIONS
29
WE ARE READY TO LEVERAGE OUR NEW KEY TECHNOLOGICALPLATFORMS IN A CHALLENGING ENVIRONMENT
29
PESSIMISTIC SCENARIOCAGR 2019-2022: +1%
BASE SCENARIO (IHS MARKIT)CAGR 2019-2022: +2%
WORLDWIDEAUTOMOTIVE PRODUCTION (M vehicles)IHS Markit November 2019Excluding LCV China
~88
2016 2017 2018 2019 2020 2021 2022
88.6
91.090.3
85.1 85.5
90.7
30
~5PTS SALES OUTPERFORMANCE2020 – 2022
+6pts
+4pts
+0pt+1pts
+4pts
+8pts
H1 2017 H2 2017 H1 2018 H2 2018 H1 2019 Q3 2019
Back to outperformance
STRONG INCREASEOF OUR
CONTENT PER CAR
~5PTS SALES OUTPERFORMANCE
31
SILVERADO 208 GOLF 8 ID.3**
X3.4 X4.5
STRONG INCREASE OF OUR CONTENT PER CAR*
*Ratio : Valeo + VSeA (average content per car new vehicle )/(average content per car previous generation)**Ratio : Valeo + VSeA (average content per car ID.3)/(average content per car Golf 7)
X1.6
SOP 2019SOP 2019SOP 2019SOP 2019
e-208
X1.3 X2.9
32
LEVERAGING OUR NEW KEY TECHNOLOGICAL PLATFORMSTO REDUCE OUR GROSS R&D EXPENDITURE
Gross R&D expenditure(In percentage of sales)
2016 2017 2018 2019 2020 2021 2022 2023 2024
9.5%
10.8% 10.6%*
9.4%
*estimated 2019
33
LEVERAGING OUR NEW KEY TECHNOLOGICAL PLATFORMSTO OPTIMIZE CAPITAL EXPENDITURE
2016 2017 2018 2019 2020 2021 2022 2023 2024
CAPITAL EXPENDITURE(In percentage of sales)
5.6%5.9%*
7.1% 7.0%
6.0%
*estimated 2019
34
INCREASING IN EBITDA
>15%EBITDA
IN % OF SALES2019*
EBITDAIN % OF SALES2022
*estimated 2019
12.8%
35
DOUBLING OUR FREE CASH FLOW GENERATION
€[1.3-1.5]bn
CUMULATEDFREE CASH FLOW
2017-2019*
CUMULATEDFREE CASH FLOW2020-2022
*estimated 2019
€0.7bn
36
DOUBLING OUR FREE CASH FLOW GENERATION
CUMULATEDFREE CASH FLOW
2020-2022
MAINTAIN DIVIDEND POLICY
SUPPORT VSeA DEVELOPMENT
DELEVERAGE OUR BALANCE SHEET
€[1.3-1.5]bn
WE WILL PURSUE THE ACTIVE MANAGEMENT OF OUR PORTFOLIO
37
SUSTAINIBILITY IS IN OUR DNA
38
#1 #1 #1
ENVIRONMENTAL, SOCIAL AND CORPORATE GOVERNANCEPERFORMANCE RANKING OF GLOBAL AUTOMOTIVE SUPPLIERS
* *
* excl. Tyres companies
A SUCCESSFUL TRANSFORMATION
39
~5 PTS SALES OUTPERFORMANCEFOCUS ON PROFIT & CASH
WE CREATED #1 POSITIONIN ELECTRIFICATION AND ADAS
THANKS TO 12 NEW KEYTECHNOLOGICAL PLATFORMS
EXPANDING OUR COMPETITIVE EDGE THROUGH HIGH BARRIERS TO ENTRY
LEADING TO A STRONG INCREASEOF OUR CONTENT PER CAR
40
PLATFORMS DRIVE OUR CONTENT PER CAR INCREASE
HANS-PETER KUNZEEXECUTIVE VICE PRESIDENT, SALES & BUSINESS DEVELOPMENT
WE WILL OUTPERFORM THE MARKET
WORLDWIDEAUTOMOTIVE PRODUCTION*Base scenario2019-2022: +2% CAGR
VALEO SALES OUTPERFORMANCE2020-2022: ~5 PTS
WORLDWIDE AUTOMOTIVE PRODUCTIONPessimistic scenario2019-2022: +1% CAGR
*IHS Markit November 2019, excluding LCV China
43
WE WILL OUTPERFORM THE MARKETTHANKS TO OUR BALANCED CUSTOMERS PORTFOLIO
EUROPENORTH AMERICA
17%ASIA
33%14% 27% 9%
HEAVY DUTIES
2022 Valeo sales by OEM origin
44
WE WILL OUTPERFORM THE MARKETTHANKS TO OUR GLOBAL PRESENCE
NORTH AMERICA
SOUTH AMERICA
EUROPE & AFRICA CHINA
ASIA EXCL. CHINA
21% 3% 44% 14% 18%
2022 Valeo sales by destination
45
OUR ELECTRIFICATION AND ADAS STRATEGYIS MATCHING WITH THE ONES OF OUR CUSTOMERS
46
€6bnBY 2023
€12bnBY 2022
€60bnBY 2024
€20bnBY 2030
€14bnBY 2023
€11bnBY 2022
€3bnBY 2020
€32bnBY 2025
MAJOR INVESTMENTS FOR A COMPLETE TRANSFORMATION
OUR ELECTRIFICATION AND ADAS STRATEGYIS SUPPORTING THE ONES OF OUR CUSTOMERS
47
WE HAVE INVESTED IN 12 NEW KEY TECHNOLOGICAL PLATFORMS TO CREATE A UNIQUE PRODUCT PORTFOLIO
A COMPLETE OFFERING IN HARDWARE, SOFTWARE AND SYSTEMS
ADASELECTRIFICATION
High voltage
HEAT PUMP
E-THERMALINTERIOR
BATTERY COOLING
E-thermal
DCDC
E-MACHINE& E-AXLE
48V
DRIVER MONITORING
FRONT CAMERA
AUTONOMOUS POD
LIDARSCALA®
ON-BOARD CHARGER
INVERTER
E-MACHINE& E-AXLE
48
WE HAVE INVESTED IN SOFTWARE RESOURCES TO CREATE INTELLIGENT PRODUCTS IN ELECTRIFICATION AND ADAS
SURROUND VIEW CAMERA
16 000
4 00048V
10 000INVERTER
Requirements
SURROUND VIEW CAMERA
2 000 000
600 00048V
1 000 000INVERTER
Lines of Code
7 000 SYSTEMS AND SOFTWARE ENGINEERS WORLDWIDE 49
IMPLEMENTATION
Concept ofOperations
Requirementsand
architecture
DetailedDesign
Operation andmaintenance
SystemVerification
and Validation
Integration,Test, and
Verification
Verificationand
Validation
WITH THIS PRODUCT PORTFOLIO WE HAVE WON MAJOR ORDER INTAKE
IN INNOVATIVE TECHNOLOGIES
X 3 WITHIN 10 YEARS
ORDER INTAKE (bn€)
9,6bn€
53%
28,6bn€
2008 2018
33,7bn€
2017
27,6bn€
24,2bn€
Incl.
Incl.
X 2 WITHIN 10 YEARS
30%
53%
59% Incl.
2008 2018
INNOVATION % OF ORDER INTAKE
50
SURROUND VIEW CAMERAS
LED HEADLAMP
A STRONG INCREASE OF OUR CONTENT PER CAREXAMPLE #1: SILVERADO
MAIN TECHNOLOGIES
SOP 2019
AC MODULE
X 1.6
Ratio : Valeo + VSeA (average content per car new vehicle) / (average content per car previous generation)
51
SOP 2019
X 1.3
A STRONG INCREASE OF OUR CONTENT PER CAREXAMPLE #2: 208 ICE
MAIN TECHNOLOGIES
Ratio : Valeo + VSeA (average content per car new vehicle) / (average content per car previous generation)
52
LED HEADLAMP
PASSIVE ENTRY/START
AUTOMATED PARKING
A STRONG INCREASE OF OUR CONTENT PER CAREXAMPLE #3: e-208
SOP 2019
X 2.9LED HEADLAMP
PASSIVE ENTRY/START
AUTOMATED PARKING
MAIN TECHNOLOGIES
Ratio : Valeo + VSeA (average content per car new vehicle) / (average content per car previous generation)
HEAT PUMP
BATTERY THERMAL MANAGEMENT
53
SOP 2019
X 3.4 FRONT CAMERA
A STRONG INCREASE OF OUR CONTENT PER CAREXAMPLE #4: GOLF 8
PIXEL HEADLAMP
48V
AC MODULE
MAIN TECHNOLOGIES
Ratio : Valeo + VSeA (average content per car new vehicle) / (average content per car previous generation)
54
FRONT CAMERA
INVERTER
A STRONG INCREASE OF OUR CONTENT PER CAREXAMPLE #5: ID.3
HIGH VOLTAGE HEATER
SOP 2019
Ratio : Valeo + VSeA (average content per car ID.3) / (average content per car Golf 7)
X 4.5
MAIN TECHNOLOGIES
BATTERY THERMAL MANAGEMENT
55
TO BE LAUNCHED SOON
X 5.8
A STRONG INCREASE OF OUR CONTENT PER CAREXAMPLE #6: PREMIUM CAR
HIGH VOLTAGEDRIVETRAIN SYSTEM
MAIN TECHNOLOGIES
LIDAR SCALA®
AC MODULE
Ratio : Valeo + VSeA (average content per car new vehicle) / (average content per car previous generation)
56
OUR INVESTMENTS IN PLATFORMSGENERATE LEADING POSITIONS
1 OUT OF 4PRODUCED VEHICLES IN 2019
EQUIPPED WITH OUR ADAS SOLUTIONS
2 OUT OF 3EUROPEAN OEMs HV LAUNCHES IN 2019-2022
EQUIPPED WITH OUR HV SOLUTIONS
57
STANDARDIZATION OF OUR PLATFORMS LEADING TO CROSS-CUSTOMERS APPLICATIONS
6.2M UNITS BOOKEDWITH 15 OEM BRANDS
FOR DELIVERIES IN2020-2022
48V E-MACHINE & E-AXLE PLATFORM
58
STANDARDIZATION OF OUR PLATFORMS LEADING TO LARGE SCALE EFFECTS
FRONT CAMERA PLATFORM
17.5M UNITS BOOKEDWITH 10 OEM BRANDS
FOR DELIVERIES IN 2020-2022
59
STANDARDIZATION IS AN OPPORTUNITY FOR GROWTH ACROSS CAR LINES AND BRANDS
208SOP 2019
CORSASOP 2019
X 4.2AVERAGECONTENT
X 1.6AVERAGECONTENT
BATTERY THERMALMANAGEMENT
HEAT PUMP
AUTOMATED PARKING
LED HEADLAMP
60
FURTHER GROWTH OPPORTUNITIESUNDERWAY THROUGH OEMs PARTNERSHIPS
EUROPENORTH AMERICA ASIA
61
WE WILL OUTPERFORM THE MARKET THANKS TO OUR
TECHNOLOGICAL PLATFORMS
DRIVINGTHE PERFORMANCE
CHRISTOPHE PERILLATCHIEF OPERATING OFFICER
65
PERFORMANCE OF OUR INFLATION BALANCE
PERFORMANCEIN DEVELOPMENT
PERFORMANCE IN MANUFACTURING
AFTER PEAKS IN GROSS R&D & CAPITAL EXPENDITURES…
66
5.6%
7.1% 7.0%
2016 2017 2018
Capital expenditure(In % of sales)
Gross Research and Development expenditure(In % of sales)
9.5%
10.3%10.8%
2016 2017 2018
Order intake(€bn)
20.1
23.6
27.6
24.2
2015 2016 2017 2018 OI SOP Peak Sales
Y Y+1 Y+2 Y+3 Y+4 Y+5 Y+6
CAPEXTDE
FORECAST OF MARKET GROWTH
12 NEW KEY TECHNOLOGICAL PLATFORMS
EXTRAORDINARY ORDER INTAKE LEVEL FROM 2016 TO MID 2018
27.6
10.8%
23.6
10.3%
9.5%
5.6%
7.1% 7.0%
24.2
…WE DEMONSTRATED STRONG REACTION TO THE MARKET DROP OF 10% SINCE MID 2018
67
Capital expenditure(In % of sales)
Gross R&D expenditure(In % of sales)
COMPENSATION FROM CUSTOMERS
COST AND CAPEX REDUCTION PLANS
CAPEX SAVING PLAN : 100M€COST SAVING PLAN : 100M€
CAPEX SAVING PLAN : 200M€COST SAVING PLAN : 100M€
WHILE COMPLETING THE DEVELOPMENTOF 12 NEW KEY TECHNOLOGICAL PLATFORMS
9.5%
10.3%
10.8%10.5%
6.0%6.0%6.0%2016 2017 2018 2019
6%
7% 7%
6%
2016 2017 2018 2019
H22018
2019
10.5%*10.8%
10.3%
7.1% 7.0%
5.6% 5.9%*
9.5%
* Estimated 2019
WE ARE READY TO REACT QUICKLY TO A SLOWER MARKET EVOLUTION
68
PESSIMISTIC SCENARIOCAGR 2019-2022: +1%
BASE SCENARIO (IHS MARKIT)CAGR 2019-2022: +2%
WORLDWIDEAUTOMOTIVE PRODUCTION (M vehicles)IHS Markit November 2019Excluding LCV China
2016 2017 2018 2019 20222020 2021
90.391.0
88.6
~8885.1
SECURE NEW PROJECTS LAUNCHES
AND BE READY FORA PESSIMISTIC SCENARIO
COMPENSATION FROM CUSTOMERSCOST AND CAPEX REDUCTION PLANSTEMPORARY WORKERS RESTRUCTURING PLANS
90.7
69
PERFORMANCE OF OUR INFLATION BALANCE
PERFORMANCEIN DEVELOPMENT
PERFORMANCE IN MANUFACTURING
SUSTAINED POSITIVE INFLATION BALANCE
70
PURCHASING PRICE EVOLUTION
SALARY INFLATION
SELLING PRICE
EVOLUTION
SUSTAINED POSITIVE INFLATION BALANCE
71
PURCHASING PRICE EVOLUTION
SALARY INFLATION
SELLING PRICE
EVOLUTION
PRICING POWER OF INNOVATIONS
SELECTIVITY OF ORDER INTAKE
STRICT FINANCIAL DISCIPLINE
PRICE INDEXATION
SUSTAINED POSITIVE INFLATION BALANCE
72
PURCHASING PRICE EVOLUTION
SALARY INFLATION
SELLING PRICE
EVOLUTION
HIGH ATTRACTIVENESS THANKS TOOUTPERFORMING GROWTH
AMONG THE TOP ELECTRONIC TIERS 1
73
PERFORMANCE OF OUR INFLATION BALANCE
PERFORMANCEIN DEVELOPMENT
PERFORMANCE IN MANUFACTURING
74
BECAUSE PLATFORMS HAVE BEEN DEVELOPED, WE CAN NOW REDUCE OUR GROSS R&D EXPENDITURE
Gross R&D expenditure(In percentage of sales)
2016 2017 2018 2019 2020 2021 2022 2023 2024
9.5%
10.8% 10.6%*
9.4%
*estimated 2019
75
EFFICIENCYTHROUGHPLATFORMS
COST COMPETITIVE FOOTPRINT
76
EFFICIENCYTHROUGHPLATFORMS
COST COMPETITIVE FOOTPRINT
WE HAVE INVESTED IN 12 NEW KEY TECHNOLOGICAL PLATFORMSTO CREATE AND COMPLETE A UNIQUE PRODUCT PORTFOLIO
IN ELECTRIFICATION AND ADAS
77
ADASELECTRIFICATION
High voltage
HEAT PUMP
E-THERMALINTERIOR
BATTERY COOLING
E-thermal
DCDC
E-MACHINE& E-AXLE
48V
DRIVER MONITORING
FRONT CAMERA
AUTONOMOUS POD
LIDARSCALA®
ON-BOARD CHARGER
INVERTER
E-MACHINE& E-AXLE
INVESTMENTS HAVE BEEN MADEIN 12 NEW KEY TECHNOLOGICAL PLATFORMS
78
12NEW KEY
TECHNOLOGICALPLATFORMS
HIGHLY STANDARDIZED HARDWARE & SOFTWAREWORLDWIDEINCLUDING R&D AND INDUSTRIAL EXPERTISESUPPORTED BY STATE OFTHE ART PRODUCT LIFECYCLE MANAGEMENT
85% STANDARDIZED SOFTWARE
85%STANDARDIZEDHARDWARE
HIGHLY STANDARDIZED HARDWARE & SOFTWARE PLATFORMS CREATING HIGH BARRIER TO ENTRY
79
WE LEVERAGE THE 48V e-MACHINE & e-AXLE PLATFORM FOR EACH NEW PROJECT
80
0.
25.
50.
75.
100.
1 2 3 4 5 CUSTOMER PROJECT
AFTER SOP SOP 2020 SOP 2021
€7.5bnORDER INTAKE
GROSS R&DEXPENDITURE1ST PROJECT
BASE 100
AFTER SOP AFTER SOP
WE LEVERAGE THE FRONT CAMERA PLATFORM FOR EACH NEW PROJECT
81
0.
25.
50.
75.
100.
1 2 3 4 5 CUSTOMER PROJECT
GROSS R&DEXPENDITURE1ST PROJECT
BASE 100
AFTER SOP SOP 2020 SOP 2020 SOP 2021
>€4bnORDER INTAKE
AFTER SOP
WE LEVERAGE THE HIGH VOLTAGE INVERTER PLATFORM FOR EACH NEW PROJECT
82
0.
25.
50.
75.
100.
1 2 3 4 5 CUSTOMER PROJECT
SOP 2020 SOP 2020
€4.2bnORDER INTAKE
GROSS R&DEXPENDITURE1ST PROJECT
BASE 100
AFTER SOP AFTER SOP AFTER SOP
WE CREATED HIGH BARRIERS TO ENTRY AND WE LEVERAGE OUR 12 NEW KEY TECHNOLOGICAL PLATFORMS FOR EACH NEW PROJECT
83
CUSTOMER PROJECT
0.
25.
50.
75.
100.
1 2 3 4 5
GROSS R&DEXPENDITURE1ST PROJECT
BASE 100
84
EFFICIENCYTHROUGHPLATFORMS
COST COMPETITIVE FOOTPRINT
AVERAGE R&D HOURLY RATE IS DECREASING THANKS TO COST COMPETITIVE FOOTPTRINT
85
2015 2016 2017 2018 2019 2020 2021 2022
COST COMPETITIVE RATIOIN % OF ENGINEERS’ HEADCOUNT
CAIRO & CHENNAI TAKE-OFFENGINEERS’ HEADCOUNT
350
4 600
8 000
2010 2019 2024
45%46%
48%49%
53%
57% 58%60%
WHILE THE TRANSFORMATION TOWARDS SOFTWAREIS SUCCESSFUL
86
2 000
7 0009 000
11 500
2013 2019 2022 2024
Series 1
44%
-%
% of total R&D HC
SOFTWARE HC EVOLUTION
31%
11%
STATE OF THE ART A-SPICE LEVEL
38%
87
PERFORMANCE OF OUR INFLATION BALANCE
PERFORMANCEIN DEVELOPMENT
PERFORMANCE IN MANUFACTURING
104AWARDS
OBSESSION FORCUSTOMER SATISFACTION
88
2.9PPM 0 KMIN 2018
+33%VS2016
STATE OF THE ART PROJECT MANAGEMENT
IN 2018
89
SG&AOPTIMIZATION
COST COMPETITIVEFOOTPRINT
VALEOFACTORY OF THE
NEAR FUTURE
CAPITAL EXPENDITURE AT
6% OF SALES
BECAUSE INVESTMENTS ARE NOW MARGINALIN MATURE PRODUCTS,
CAPITAL EXPENDITURE CAN BE OPTIMIZED
ADAPTATION TO NEW MARKET FORECASTSTRICT FINANCIAL DISCIPLINE IN ORDER INTAKEWORLDWIDE CAPACITY MANAGEMENTBUY VS MAKE
9090
2016 2017 2018 2019 2020 2021 2022 2023 2024
CAPITAL EXPENDITURE(In percentage of sales)
5.6%
5.9%*
7.1%
7.0%6.0%
*estimated 2019
SG&AOPTIMIZATION
COST COMPETITIVEFOOTPRINT
VALEO FACTORYOF THE NEAR FUTURE
CAPITAL EXPENDITURE AT 6% OF SALES
91
5 YEARS LATER, WE ARE PROUD OFVALEO FACTORY OF TODAY
AUTOMATION DIGITIZATION
IN 2015, WE LAUNCHEDVALEO FACTORY OF THE NEAR FUTURE
SG&AOPTIMIZATION
COST COMPETITIVEFOOTPRINT
VALEO FACTORYOF THE NEAR FUTURE
CAPITAL EXPENDITURE AT 6% OF SALES
VALEO FACTORY OF TODAYMAKES OUR PLANTS MORE EFFICIENT
ROBOTIC DENSITY: 3X AUTOMOTIVE INDUSTRY
2015 2017 2019
NUMBER OF ROBOTS
6 900
11 50013 300
AUTOMATION
92
SG&AOPTIMIZATION
COST COMPETITIVEFOOTPRINT
VALEO FACTORYOF THE NEAR FUTURE
CAPITAL EXPENDITURE AT 6% OF SALES
VALEO FACTORY OF TODAYMAKES OUR PLANTS MORE EFFICIENT
CUSTOMERSUPPLIER RECEIVING UPSTREAMPROCESS ASSEMBLY SHIPPING
e VISUAL RECORDER
e KANBAN e BUILT TO TRUCK e WORKSTATION
MANUFACTURING EXECUTION SYSTEM
e WORKSTATION
DIGITIZATION
93
SG&AOPTIMIZATION
COST COMPETITIVEFOOTPRINT
VALEO FACTORYOF THE NEAR FUTURE
CAPITAL EXPENDITURE AT 6% OF SALES
BIG DATA IN MANUFACTURING
BLOCKCHAIN
INTEGRATEDSUPPLY CHAININTEGRATED
SUPPLY CHAIN
CONNECTED WATCH
AND MORE TO COME…
QUICKERREACTION
IMPROVEDTRP
AND MORE TO COME...
VALEO FACTORY OF TODAYMAKES OUR PLANTS MORE EFFICIENT
94
DIGITIZATION
SG&AOPTIMIZATION
COST COMPETITIVEFOOTPRINT
VALEO FACTORYOF THE NEAR FUTURE
CAPITAL EXPENDITURE AT 6% OF SALES
A COST COMPETITIVE FOOTPRINT
COST COMPETITIVE RATIO% OF HC DIRECT LABOR
65%66%
68%
70%
2019 2020 2021 2022
95
SG&AOPTIMIZATION
COST COMPETITIVEFOOTPRINT
CAPITAL EXPENDITURE AT 6% OF SALES
VALEO FACTORYOF THE NEAR FUTURE
SG&A ARE OPTIMIZED
TOTAL SG&A COSTS(%OF SALES)
4.8%4.7%
4.6%4.5%
4.4%
2018 2019 2020 2021 2022
96
4.7%*
4.4%
4.8%
*estimated 2019
CAPITAL EXPENDITURE AT 6% OF SALES
VALEO FACTORYOF THE NEAR FUTURE
COST COMPETITIVEFOOTPRINT
SG&AOPTIMIZATION
THANKS TO OUR VERY COMMITTED TEAM
97
CERTIFIED“TOP EMPLOYERS”
PROMOTINGDIVERSITY
PROMOTINGEMPLOYEE
SHAREHOLDING
CORPORATESOCIAL
RESPONSIBILITY
GENERATIONAL DIVERSITY
DISABILITYRECRUITMENT & PROMOTION
GENDER DIVERSITY
2.4% OF VALEO SHARE CAPITAL OWNED BY VALEO’S
EMPLOYEES
45% OF OUR WW EMPLOYEES ARE SHAREHOLDERS
75% OF PLANTSRUN BY A LOCAL DIRECTOR
82% OF OUR SITES ARE PARTNERING WITH LOCAL
ACADEMICS
100% OF VALEO’ SITES ORGANIZE INITIATIVES FOR LOCAL COMMUNITIES5TH
YEARRUNNING
FOCUSON PROFIT& CASH GENERATION
ROBERT CHARVIERCHIEF FINANCIAL OFFICER
VALEO 2019 INVESTOR DAY
101
ALL DATA RELATED TO 2019 - 2022 ARE BASED ON ON THE CURRENT PERIMETER*
VALEO SIEMENS E-AUTOMOTIVEIS CONSOLIDATED AT EQUITY
* After withdrawal of top column module segment
A CHALLENGING ENVIRONMENT
102
SHARP DROP OF THE AUTOMOTIVE PRODUCTION SINCE 2018…
-1.5% IN 2018 (-5% IN H2 2018)
-6.0% IN 2019
…LEADING TO A COMPLETE CHANGE OF THE AUTOMOTIVE ENVIRONMENT VERSUS OUR ASSUMPTIONS RELEASED DURING OUR VALEO INVESTOR DAY 2017
INVESTOR DAY 2017
96.0
ESTIMATEDLANDING
85.1
DELTA
-11.4%
WORLDWIDE AUTOMOTIVE PRODUCTION (IN MILLION VEHICLES)
VOLUME 2019
WHICH HAS TRANSLATED IN LOWER OE SALES IN 2019
DURING THIS PERIOD WE HAVE HEAVILY INVESTED IN R&D TO DRIVE VALEO’S TRANSFORMATION
103
2016 2019
Gross Research and Development expenditure(€bn)
+21%
(same perimeter)
Cumulated FCF 2017-2019 Excluding VSeA (€bn)
-0.5
Traditional products
Key technologicalplatforms
Valeo
Share of net income of VSeA 2017-2019(€mio)
Financing granted to VSeA by Valeo 2017- 2019(€mio)
~ €-430VSeA*
~ €540
VSeA*
1.6
1.9
1.20.7
* estimated 2019
MARKET ASSUMPTIONS
104
PESSIMISTIC SCENARIOCAGR 2019-2022: +1%
BASE SCENARIO (IHS MARKIT)CAGR 2019-2022: +2%
WORLDWIDEAUTOMOTIVE PRODUCTION (M vehicles)IHS Markit November 2019Excluding LCV China
~88
2016 2017 2018 2019 2020 2021 2022
88.6
91.090.3
85.1 85.5
90.7
2019 20222019 2022
SALES ARE INCREASING IN ALL OUR MARKETS
105
Valeo OEM sales (€bn)
CAGR LIKE FOR LIKE:~+7%
Valeo aftermarket sales (€bn)
Valeo Other sales(€bn)
CAGR LIKE FOR LIKE:+4%
CAGR:+4%
2019 2022
Series 1
>18.3~16.3 ~1.9
>2.1
~1.1>1.2
Valeo Total sales(€bn)
CAGR:+4%
2019 2022
Series 1
>21.5~19.3
+>12%
+>12%
OUTPERFORMING THE MARKET BY ~5 POINTS / BY YEAR
106
Valeo OEM sales(In €bn)
Valeo OEM sales (In €bn)
SECURED GROWTH: 84% OF OUR 2022 OEM SALES ARE BOOKED
CAGR LIKE FOR LIKE:~+7%
INCLUDING• ADAS: +18% • 48V: +59%
2019 2022
>18.3~16.3
+>12%
15.4
2022
>18.3
84%
BookedBusiness
OEM MARKET SHARE & PORTFOLIO INCREASE
GEOGRAPHICAL EXPANSION IN ASIA AND AMERICA
IAM ACTORS CONSOLIDATION WITH RISKS & OPPORTUNITIES
ACCIDENT RATE DECREASE AND HIGHER PRODUCT RELIABILITY
EUROPEAN AFTERMARKET IS DECREASING
WE ARE GAINING MARKET SHARE IN AFTERMARKETIN AN EVOLVING ECOSYSTEM
107
Valeo aftermarket sales(€bn)
CAGR LIKE FOR LIKE:+4%
2019 2022
~1.9 >2.1
PROFITABILITY WILL IMPROVE BY ~150BPS BETWEEN 2019 AND 2022
108
Total Sales(€bn)
CAGR +4% by year
2019 2022
Series 1
+11%
~19.3
>21.5
Operating margin Before JV & AssociatesIn % of sales
2019 Vol-mix Plant efficiency R&D exp+SG&A Contingencies Subtotal
5.5%*0.8%
0.6%0.4% -0.3%
~7.0%
2022
* after one off effect linked to october 2019 GM strike in North America - Estimated 2019
PROFITABILITY STRESS TEST IN CASE OF A PESSIMISTIC SCENARIO
109
INCREASE RESTRUCTURING PLANS
MAINTAIN PERSONAL COST/SALES CONSTANT
2022 TARGET OF OPERATING MARGIN WOULD RANGE [6.7% - 7%]
R&D EFFICIENCY AND PLATFORM ORGANIZATION WILL OFFSETTHE INCREASE OF DEPRECIATION
110
Depreciationof capitalized R&D
Standardization from platformsCost competitive footprint
R&D expenses2019*
Capitalization Depreciation R&D expenses2022
~100bps
~10bps ~100bps7.8%7.9%
* estimated 2019
In % of sales
Efficiency
2016 2017 2018 2019 2020 2021 2022 2023 2024
CAPITAL EXPENDITUREOPTIMIZED AT 6%
111
CAPITAL EXPENDITURE(In percentage of sales)
ADAPTATION TO NEW MARKET FORECASTSTRICT FINANCIAL DISCIPLINE IN ORDER INTAKEWORLDWIDE CAPACITY MANAGEMENTBUY VS MAKE
5.6%
5.9%*
7.1%
7.0%6.0%
* estimated 2019
PROFITABILITY WILL IMPROVE BY ~150BPS BETWEEN 2019 AND 2022
112
Total Sales(€bn)
2019 2022
Series 1
~19.3
>21.5
12.8%
>15%
2019*
2022
CAGR+4% by year
EBITDA (in % of sales)
+11%
EVERY BUSINESS GROUP WILL POSITIVELY CONTRIBUTE TO PROFITABILITY INCREASE
* estimated 2019
DOUBLING OUR FREE CASH FLOW GENERATION
113
INCREASING EBITDA
OPTIMIZED RECORDED CAPEX
WORKING CAPITALREQUIREMENT INCREASE
[1.3-1.5]
CUMULATED2017-2019*
CUMULATED2020-2022
CASH CONVERSION RATE (in % of EBITDA)
FREE CASH FLOW (in €bn)
>15%
2019*
2022
* estimated 2019
>0.7
~11.8%
DOUBLING OUR FREE CASH FLOW GENERATION
114
CUMULATEDFREE CASH FLOW
2020-2022
MAINTAIN DIVIDEND POLICY
SUPPORT VSeA DEVELOPMENT
DELEVERAGE OUR BALANCE SHEET
€[1.3-1.5]bn
DEBT MATURITY PROFILE
115
31/12/2019 2020 2021 2022 2023 2024 2025 2026
credit lines cash and cash equivalents EMTN convertible bond Schuldschein
Undrawn credit lines1.1 Mds euros3.0 yearmaturity
Average maturity: 4.0 years
~1.8%AVERAGE EFFECTIVE INTEREST RATE 0.93 ~0.7 49% ~40%
2018 2022 2018 2022
LEVERAGE RATIO GEARING RATIO
470m€ 600m€ 500m€ 700m€
600m€
336m€
600m€ 600m€
212m€
VALEO SIEMENS e-AUTOMOTIVETHE EMERGENCE OF A LEADER
116
2 MAJOR CONTRACTS IN PRODUCTION END OF 2019 AND S1 2021
STRONG DECREASE OF R&D AS OF 2021 (R&D FOOTPRINT + TECHNOLOGICAL PLATFORM ORGANIZATION)
ONGOING NEGOTIATION ON NEW PROJECTS AND RENEWALS
2019 2022 2024
VSeA SALES(€bn) >2.0
>1.4
>0.3
EBITDA 2022
EBITDA 2024
8%
12%~450M€FINANCING BY VALEO OVER 2020 - 2021
FREE CASH FLOWBREAKEVEN2022
2022 FINANCIAL TARGETS
117
SALES (€bn)
EBITDA
OPERATING MARGIN BEFORE JV
CASH CONVERSION RATE (% EBITDA)
FREE CASH FLOW 2020-2022
~ 19.3 >21.5
~ 12.8% >15%
~ 5.5%** ~ 7%
>15%
€ [1.3-1.5]bn
2019* 2022
* estimated 2019** after one off effect linked to october 2019 GM strike in North America
11.8%
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 respect to future financial results, events, operations, services, product development and potential, and statements regarding future performance. Even though Valeo’s Management feels that the forward-looking statements are reasonable as at the date of this document, investors are put on notice that the forward-looking statements are subject to numerous factors, risks and uncertainties that are difficult to predict and generally beyond Valeo’s control, which could cause actual results and events to differ materially from those expressed or projected in the forward-looking statements. Such factors include, among others, the Company’s ability to generate cost savings or manufacturing efficiencies to offset or exceed contractually or competitively required price reductions. The risks and uncertainties to whichValeo is exposed mainly comprise the risks resulting from the investigations currently being carried out by the antitrust authorities asidentified in the Registration Document, risks which relate to being a supplier in the automotive industry and to the development of newproducts and risks due to certain global and regional economic conditions. Also included are environmental and industrial risks as well asrisks and uncertainties described or identified in the public documents submitted by Valeo to the French financial markets authority (Autoritécdes marchés financiers – AMF), including those set out in the “Risk Factors” section of the 2018 Registration Document registered with the AMF on March 29, 2019 (under number D.19-0224).
The Company assumes no responsibility for any analyses issued by analysts and any other information prepared by third parties which maybe used in this document. Valeo does not intend or assume any obligation to review or to confirm the estimates of analysts or to update anyforward-looking statements to reflect events or circumstances which occur subsequent to the date of this document.