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Q3-2003 RESULTSOctober 20, 2003
Thierry MorinThierry MorinChairman & CEOChairman & CEO
Key figures
Property of VALEO – Duplication prohibited 3 October 20, 2003
Key figuresYear-on-year evolution: Q3
Sales
Gross margin% of sales
Operating income% of sales
Net income% of sales
Q3Q3--20032003 Q3Q3--20022002 ∆∆
2,2412,241
38738717.3%17.3%
1051054.7%4.7%
31311.4%1.4%
In million euros
2,0862,086
36436417.4%17.4%
90904.3%4.3%
25251.2%1.2%
-- 7%7%
+ 0.1 pt+ 0.1 pt
-- 0.4 pt0.4 pt
-- 0.2 pt0.2 pt
Property of VALEO – Duplication prohibited 4 October 20, 2003
Key figuresYear-to-date
Sales
Gross margin% of sales
Operating income% of sales
Net income% of sales
99--monthsmonths20032003
99--monthsmonths20022002 ∆∆
7,4257,425
1,2751,27517.2%17.2%
3453454.6%4.6%
99991.3%1.3%
In million euros
6,9326,932
1,2271,22717.7%17.7%
3303304.8%4.8%
1271271.8%1.8%
-- 7%7%
+ 0.5 pt+ 0.5 pt
+ 0.2 pt+ 0.2 pt
+ 0.5 pt+ 0.5 pt
Sales
Property of VALEO – Duplication prohibited 6 October 20, 2003
SalesVariation: Q3
in million euros
Q3-2002 Q3-2003
2,2412,086
Net changeAt constant currencies
(4%)
Gross change(7%)
Currency impact(3%)
Property of VALEO – Duplication prohibited 7 October 20, 2003
SalesVariation by continent: Q3
Market Valeo*
- 5%
- 13%
Market Valeo**
+ 1%
+ 28%
SouthSouth AmericaAmerica
* at constant currencies** at constant currencies and inflation
NorthNorth AmericaAmericaMarket Valeo*
- 5%- 3%
Market Valeo*
0%
- 4%
AsiaAsia
EuropeEurope
Profitability
Property of VALEO – Duplication prohibited 9 October 20, 2003
Gross Margin9-month year-on-year evolution
% of sales
2001 2002 2003
16.2
17.2
17.7
Property of VALEO – Duplication prohibited 10 October 20, 2003
Gross MarginQuarterly evolution
% of sales
2001
2002
2003
16.5%16.5%
17.7%17.7%17.5%17.5%
18.1%18.1%
15%15%
16.7%16.7%
17.4%17.4%
17%17%
17.3%17.3%
T1 T2 T3 T4
Property of VALEO – Duplication prohibited 11 October 20, 2003
Gross Margin
Anticipation of a challenging environment in 2004
Renewed momentum in restructuring plan
Associated operational disruptions triggering« friction » costs
Property of VALEO – Duplication prohibited 12 October 20, 2003
Gross MarginSustained restructuring pace: number of sites
MarMar--0101
SeptSept--0202
JuneJune--0303
SeptSept--0303
139139
130130
125125125
170170170
FranceSpain
(4)(1)
Disposal in progress announced: France (1)
Property of VALEO – Duplication prohibited 13 October 20, 2003
Gross MarginSustained restructuring pace: number of employees
MarMar--0101
SeptSept--0202
JuneJune--0303
SeptSept--0303
71,00071,000
69,00069,000
67,00067,00067,000
75,00075,00075,000
Property of VALEO – Duplication prohibited 14 October 20, 2003
Operating expensesIn million euro & % of sales
50
70
90
110
130
150
170
190
Q3-2002 Q3-2003
136136 131131
R&D
6.3%6.1%50
70
90
110
130
150
170
190
Q3-2002 Q3-2003
146146 143143
SG&A
6.5% 6.8%
Property of VALEO – Duplication prohibited 15 October 20, 2003
Operating Margin9-month year-on-year evolutionIn % of sales
2001 2002 2003
3.5
4.6 4.8
Property of VALEO – Duplication prohibited 16 October 20, 2003
Net income
● Operating incomein % of sales
● Net financial charge
● Other income and expenses net
● Taxes
● Goodwill amortization
● Minorities and associated companies
● Net incomein % of sales
90904.3%4.3%
(11)(11)
(9)(9)
(20)(20)
(23)(23)
(2)(2)
25251.2%1.2%
1051054.7%4.7%
(15)(15)
(7)(7)
(26)(26)
(23)(23)
(3)(3)
31311.4%1.4%
-- 0.4 pt0.4 pt
-- 0.2 pt0.2 pt
Q3-2002 ∆Q3-2003in million euros
Cash and balance sheet
Property of VALEO – Duplication prohibited 18 October 20, 2003
Cash generation
Free cash-flow before dividend and equalizationtax: 49 M€
✚✚ FurtherFurther reductionreduction in in inventoryinventory levellevel✚✚ CAPEX control:CAPEX control:
4.8% 4.8% ofof sales vs 5.7% in Q3sales vs 5.7% in Q3--20022002
-- RestructuringRestructuring costcost: 54 M€: 54 M€
Dividend of 81 M€ paid in July 2003Equalization tax related to dividend payment: 39 M€
Property of VALEO – Duplication prohibited 19 October 20, 2003
Shareholder’s equity / Net debtin million euro
December 31, 2002 September 30, 2003
Shareholder's Equity Net Debt
2,0252,101
564 471
Gearing: 27% Gearing: 23%
Prospects andstrategic developments
Property of VALEO – Duplication prohibited 21 October 20, 2003
Order intake
Ratio to Sales
2001
1.0
2002
1.2
1.3
9 months 2003
Confirmation of expectations: sales outperformanceas from H2-2004
Property of VALEO – Duplication prohibited 22 October 20, 2003
Contracts and awards
New contractsPower closure systems for VolkswagenFirst order for Lane Departing Warning system
Customer awardsVEC South Africa Supplier award by VolkswagenVCC Italy 1 year zero defect with
DaimlerChrysler
Property of VALEO – Duplication prohibited 23 October 20, 2003
Strategic alliances
JapanNegotiations in progress with Zexel to reachconsolidation threshold
ChinaCurrent Valeo presence:
– 8 production sites + Asian purchasing office– 5 branches with industrial sites: VT, VCC, VLS, VES, VWS
Expected reinforcement of Valeo’s share in JVs’ capital in several branches (VES, VT, VWS)Forthcoming establishment of all industrial branches
Property of VALEO – Duplication prohibited 24 October 20, 2003
Potential acquisitions
Selective acquisitions to reinforce thetechnological content of Valeo’s existingproduct lines
enrich integrated systems offer
Several targets currently under review
Opportunistic approach
Property of VALEO – Duplication prohibited 25 October 20, 2003
Prospects
Q4: challenging environment
Organic sales growth from H2-2004
Positioned to leverage growth in late 2004
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