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