2007 Results and Outlook

2007

Results and Outlook

Agenda

„

Q4’07 and FY’07 review

„

Valeo strategic positioning

Q4-07 Key Figures

nm

42

(3)

Non strategic activities

- 16.7%

-

0.4 pt

60

2.5%

50

2.1%

Net income

as % of total op. revenues

+ 72.5%

+ 1.5 pt

51

2.1%

88

3.6%

Operating income*

as % of total op. revenues

+ 2.6%

2,376

2,438

Total operating revenues*

Change

Q4-2006

Q4-2007

In euro million

Q4 operating margin walkdown

% of Total operating revenues

+0.1

+0.2

+0.8

2.8%

3.9%

Q4-06

Raw materials

Selling price

Q4-07

adjustments

Activity /

Productivity

2007 Highlights

„

Sales & margin recovery acceleration

„

Operational excellence demonstrated further

„

Innovation gains market traction

2007 Key Figures

+ 10.0%

120

132

Net income excl. impact from divestitures**

- 49.7%

-

0.9 pt

161

1.7%

81

0.8%

Net income

as a % of total op. revenues

- 17.5%

968

799

Net financial debt

+ 0.6%

1.81

1.82

EPS from contd. operations (€)***

+ 17.7%

+ 0.5 pt

271

2.8%

319

3.3%

Operating income*

as a % of total op. revenues

+ 1.5%

9,550

9,689

Total operating revenues*

Change

2006

2007

In euro million

Total operating revenues

In euro million

9,550

9,689

8000

9000

10000

2006

2007

+6.2%

Volume/mix

-3.0%

Prices*

-1.5%

Currencies

-0.2%

Perimeter

+3.2%

Like-for-Like

+1.5%

Revenue growth acceleration in H2

TOTAL OPERATING REVENUE - YOY CHANGES

at same perimeter & exchange rate (2007)

H1

H2

+2.3%

+1.6%

+2.0%

+4.3%

+4.8%

5%

4%

+3.8%

3%

2%

1%

Q1

Q2

Q3

Q4

2007 net sales

Geographical trends

+1%

Europe

67% of total Sales

+12%*

Asia

12% of total Sales

+18%*

South America

6% of total Sales

+6%*

North America

14% of total Sales

Market +7%

Market +4%

Market +18%

Market -2%

Valeo sales

+15%

+5%

=

+3%

-3%

+13%

+3%

-1%

+14% +1% -11%

2006 2007

SALES by customers

Original Equipment

Touring Cars

Rebalancing customer exposure

OE SALES

(2001- 2007)*

4.4 %

5.0 %

Fiat

26.7 %

28.1 %

PSA & Renault

10.6 %

7.5 %

Mercedes & BMW

24.5 %

22.5 %

German

21.8 %

31.7 %

Big 3

14.7 %

5.7 %

Asians

2007

2001

Automaker

Results

+ 2.3%

+ 0.2 pt

1,463

15.5%

1,497

15.7%

Gross margin

as % of sales

+ 1.5%

9,550

9,689

Total operating revenues

Change

2006

2007

LME Average Price (Spot)

Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec

2006

2007

H1

Q3

Q4

H1

Q3

Q4

€2,262

€2,440

Euro / ton

Average

2007

Average 2006

Raw material tailwinds in Q4

Ppt of sales - cumulative

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

3.5

2.7

1.6

4.4

4.3

4.7

3.8

1.6

1.9

2.1

1.9

2.2

2.2

1.8

4.3

0.7

0.5

2.1

1.1

4.7

2007

2006

2005

2004

Gross impact

Net impact

Results (cont.)

+ 0.7%

(0.1

pt)

(1,143)

12.0%

(1,151)

11.9%

Total overhead

as % of total op. revenues

+ 17.7%

+

0.5 pt

271

2.8%

319

3.3%

Operating income

as % of total op. revenues

- 44.9%

(

0.2 pt)

(49)

0.5%

(27)

0.3%

Other income (expenses)

as % of total op. revenues

=

(

0.1 pt)

(617)

6.5%

(617)

6.4%

SG&A

as % of total op. revenues

+ 1.5%

=

(526)

5.5%

(534)

5.5%

R&D expenses (net)*

as % of total op. revenues

Change

2006

2007

In euro million

Margin improvement accelerates in Q4

Quarterly YOY change in operating margin (2007)

+ 1.1

- 0.4

+ 0.3

0

-1 pt

0 pt

1 pt

2 pt

Q1

Q2

Q3

Q4

Results (cont.)

+ 40%

(5)

(7)

Minorities

+ 9.0%

211

230

Income before taxes

- 49.7%

161

81

Net income

+ 23.9%

nm

(67)

31.6%

22

(83)

37.4%

(59)

Taxes

Effective tax rate

Non strategic activities

=

nm

nm

(51)

(8)

(1)

(51)

(46)

8

Cost of net debt

Other financial inc./(expenses)

Associates

+ 17.7%

271

319

Operating income

Change

2006

2007

In euro million

Valeo weathered the raw material shock

OPERATING MARGIN

% of total operating revenues

(2003-2007)

OPERATING MARGIN

adjusted for cumulative

raw material headwinds (2004-2007*)

2,0% 3,0% 4,0% 5,0% 6,0% 2004 2005 2006 2007

Operating margin (reported)

Operating margin (adjusted)

Operating margin 2007 Operating margin 2003 Supplier productivity & product ineering Customer contribu-tions Price deflation**

5.0%

-9.0%

+4.5%

+2,5%

+15,8%

3.6%

-15.2%

Net financial debt walkdown

In euro million

968

-66

-237

+29

+89

+16

799

10 pt gearing reduction in 2007

1,551

1,263

1,752

968

1,782

Gearing

55%

Gearing

45%

Gearing

81%

1,263

968

799

In euro million

Return on capital employed analysis*

3.7

3.4

3.6

Operating margin (%)

13.4

13.2

14.3

ROCE (%)

3.7

3.9

4.0

Asset turn (x)

2005

2006

2007

Success factors

COST

COST

QUALITY

QUALITY

GLOBAL

PRESENCE

GLOBAL

PRESENCE

TECHNOLO

GY

TECHNOLO

GY

Valeo Domains address industry opportunities

Driving

Assistance

Powertrain

Efficiency

Comfort

Enhancement

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

Reconciling automobiles

and safety by reinforcing

the active aspects of

accident prevention and

avoidance

Other

€9.6bn

CO

2

Regulation

Europe:

120g CO

2

/km

by 2012

95g CO

2

/km

by 2020

European Commission

Europe:

120g CO

2

/km

by 2012

95g CO

2

/km

by 2020

European Commission

Japan:

16.8 km/l

by 2015

Council for transport

Policy

February 2007

Japan:

16.8 km/l

by 2015

Council for transport

Policy

February 2007

USA:

35 MPG

by 2020

CAFE

USA:

35 MPG

by 2020

CAFE

Fuel Economy solutions portfolio

Low consumption

A/C compressor

UltimateCooling™

THEMIS™

DUAL CLUTCH

transmission

Cooled EGR system

MICRO HYBRID

(from Stop-Start

to Regenerative braking)

CAMLESS System

- 40%

Feasible!

-3%

-3-5%

-4%

-4-6%

-5-7%

-6-15%

-15-20%

Power on

Demand

Thermal

Management

Transmission

Automation

Air Systems

Hybridization

Engine

Powertrain Efficiency growth drivers

CO

AND POLLUTANT REDUCTION

0

5

10

15

20

25

30

35

40

45

50

2006

2010

2015

2020

EGR gasoline

Micro hybrid

Turbo

gasoline

% fitment rate

Successful innovations

StARS micro hybrid

▌

Offered on Citroën C2/C3

▌

Development contracts

with 5 other customers

Accident Statistics

ROAD SAFETY EVOLUTION

in Europe

Evolution 1990-2010 EU road fatalities

More than 100 people do not come back home everyday

Driving assistance growth drivers

DRIVING ASSISTANCE

0

15

30

45

2006

2010

2015

LED rear lighting

Park Assist (including Park4U)

All around Cameras

Successful innovations

Blind spot detection system

▌2007 PACE Award winner

▌28 cars equipped by 2010

▌Best-in-class multi-beam radar system

Successful innovations

Park4U™

▌Ultrasonic technology-based

driving assistance system

▌World premiere on the VW Touran.

Now on VW Tiguan and Cross Touran

▌12 models to be equipped

Significant increase in potential content

per vehicle through the Domain approach

MAXIMUM CONTENT per vehicle

2010

2005

€680

€1,480

Comfort Enhancement

Powertrain Efficiency

Driving Assistance

Total

€710

€1,230

+118%

€940

€1,250

+73%

€2,430

€3,960

+63%

+62%

€3.2bn or a third of new orders

related to innovative products

ORDER INTAKE/ X OE SALES

(excluding VMA & VCS in 2006 & 2007)

2005

2006

2007

€8.6bn

€9.9bn

€10.1bn

+50%

1.1x

1.3x

1.3x

Innovative products

Others

Focusing on Domains

Disposal of the wiring harness business

„

Achieved €255m in enterprise value (0.47X 2007 sales)

Î

€237m Group net financial debt reduction

Î

€213m Group goodwill reduction

„

Rationale of the disposal

Î

Low value added

Î

Lack of customer diversification

Focusing on Domains

Acquisition of Connaught Electronics

„

Expert in camera - based vision

solutions for low speed

maneuvering

Quality levels - now a 10 ppm* organization

63 sites

47%

2006

86 sites

65%

CUSTOMER RETURNS

in parts per million

185

53

32

15

10

2003

2004

2005

2006

2007

Single digit PPM sites

Including 18 sites at 0 ppm

2007

Rationalized industrial footprint

31/03/2001 – 31/12/2007

perimeter changes included

2001 2002 2003 2004 2005 2006 2007

72%

34%

66%

28%

68%

32%

30%

70%

38%

62%

44%

56%

48%

52%

LCC/ HCC BREAKDOWN*

31/03/2001 Closures Disposals Openings Acquis. 31/12/2007

170

-47

-41

+29

+14

Rebalancing new business to Asia

ORDER INTAKE

2007

SALES

Asia

20%

Rest of World

2%

Asia

12%

Rest of World

2%

Europe

60%

North

America

14%

South

America

4%

Europe

66%

North

America

14%

South

America

6%

2008 objectives

„

Trading conditions

Î

Global car production growth: +2.5%, down from 5% in 2007

Î

Raw material prices stabilize at a high level

„

Valeo

Î

Customer mix improvement

Î

Moderate raw material tailwinds

Î

Short term operational levers: Rochester closure, Compressors

Î

Reengineering plan deployment

6% operating margin objective in 2010

Updated identified levers

OPERATING MARGIN

(2006- 2010)

IMPROVEMENT LEVERS

2007

2008

2009

2010

ppt

%

Contract renewal will support raw material

headwind absorption

Copper ($/T)

9 000

Signature

SOP Delta:$0 Contract H2-07/ SOP H1-09

Delta: $1,305 Contract H1-04/ SOP H1-06

Contract H1-05/ SOP H1-07 Delta: $3,458 8 000 7 000 6 000 5 000 4 000 3 000 2 000 1 000 0 H1-0 H2-0 H1-0 H2-0 H1-0 H2-0 H1-0 H2-0 H1-0 H2-0 H2-01 H1-0 H2-0 H1-0 H1-0 H2-0 H1-1 H2-1 H1-1 H2-1 H2-1 H1-1 H2-0 H1-1 5 5 6 6 7 7 8 8 9 9 2 2 3 3 4 4 0 0 1 1 2 2 3

Investment case

„

Upside potential from the ‘Green and Safe’ drivers

„

Resilient operational model and financial structure

„

Value creation potential

Î

Steady dividend growth policy; 2007 proposal of €1.20/share

Î

2010 financial targets

–

€1.3 Bn EBITDA

Contact

Investor Relations

Rémy Dumoulin

43, rue Bayen

F-75848 Paris Cedex 17

France

Tel.: +33 (0) 1.40.55.29.30

Fax: +33 (0) 1.40.55.20.40

E-mail:

[email protected]

Quarterly P&L

(in euro million) 1Q 3Q 1Q

„ NET SALES

Other operating revenues

„ TOTAL OPERATING REVENUES „ GROSS MARGIN

as % of net sales

Research & Development expenditure Selling expenses

Administrative expenses Other income & expenses

„ OPERATING INCOME

as % of operating revenues

Cost of net debt

Other financial income and expense Equity in net earnings of associates

„ INCOME BEFORE INCOME TAXES

Income taxes

INCOME FROM CONTINUING OPERATIONS „ Non-strategic activities

„ NET INCOME FOR THE PERIOD

Minority interests

„ NET INCOME ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY

3Q 2,125 28 2,153 322 15.2% (146) (45) (94) (15) 50 2.3% (12) (6) 0 32 (22) 10 (2) 8 (1) 7 2,487 23 2,510 394 15.8% (170) (49) (113) (20) 65 2.6% (14) (8) 2 45 (10) 35 (11) 24 (2) 22 2,214 31 2,245 340 15.4% (156) (45) (97) (9) 64 2.9% (14) (15) 1 36 (23) 13 (52) (39) (1) (40) 2,472 27 2,499 377 15.3% (168) (49) (113) 3 77 3.1% (12) (10) 0 55 (21) 34 (0) 34 (1) 33 2,472 35 2,507 394 15.9% (173) (48) (105) (13) 90 3.6% (13) (10) 5 72 (26) 46 (4) 42 (4) 38 2Q 2,483 28 2,511 396 15.9% (161) (49) (110) 1 105 4.2% (14) 17 3 111 (31) 80 (7) 73 (1) 72 2Q 4Q 4Q

2007

2006

Share Information

Share Data

ƒ

Bloomberg Ticker

ƒ

Reuters Ticker

ƒ

ISIN Number

ƒ

Shares outstanding as per 31.12.2007

FR FP

VLOF.PA

FR 000130338

78 209 617

ADR Data

ƒ

Ratio (ordinary share: ADR)

ƒ

Bloomberg Ticker

ƒ

Reuters Ticker

ƒ

ISIN Number

ƒ

Type

ƒ

Exchange

ƒ

Sponsor

1:2

VLEEY US

VLEEY PK

US 9191343048

Level 1

OTC

JP Morgan Chase