2004 Results and Outlook. February 10, Thierry Morin Chairman & CEO

Transcription

1 2004 Results and Outlook February 10, 2005 Thierry Morin Chairman & CEO

2 Agenda Key figures Sales and automotive markets Results Cash flow and balance sheet Operating performance Outlook Transition to IFRS 2

3 Highlights & Key Figures

4 2004 Highlights Relative commercial performance improved in the course of the year Innovative products came under production; new contracts for innovative products Margin resilience to commodity price inflation Further improvement in structural competitiveness Financial flexibility further increased 4

5 Q4-04 Key Figures In euro million Change Sales 2,332 2, % Operating income as % of sales % % -12.7% -0.8 pt Other non operating income (expenses) (64) (13) (51)m Tax, associates & minorities (27) (55) na Net income % 5

6 2004 Key Figures In euro million Change Sales 9,439 9, % Operating income as % of sales % % -1.5% -0.1 pt Net income % Free cash flow as % of sales % % +13.0% +0.3 pt Return on capital employed* 20.5% 20.2% pt *Pretax operating income/ capital employed excluding goodwill 6

7 Sales & Automotive Markets

8 Sales Organic Growth Rate Slightly Negative in euro million 9,234 Gross variation + 2.2% Currencies : - 1.9% Perimeter : + 4.5% 9,439 Net variation at constant perimeter & currencies - 0.4%

9 Sales Trend by Region vs. Automotive Output North America -9%* -1% Europe +1% +3% South America +25%* +29% +3%* +8% Asia *at constant perimeter and currencies 9

10 Caught up with Automotive Production in the course of 2004 Change in organic sales minus change in weighted LV production 2% 1% 0% Q1-01 Q2-01 Q3-01 Q4-01 Q1-02 Q2-02 Q3-02 Q4-02 Q1-03 Q2-03 Q3-03 Q4-03 Q1-04 Q2-04 Q3-04 Q % -2% -3% -4% -5% -6% 10

11 Sales Aftermarket Global sales 1,664 million euros Unchanged* 18% of sales *at constant perimeter and currencies 11

12 OE Sales by Customer (2004) As % of OE sales 20% 20% 10% 10% And other major Asian customers 12

13 Results

14 Higher Commodity Prices Impacted Gross Margin as 2Q-04 As % of sales 17.9% 17.7% 16.5% 17.4% Raw material price net impact Q2-04: -0.4% Q3-04: -0.5% Q4-04: -0.8% FY-04: -0.5% 1Q-02 2Q-02 3Q-02 4Q-02 1Q-03 2Q-03 3Q-03 4Q-03 1Q-04 2Q-04 3Q-04 4Q-04 Unaudited quarterly figures 14

15 Commodity Price Inflation and R&D Efforts Partly Absorbed by Strict Control over SG&A in euro million Gross margin % Sales R & D % C.A. Selling & Administ. expenses % sales Operating income % sales , % (584) 6.2% (626) 6.6% % , % (564) 6.1% (624) 6.8% % 15

16 Intensified Restructuring Efforts Impact the Bottom Line in euro million Operating income Financial expenses (net) Other income and expenses (net)* Taxes** Effective tax rate Net income before goodwill Net income (31) (148) (15) 5.4% (41) (89) (55) 16.4% * Including 126m and 71m in social and restructuring costs in 2004 and 2003 respectively ** Including 83m and 88m in tax reimbursements in 2004 and 2003 respectively 16

17 Cash Flow and Balance sheet

18 Strong Free Cash Flow Despite Less Support from Working Capital Management In euro million Change Net cash provided by operating activities (1) of which changes in working capital (39) Acquisition of property and intangibles (2) (457) (460) (3) Free cash flow (1-2) Of which tax reimbursement (3) (83) (88) (5) Adjusted free cash flow (1-2-3) Of which cash restructuring expenses 213 (205) 174 (231) 39 (26) 18

19 Net Financial Debt Further Reduced in euro million (296) +49* ** (33) 500 Net 01/01/2004 Free cash flow Acquisitions net Dividends Equalisation tax Capital increase Others Net 31/12/2004 * Including 63m to acquire the remaining 7% stake in Valeo Climatisation from Bosch Automotive Systems Corp. Japan ** Including 83m on dividends paid in 2001 and 2002 which became due further to the corporate tax income received in

20 Shareholders Equity* and Net Debt in euro million 2,112 1,844** Gearing : 27% Gearing : 27% * Including minority interests ** Including impact of accounting change (see next slide) 20

21 Shareholders Equity Impacted by Accounting Change and Equalisation Tax in euro million (85) (101) +33 1,980 (244) +150 (3) 1,730 Shareholders 01/01/2004 Dividends Equalisation tax Capital increase for Employees Accounting change* Net income Others Shareholders 31/12/2004 * Application of recommandation 2003-R.01 from the National Accounting Board prescribing implementation of IAS 19 on employee benefits as from January 1,

22 Restructuring Provisions in euro million (105) /12/2003 Utilisations Net accruals Perimeter 31/12/2004 & others 22

23 Delivering Operational Performance

24 Start of Production for Innovative Products; New Contracts LaneVue TM : Nissan Infiniti, Citroën C4 StARS: Citroën C3 Dynalic Bending Light: Citroën C5 Fixed cushion: C4 First contract for a Blind Spot Detection System Two additional orders for StARS 24

25 Building Long Term Competitive Advantages Potential for Further Progress in Quality More sites enjoying single PPM Single digit PPM Q Q % 39% Number of Single Digit PPM sites increased from 26% to 39%... 25

26 Industrial Footprint Rationalisation 129 sites at year- end closures Hampton (VT), US Santo Tirso (VECS), Portugal Wemding (VMA), Germany Gebze (VES), Turkey 3 openings Mioveni (VCC), Roumania Chrzanow (VLS), Poland Zielonki (VMA), Poland 26

27 Building Long Term Competitive Advantages Reshaping the Industrial Footprint Direct labor headcount 100% 80% 60% 62% 59% 55% 52% HCC LCC 40% 20% 38% 41% 45% 48% 0% Dec 2001 Dec 2002 Dec 2003 Dec

28 Leaner Company Generating Higher ROCE and Cash 27% 5,0 4,0X 4,2X 4,5 22% 4,0 20,2% 20,5% 3,5 ROCE drivers 2H-01 2H-04 Change 17% 12% 3,1 13,5% 3,0 2,5 2,0 1,5 EBIT/Sales Asset turn (X) ROCE Capital employed ( m) Free cash flow ( m) 3,8% 3,34 12,7% 2,863 (21) 4,9% 4,23 20,5% 2, ,1% 0,89 7,9% (630) 317 7% 3,8% 5,1% 4,9% 1,0 0,5 2% H H H H H H H H H Last 12 months sales/ capital employed period end ROCE (LA) Last 12 months EBIT margin (LA) Notes: Capital employed excludes goodwill ROCE defined as pretax operating income/ capital employed 28

29 Outlook

30 1H-05 Challenging Trading Conditions Automotive production outlook Europe -2% North American Big Three -5% Target to outperform our production benchmark Ongoing raw material impact Targeting further selling price adjustments and value added productivity gains in line with

31 Integration of Valeo Engine Management Systems Agreement to acquire Johnson Controls Engine Electronic Division for 324m in cash signed on January 10; deal is expected to close on February 28 Should add approximately 400m in sales in FY05; accretive to earnings Reinforces Valeo position in electronics and electrical systems for safe, comfortable and environment friendly vehicles 31

32 Order Intake Sales ratio (Original Equipment)

33 Transition to IFRS

34 Opening Shareholders Equity Reduced by 262m in euro million Shareholders equity French GAAP Employee benefits Development costs Specific Tooling Other adjustments Total adjustments Shareholders equity - IFRS January 1,2004 2,112 (245) 148 (53) (112) (262) 1,850 Minority interests 132 (35) 97 Largest single impacts from adjustments for employee benefits ( -245m) and development costs ( 148m) Impairment of goodwill is limited ( 18m included in Other adjustments/impairment of assets) 34

35 IFRS- Next Steps When reporting 1Q results (April 19, 2005), Valeo will also release: P&L, balance sheet, statement of changes in stockholders equity and cash flow statement under IFRS, and reconciliation metrics with French GAAP and explanatory notes Impact on shareholders equity of FTA as from January 1, 2005 of IAS 32 and 39 on financial instruments Interim results for 1H-05 and 3Q-05 under IFRS with 2004 comparables (excluding IAS 32 & 39) Full set of IFRS accounts for FY06 in February

36 Back-up

37 Quarterly P&L ( ) (in euro million) Sales Q1 T1Q2 Q3 Q4 Q1 Q2 Q3 2,440 2,406 2,086 2,302 2,415 2,513 2,179 Q4 2,332 Gross Margin % of sales % % % % % % % % R&D expenses % of sales SG&A % of sales (152) 6.2% (167) 6.8% (144) 6.0% (159) 6.6% (131) 6.3% (143) 6.9% (137) 6.0% (155) 6.7% (154) 6.4% (164) 6.8% (153) 6.1% (162) 6.4% (140) 6.4% (146) 6.7% (138) 5.9% (154) 6.6% Operating income % of sales % % % % % % % % Net financial expenses and other financial expenses % of sales (17) (0.7%) 0 (0.0%) (11) (0.5%) (12) (0.5%) 4 (0.2%) (17) (0.7%) (8) (0.7%) (10) (0.4%) Other income and expenses - net (26) (41) (9) (13) (39) (23) (22) (64) Taxes Effective tax rate (21) 31.5% 16 N.S. (20) 28.6% (30) 27.5% 27 N.S. (27) 26.6% (18) 30.1% 3 (7.0%) Net income from consolidated companies % of sales % % % % % % % % Equity in net earnings of associated companies Amortization of goodwill 5 (23) 0 (22) 2 (23) 2 (22) 2 (22) 3 (23) 1 (22) 1 (23) Minority interests (5) (4) (4) (5) (9) (8) (7) (8) Net income % of sales % % % % % % % % 37

38 Half Year Cash Flows ( ) (in euro million) CASH FLOWS FROM OPERATING ACTIVITIES Net income from consolidated companies Net dividends received from associated companies Other adjustments to reconcile net income to net cash provided by operating activities: -Depreciation, amortization and provisions for impairment in value -Net charges to/(reversals from) provisions and deferred taxes -(gains)/losses net of tax on disposals of fixed assets -Other income and deductions with no cash effect Cash flows Changes in operating working capital: -Inventories -Accounts and notes receivable -Accounts and notes payable -Other receivables and payables Net cash provided by operating activities CASH FLOW FROM INVESTING ACTIVITIES Capital expenditures: -property and intangibles -investments and other non-current assets Proceeds net of tax from disposal of: -property and intangibles -investments and other non-current assets Impact of changes in scope of consolidation Net cash used in investing activities Net cash provided before financing activities CASH FLOW FROM FINANCING ACTIVITIES Dividends paid to parent company stockholders Equalization tax on dividends Dividends paid to minority interests in consolidated subsidiaries Proceeds from: -issuance of share capital -issuance of long-term debt -capital grants received Reduction in long-term debt Net cash provided by/(used in) financing activities Effect of exchange rate changes on cash NET CHANGE IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at beginning of year CASH AND CASH EQUIVALENT AT END OF PERIOD S1 S2 FY S (39) 16 (2) (185) (207) (3) 6 (204) 178 (8) 1 (7) (14) (23) (105) (2) (103) (73) 339 (253) (2) 8 2 (42) (287) 52 (81) (5) (6) 381 (20) (144) 14 (2) (64) (460) (5) 14 2 (42) (491) 231 (81) (39) (13) (13) 328 (43) (48) 2 (2) 408 (10) (177) (217) (1) 12 1 (3) (208) 257 (85) - (4) (9) (81) S (8) (8) 199 (94) (152) 288 (240) (1) 8 1 (66) (298) (10) (101) (4) (3) (64) (13) (87) FY (56) 7 (2) 751 (18) (51) 753 (457) (2) 20 2 (69) (506) 247 (85) (101) (8) (12) (145) (3)

39 Half Year Balance Sheets ( ) (in euro million) ASSETS Cash and marketable securities Accounts and notes receivable net Inventories net Short-term deferred tax assets Prepaid expenses and other current assets Current asset Property, plant and equipment Less accumulated depreciation Property, plant and equipment net Goodwill net Other intangibles net Investments in companies carried at cost Investments in companies at equity Loans and other assets Investments and other non-current assets Long-term deferred tax assets Fix assets TOTAL ASSETS LIABILITIES AND STOCKHOLDERS EQUITY Short-term debt Accounts and notes payable Current maturities of long-term debt Provisions current portion Other liabilities and deferred income Current liabilities Long-term debt Long-term deferred tax liabiities Provisions for contingencies and charges Long-term liabilities Minority interests Share capital Additional paid-in capital Retained earnings Stockholders equity Stockholders equity including minority interests TOTAL LIABILITIES AND STOCKHOLDERS EQUITY June 30 December 31 June 30 December , ,611 5,583 (3,484) 2,099 1, ,631 7, , ,042 3, , ,023 2,005 2,140 7, , ,451 5,755 (3,659) 2,096 1, ,567 7, , ,007 1, , ,980 2,112 7, , ,945 5,946 (3,899) 2,047 1, ,371 7, , ,037 3,537 1, , ,947 2,105 7, , , (3,897) 2,002 1, ,379 6, , ,160 1, , ,730 1,844 6,989 39

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