Valeo S.A. Semi-annual update. Exhibit 1 Leverage Compared with Rating Triggers Valeo S.A. Cash on balance ( m) Expected range for Baa2:

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1 CREDIT OPINION Semi-annual update Update Summary RATINGS Domicile Paris, France Long Term Rating 2 Type LT Issuer Rating - Fgn Curr Outlook Stable Please see the ratings section at the end of this report for more information. The ratings and outlook shown reflect information as of the publication date. Valeo s 2 rating reflects as positives its: (a) size and scale as a Tier 1 automotive supplier with revenues in 2017 of around 18 billion; (b) long-standing relationships with the global original equipment manufacturers (OEMs); (c) high product diversity operating across four core reporting segments; (d) positive exposure to the long-term forces affecting the automotive industry; (e) high rate of innovation with products launched within the last 3 years accounting for over 42% of orders in 1H2017; and (f) balanced financial policy, as reflected by gross debt/ebitda (Moody's adjusted) of 2.9x per 06/2017. The rating also reflects as negatives its: (a) exposure to the cyclicality of automotive production which faces headwinds in 2017; (b) exposure to volatile raw material costs; and (c) low profitability, with an EBITA margin (Moody's adjusted) of 5.8% per June 2017 albeit at a level that is average for the industry. Exhibit 1 Leverage Compared with Rating Triggers 2.5x Contacts Cash on balance ( m) 2,500 Matthias Heck VP-Senior Analyst matthias.heck@moodys.com Falk Frey Senior Vice President falk.frey@moodys.com x 2,000 Expected range for 2: x 1.5x 1, x 1, x 500 Matthias Hellstern MD-Corporate Finance matthias.hellstern@moodys.com 0.0x e 2018e /2017 net debt / EBITDA (Moody's adjusted) Source: Moody's Financial Metrics Credit Strengths CLIENT SERVICES Americas Asia Pacific Japan EMEA » High innovation rate underpins future revenue growth» Well positioned to manage long-term disruptive trends» Increasing aftermarket sales» Strong liquidity, supported by continuously high cash balance Credit Challenges» Exposure to the cyclicality of automotive production 2017e 2018e 2019e

2 » Exposure to disruptive trends in the industry, but product portfolio to partly offset this» High R&D expenses Rating Outlook The stable outlook reflects our expectation that Valeo will be able to sustain: (a) EBITA margins well above 5.5%; (b) positive levels of Free Cash Flow (FCF) generation; (c) net leverage well below 2x net debt / EBITDA (and gross debt / EBITDA well below 3x); and (iv) retained cash flow (RCF) / net debt above 35%. Factors that Could Lead to an Upgrade Positive rating pressure could arise if Valeo achieved on a sustainable basis» EBITA margins in the high single-digits in percentage terms,» Net leverage below 1.5x net debt/ebitda (Moody's adjusted),» Further improvement in FCF generation,» RCF/net debt ratio above 40%, and» continuation of a balanced financial policy. Factors that Could Lead to a Downgrade Negative rating pressure could arise if» EBITA margins fell below 5.5%,» Materially negative FCF was generated,» Leverage increased towards 2.0x net debt/ebitda and/or 3.0x gross debt/ebitda, or» RCF / net debt declined to below 35%. Key Indicators Exhibit 2 Key Financial Metrics 6/30/2017(L) 12/31/ /31/ /31/ /31/2013 Revenue (USD Billion) $19.5 $18.3 $16.1 $16.9 $15.5 EBITA Margin 5.8% 6.0% 6.0% 5.7% 5.4% EBITA / Interest 7.6x 7.2x 6.4x 4.9x 4.0x 38.8% 54.2% 65.1% 41.1% 36.4% Debt / EBITDA 2.9x 2.2x 2.7x Net debt / EBITDA 1.3x 1.0x 45.1% 37.8% 33.9% 46.1% 45.8% Retained Cash Flow / Net Debt Capital Structure: Net Debt / Net Capitalization [1] All ratios are based on 'Adjusted' financial data and incorporate Moody's Global Standard Adjustments for Non-Financial Corporations Source: Moody's Financial Metrics Profile Headquartered in Paris, is one of the leading global suppliers of automotive components for new cars and light vehicles (original equipment or OE) and the aftermarket (around 10% of group revenues). In 2016, Valeo generated revenues of 16.5 billion. This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on for the most updated credit rating action information and rating history. 2

3 Valeo has four business divisions: (i) Comfort and Driving Assistance Systems (20% of 2016 group revenues); (ii) Powertrain Systems (24%); (iii) Thermal Systems (28%); and (iv) Visibility Systems (28%). The group's product range consists of clutches, electrical systems, switching and driver interface modules; sensors for driving assistance; air-conditioning systems and modules; heating and cooling products; filters; windshield wipers; and lighting systems. Detailed Credit Considerations Exposure to the cyclicality of automotive production Valeo, like most global auto suppliers, has a strong reliance on the production rates of light vehicles by the various OEMs. In 2017, the global production of passenger cars increased by around 1.3% to reach 94 million cars (according to Moody's data). While the developed markets of Europe grew by a more muted 2%, growth in Asia was notably higher. In particular, production in China grew by 5.6% (according to Moody's data). In contrast, North American markets declined by around 3.6%, after relatively strong growth in 2014 and 2015 and stable volumes Exhibit 3 Global production increased by 1.3% in 2017 driven by most regions but notably higher in China (Moody's data) Unit Sales 2013 Unit Sales 2014 Unit Sales 2015 Unit Sales 2016 Base Scenario 2017 YoY growth Base Scenario 2018 YoY growth Western Europe Japan 12,885 13,592 14,857 15,958 16, % 16, % 5,255 5,440 4,934 4,822 5, % 5, % United States 15,573 16,489 17,445 17,539 16, % 16, % K Units China 21,994 23,489 24,563 27,939 28, % 29, % Others 28,578 28,332 27,303 26,535 26, % 27, % 84,285 87,341 89,102 92,794 94, % 95, % Total See Moody's 2018 Outlook for Automotive manufacturers and parts suppliers Source: LMC, US Bureau of Economic Analysis, ACEA, Chinese Association of Automobile Manufacturers and estimates of Moody's Investors Service As a consequence of this speed of growth, Valeo (along with many of the other automotive suppliers) is looking to increase its exposure to Asian customers. While in 2007, Asia represented only 12% of OEM sales (with China at 3%), the region had increased in 1H2017 to 29% of Valeo's OEM sales (with 15% coming from China). At its Capital Markets Day in February 2017, Valeo estimated that global vehicle production would increase by an average 2.3% per annum between 2016 and 2021 with Asia accounting for 65% of the increase. Within this, Valeo estimated that China would account for 46% while the rest of Asia would account for 19%. This is arguably a stronger rate of growth than we estimate in our industry sector outlook, published in December 2017 where we estimate that global light vehicle sales will grow by 1.5% in 2018, roughly the same growth rate as the industry delivered in While we expect China and Japan to grow above the global average, we anticipate that Western Europe will grow very modestly by 1.0% and the United States may decline by another 0.6% in Well positioned to manage long-term disruptive trends We believe that Valeo has positive exposure to three long-term disruptive trends currently facing the automotive industry: (a) the electrification of the powertrain and the shift towards hybrid and fully electric vehicles; (b) autonomous driving; and (c) the increasing connectivity of a car both with passengers and also with its surroundings. In recent research, we estimated that alternative fuel vehicles (AFVs) such as hybrids and electric cars could account for between 15-25% of total production by This high level of growth is driven by a combination of: (a) the increasing severity of carbon emissions regulations and; (b) the decreasing cost of lithium ion batteries. Together these factors are promoting an increase in sales of cars with some level of electrification in the powertrain. We believe that Valeo is well placed to benefit from this trend, particularly given its leading position for 48-volt (48V) mild hybrids. In its 2017 Capital Markets Day, Valeo estimated that for such vehicles its average content per car is around threefold of that with a traditional internal combustion engine (ICE). For higher powered hybrids (such as plug-in hybrids) and electric vehicles, the content is greater still. We also think Valeo is well positioned to benefit from its Joint Venture with Siemens founded in 2016, which will see the latter contribute its expertise for electric motors and inverters. 3

4 Through Valeo s Comfort & Driving Assistance (CDA) Systems division, we believe the group is also well placed to benefit from the trend towards increasingly autonomous and connected vehicles. The company has a broad portfolio of products (e.g., sensors, cameras, lasers and control units) which are found in increasing quantities in autonomous vehicles. While the time horizons for the various stages of autonomous cars (level 1 = some driver assistance; level 5 = full autonomy) are uncertain, the company also believes that its average content per vehicle would be considerably higher in those scenarios than is implied from its financial performance in High innovation rate underpins future revenue growth Like many European auto suppliers, Valeo invests significantly in research & development (R&D) activities per year. In 2016, this amounted to 1.6 billion (9.7% of sales), a 59% increase since 2012 (where it was 1 billion and represented 8.6% of sales). Of this 1.6 billion, around 456 million were funded directly by Valeo s customers (predominantly the OEMs) and through subsidies/grants and around 437 million were capitalized as capital expenditure. Within the profit & loss account, therefore, 5.8% of revenues are shown as net R&D expenses, which was slightly above that of the industry average. While the high level of R&D has a negative impact on both profitability and cash flow, it is nevertheless intrinsic to the sector and is somewhat required by companies in order to generate future orders and profitability. Indeed, Valeo s financial policy is illustrated through its virtuous circle whereby innovation through R&D underpins future orders, which in turn provides earnings growth and headroom to undertake acquisitions. In this respect, the company said that in the first half of 2017 its order intake increased by 16% to 14.9 billion (1.8x of original equipment sales) in addition to 3.0 billion related to the Valeo Siemens JV. This high order intake will underpin revenue growth in excess of automotive production in the next 2-3 years. Furthermore, Valeo aims to maintain R&D expenses around 6% of sales to drive continuing innovation. In the first half of 2017, products that were developed within the prior 3 years amounted to 42% of the group s order intake. Increasing global presence and aftermarket provide diversification benefits Given the growth of its sales to OEM customers in recent years, Valeo s aftermarket business has declined slightly (in relative terms) and now reflects 10% of total group revenue (as per first nine months of 2017). Nevertheless, the company believes that its aftermarket sales will significantly increase in excess of 10% per year to 2021 to reach around 2.8 billion of sales. This reflects a combination of: (a) previous OEM sales which drives the demand for replacement products; and (b) the acquisition of FTE and Ichikoh. From a credit perspective, such a strategy if successfully executed would be credit positive because we generally expect that aftermarket sales are less sensitive to the economic cycle than for the OEM segment. As a consequence, a higher proportion of aftermarket sales (as a percentage of the total group) would lower the volatility of Valeo s cash flows over time. Strong credit metrics and committed to an investment-grade rating Exhibit 4 Peer Comparison Table Hella KGaA Hueck & Co. Continental AG Autoliv ASP, Inc. Faurecia SA 2 Stable 2 Positive 1 Stable Stable Ba2 Positive Dec-15 Dec-16 Jun-17 May-16 May-17 Aug-17 Dec-15 Dec-16 Sep-17 Revenue $16,148 $18,278 $19,463 $7,048 $7,179 $7,322 $43,558 $44,866 EBITDA $1,593 $1,771 $1,860 $809 $900 $932 $6,886 $7,047 Total Debt $3,458 $4,681 $5,705 $1,718 $1,951 $2,038 $10,192 Cash & Cash Equiv. $1,874 $2,488 $2,567 $1,017 $1,234 $1,342 (in US millions) EBITA Margin Dec-15 Dec-16 Sep-17 Dec-15 Dec-16 Jun-17 $47,792 $9,170 $10,074 $10,257 $20,840 $20,702 $21,230 $7,656 $1,185 $1,300 $1,287 $1,292 $1,379 $1,507 $11,914 $13,364 $1,984 $2,035 $1,996 $3,800 $3,958 $4,347 $1,500 $1,766 $1,592 $1,334 $1,227 $958 $1,013 $1,648 $1, % 6.0% 6.0% 5.8% 5.9% 6.8% 6.8% 11.4% 11.1% 11.4% 9.3% 9.1% 8.5% 3.8% 4.2% EBITA / Int. Exp. 6.4x 7.2x 7.6x 8.1x 9.8x 8.8x 13.7x 15.2x 9.6x 10.8x 12.1x 11.2x 3.8x 5.0x Debt / EBITDA 2.2x 2.9x 2.1x 2.1x 2.0x 1.5x 1.8x 1.7x 3.0x 3.0x Net Debt / Net Cap 33.9% 37.8% 45.1% 25.2% 23.3% 20.0% 37.1% 38.9% 38.2% 15.8% 17.1% 19.8% 56.2% 47.6% 51.9% RCF / Net Debt 65.1% 54.2% 38.8% 81.7% 109.5% 119.0% 56.0% 47.3% 44.5% 95.0% 97.0% 69.5% 34.4% 36.7% 39.1% Source: Moody's Financial Metrics. All figures & ratios calculates using Moody's estimates & standard adjustments. = Financial Year-End. = Last Twelve Months. Valeo's credit metrics are generally commensurate with the current rating in absolute terms as well as in comparison to its peers. At the end of June 2017, net debt / EBITDA amounted to (vs. guidance to maintain the rating of 1.5x-2.0x) while gross debt / EBITDA was 2.9x (vs. guidance of less than 3x). The difference reflects the company s sizeable cash balance, which amounted to 2.3 billion at the end of June 2017 and reflects the company s strong historical free cash flow generation. Nevertheless, since 2015, Valeo s credit metrics 4

5 have weaken somewhat and this reflects predominantly the acquisitions made by the group. We therefore expect a further increase in net leverage towards 2.0x at the end of The acquisition of FTE, a producer of clutch and gear actuators based in Germany, was Valeo's only major transaction in The acquisition was closed in 4Q2017 for an enterprise value of 819 million and was financed with cash on balance. While we expect the company will continue to make medium sized acquisitions going forwards, we nevertheless believe that the issuer will maintain a balanced financial policy, commensurate with its existing rating. In this respect, we also note the group s public commitment to maintaining an investment grade rating and also its recent track record for stronger FCF generation. Valeo has also operated a reverse factoring programm since Under the programme, which is reported as part of the group's trade payables, Valeo pre-approves invoices from suppliers to a financial institution ( factor ). This supports Valeo's suppliers and enables them to factor their receivables. Despite its growing volume, we understand that Valeo's reverse factoring programme is still relatively small compared to its total trade payables of 4.2 billion as per June 2017 and has no material impact on the group's credit metrics on a Moody's adjusted basis. Liquidity Analysis Moody's considers Valeo's liquidity position to be strong and reflects a combination of: (a) cash on the balance sheet of 2.3 billion; (b) annual funds from operations (FFO) of around 1.4 billion; and (c) full availability under the company s committed credit lines of 1.2 billion. While those lines contain a financial covenant, we anticipate that headroom against it will be ample. The above mentioned sources of liquidity comfortably exceed expected cash outflows, which mainly comprise (a) capex, (b) debt repayments, and (c) M&A-related outflows for the Kapec JV and the acquisition of FTE. Exhibit 5 Liquidity Development 3Q2017 to 2Q2018E walk-forward Cash FFO Facilities Working cash W/C & capex Dividends Debt repayments* M&A Ending liquidity *Short-term debt and current maturities of long-term debt ** Working cash of ~ 0.5 billion is a Moody's standard assumption equivalent to 3% of group revenue Source: This represents Moody's forward view; not the view of the issuer; and unless noted in the text, does not incorporate significant acquisitions and divestitures. Rating Methodology and Scorecard Factors Moody's rating methodology for the automotive supplier industry points to 3 for Valeo driven by a temporary increase in gross and net debt which also leads to slightly lower retained cash flow to net debt as a result of recent acquisitions. While scale of the business is shown as a key strength of the credit, the grid points to profitability weakness. The actual rating assigned is one notch above the indication received from the grid reflecting the company's focus on innovation and the success in growing the business above the market. the rating also reflects Valeo's continuously high cash balance which is not reflected in the gross leverage calculation. 5

6 Exhibit 6 Rating Factors and Forward View Current 6/30/2017 Automotive Supplier Industry Grid [1][2] Factor 1 : Scale (10%) a) Revenue (USD Billion) Moody's Month Forward View As of 12/28/2017 [3] Measure Score Measure Score $19.5 A $21 - $22 A Factor 2 : Competitive Position (10%) a) Competitive Position Factor 3 : Profitability and Cash Flow (25%) a) EBITA Margin 5.8% B 5.8% - 6.2% B b) FCF Through the Business Cycle Factor 4 : Financial Policy (20%) a) Financial Policy Factor 5 : Coverage and Leverage (35%) a) EBITA / Interest b) Retained Cash Flow / Net Debt c) Debt / EBITDA d) Capital Structure: Net Debt / Net Capitalization 7.6x A 7.5x - 10x A 38.8% 33% - 40% 2.9x Ba 2.5x - 3x Ba 45.1% Ba 40% - 45% Ba Rating: a) Indicated Rating from Grid 3 b) Actual Rating Assigned 3 2 [1] All ratios are based on 'Adjusted' financial data and incorporate Moody's Global Standard Adjustments for Non-Financial Corporations. [2] As of 6/30/2017; [3] This represents Moody's forward view; not the view of the issuer; and unless noted in the text, does not incorporate significant acquisitions and divestitures. Source: Moody's Financial Metrics Ratings Exhibit 7 Category VALEO S.A. Outlook Issuer Rating Senior Unsecured -Dom Curr Subordinate MTN -Dom Curr Commercial Paper -Dom Curr Moody's Rating Stable 2 2 (P)3 P-2 Source: Moody's Investors Service 6

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8 CLIENT SERVICES 8 Americas Asia Pacific Japan EMEA