Zurich, May 2004 Rémy Dumoulin Financial Relations Director Bruno Roland- Bernard Chairman s Delegate
is an independent industrial Group fully focused on the design, production and sale of components, integrated systems and modules for cars and trucks, in both the OEM and aftermarket segments 2 May 2004
Restored foundations
2001-2003: restored foundations Disqualifying factors Cost competitiveness Quality Global reach Differentiating factors Technology 4 May 2004
Cost competitiveness Industrial footprint rationalization Number of production sites 170 143 140 Zexel 129 7 129 122 1Q-2001 31/12/2001 31/12/2002 31/12/2003 1Q-2004 5 May 2004
Cost competitiveness Growing low-cost presence % of production sites in low-cost countries 41% low-cost 38% low-cost 25% low-cost 1Q-2001 31/12/2001 31/12/2002 31/12/2003 1Q-2004 6 May 2004
Cost competitiveness Supply base rationalisation Number of suppliers 4,500 3,000 2,475* Q1-2001 dec-2002 dec-2003 (*) 2,880 incl. Zexel VCC 7 May 2004
Quality Customer returns in parts per million 190 185 53 Q4-2001 Q4-2002 Q4-2003 8 May 2004
Global reach % of total sales North America 17 sites 16% South America Europe 11 sites In Eastern Europe 10% Asia 70% 18 sites + 10 sites In minority-held JVs 3% 12 sites 9 May 2004
Margins progression
Gross Margin Steady improvement % of sales 17.5 17.8 16.5 15.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2001 2002 2003 2004 Unaudited quarterly data 11 May 2004
Result improvement Q1 figures in million euros Q1-2004 Q1-2003 Sales 2,415 2,440-1% Gross margin % sales 429 17.8% 428 17.5% + 0.3 pt Operating income % sales 111 4.6% 109 4.5% + 0.1 pt Op. income less fin. charges %sales 115 4.8% 92 3.8% +1.0 pt Net income % sales 74 3.1% 22 0.9% + 2.2 pts Unaudited quarterly data 12 May 2004
Differentiating technology
Research & Development (in % of sales) 6.0 5.9 6.1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2001 2002 2003 2004 Unaudited quarterly data 14 May 2004
Enhancing innovation capabilities Leveraging our innovation efforts reduced time to market essential for early adoption technological partnership approach increased R&D productivity Two major new products in Q1-2004 Lane Departure Warning System Nissan Infiniti NYC AutoShow Blind Spot Detection through 58%-held JV Valeo-Raytheon Systems Inc. 15 May 2004
Lane Departure Warning System + Announcement at NYC Autoshow Nissan Infiniti 16 May 2004
Enhancing innovation capabilities Leveraging our innovation efforts reduced time to market essential for early adoption Technological partnership approach Increased R&D productivity Two major new products in Q1-2004 Lane Departure Warning System Nissan Infiniti NYC AutoShow Blind Spot Detection through 58%-held JV Valeo-Raytheon Systems Inc. 17 May 2004
Blind Spot Detection + Global customer for US market 18 May 2004
Order intake Ratio to Sales 1.3 1.3 1.2 1.0 2001 2002 2003 Q1-2004 Unaudited quarterly data 19 May 2004
Strategic ambition
Valeo 2010 Strategic medium term vision 2001 to 2004 2005 and onwards Competitiveness restored & Technological reinforcement High order intake Superior Growth 2010 Leadership Technological Commercial Industrial 21 May 2004
Valeo 2010 Actions 3 strategic directions towards technological and commercial excellence Geographical angle Innovation Aftermarket 3 transversal levers towards industrial excellence Quality mindset Production tool Supplier integration 22 May 2004
Valeo 2010 1st strategic direction: geographical angle Asia Strong organic growth Systematic approach North America Favorable competitive position Europe 50% 25% 25% Asia Americas 23 May 2004
Valeo 2010 2nd strategic direction: technology (1) Domain approach reinforced Domain Systems Components Services Solutions Modules Cross-branch technological developments Selling synergies 24 May 2004
Valeo 2010 2nd strategic direction: technology (2) Focus on 3 Domains Driving Assistance Monitor vehicle perimeter, inform or alert driver and other road-users and initiate appropriate corrective actions Powertrain Efficiency Provide more performance and driving pleasure with less fuel consumption and emissions Comfort Enhancement Increase convenience of vehicle use and passengers well being Supported by Electric and Electronic Distribution System (EEDS) 25 May 2004
Valeo 2010 3rd strategic direction: Aftermarket Organisation in place Range maximization Technological services offer International coverage Target: 25% of total sales 26 May 2004
Valeo 2010 Transversal leverage towards industrial excellence Quality mindset Total Quality target Production tool Higher asset utilization Follow demand geographically Low Cost purchasing policy Target: 70% low-cost sourcing 27 May 2004
Valeo in 2004
Valeo in 2004 Implementation of strategic plan with short term focus: Continuing operating improvement Significant order intake 29 May 2004
30 May 2004