Valeo: First Half 2008 Results
Paris (ots/PRNewswire)
- Net Income up by 41%
- Fourth Consecutive Quarter of Margin Improvement
- Debt Reduction of 178 Million Euros
- Good Level of Order Intake
Valeo's Board of Directors, which met yesterday, approved the consolidated financial summary for the first half 2008.
1st half** Quarterly change in 2008
In million euros 2nd 1st
2008 2007*** Change quarter* quarter*
Total operating revenues 4,914 5,006 -1.8% 2,444 2,470
Gross margin 791 771 +2.6% 403 388
% of sales 16.3% 15.6% +0.7 pt 16.7% 15.9%
Operating margin(1) 203 177 +14.7% 113 90
% of total operating 4.1% 3.5% +0.6 pt 4.6% 3.6%
revenues
Net income attributable 100 71 +40.8% 57 43
to the company's
shareholders
% of total operating 2.0% 1.4% +0.6pt 2.3% 1.7%
revenues
Basic earnings per share 1.30 0.92 +41.3% 0.74 0.56
(in euros)* Non audited
** Half-yearly data were submitted to a limited examination
*** These figures do not include amounts relating to the wiring harness activity divested on Dec. 31, 2007, in line with IFRS 5 norms
First half 2008 results
In the first half 2008, total operating revenues amounted to 4,914 million euros, up by 0.6% at constant reporting entity and exchange rates. Volumes resisted the significant slowdown in automotive production in the second quarter and increased by 3.4% over the first half.
The efforts made by the Group to offset the impact of high raw material prices through using less expensive components and productivity gains have paid off. Gross margin reached 16.3% of sales (or 791 million euros) versus 15.6% of sales (771 million euros) in the first half 2007.
Operating margin rose by 14.7% to 203 million euros. It represents 4.1% of total operating revenues, up by 0.6 points versus the first half 2007. The Group recorded its fourth consecutive quarter of improvement in operating profitability, with a gain of 0.5 points in the second quarter.
Income before taxes stood at 161 million euros, for an annual progression of 26.8%. Thanks to a lower average debt level, net financial charges were down slightly despite the rise in the cost of debt. Income before taxes also benefited from favorable exchange rate variations worth 13 million euros.
Income attributable to Valeo shareholders totaled 100 million euros in the first half versus 71 million euros in the first half 2007, representing an increase of 40.8%.
The net financial debt of 621 million euros(2) improved by 178 million euros versus Dec. 31, 2007. This is due to the generation of free cash flow(3) (89 million euros) and the divestiture of the truck engine cooling activity (77 million euros). The net debt-to-equity ratio thus improved to 35% versus 45% at the end of 2007.
Order intake in the first half represented 1.3 times original equipment sales, versus 1.2 times in the first half 2007. The share of innovative products is stable at 26% of the total.
Highlights
Innovation and operational excellence are the cornerstone of the Group's strategy.
The StARS micro-hybrid system, launched as a world premiere in 2004, crossed a new threshold in its commercial development with the announcement of a contract with PSA Peugeot Citroen for the equipment of more than one million vehicles by 2011. Other commercial successes are expected shortly. StARS will benefit, along with the camless engine project, from 54.8 million euros in public funding granted by OSEO.
The Park4U(TM) parking assistance system, which was honored in the first half by a prestigious PACE Award - the fourth consecutive year this award has gone to a Valeo innovation - is in the commercial deployment phase, with 16 vehicles to be equipped by 2010.
The Group's operational excellence has been recognized by a number of customers, including Toyota which gave Valeo its Excellent Quality Award in recognition of the outstanding progress achieved in terms of quality.
The optimization of the industrial footprint, which aims to support customer growth and constantly maintain a competitive cost base, has continued. The Group closed its Rochester site in the U.S. in the second quarter. The percentage of productive headcount in leading competitive-cost countries continued to rise, accounting for 48% of the total versus 45% at June 30, 2007 (excluding the wiring harness activity divested on Dec. 31, 2007).
Valeo pursued its expansion in emerging markets, announcing the creation of its first industrial presence in Russia in the field of climate control systems. Several joint ventures will be launched by the end of the year, in line with the Group's development plan.
Valeo continued to refocus its product portfolio on its three Domains by selling its truck engine cooling activity to the EQT fund.
Outlook
Operating conditions are expected to become tougher in the second half. Against this backdrop, Valeo will take all necessary actions to ensure the growth of its 2008 annual results, in line with its commitments.
Valeo is an independent industrial Group fully focused on the design, production and sale of components, integrated systems and modules for cars and trucks. Valeo ranks among the world's top automotive suppliers. The Group has 122 plants, 61 R&D centers, 9 distribution centers and employs 59,700 people in 28 countries worldwide.
For more information about the Group and its activities, please visit our web site http://www.valeo.com
(1) Operating income before other income and expenses
(2) Before taking into account the dividend of 92 million euros paid on July 1, 2008
(3) Cash flow less taxes less change in working capital requirements less financial expenses plus subsidies less gross tangible and intangible investments
For all additional information, please contact:
Kate Philipps, Group Communications Director, Tel: +33-1-40-55-20-65
Remy Dumoulin, Investor Relations Director, Tel: +33-1-40-55-29-30
Contact:
For all additional information, please contact: Kate Philipps, Group
Communications Director, Tel: +33-1-40-55-20-65; Remy Dumoulin,
Investor Relations Director, Tel: +33-1-40-55-29-30