MainFirst Automotive Conference IAA 2007...China Japan E.Europe S.America N.America 0 2 000 000 4...

IAA ConferenceSeptember 11, 20071

September 11, 2007

MainFirst Automotive ConferenceIAA 2007

Thierry MorinChairman & CEOThierry MorinChairman & CEO


Agenda

Valeo committed to enabling a better automotive world

H1-2007 financials

Strategy update


The Automotive Dilemna

The Valeo answers

The Automotive Dilemna

The Valeo answers

The automotive dilemma


Growing vehicle production

Number of VehiclesNumber of Vehicles

Source: J.D. Powers

62.1 63.6 66.1 68.0 70.8 74.2 76.9 80.0 82.4 84.8 87.3Totalin ml

YearYear

W.Europe

China

Japan

E.Europe

S.America

N.America

0

2 000 000

4 000 000

6 000 000

8 000 000

10 000 000

12 000 000

14 000 000

16 000 000

18 000 000

2 004 2 005 2 006 2 007 2 008 2 009 2 010 2 011 2 012 2 013 2 014


0

200

400

600

800

1000

1200

1900 1920 1940 1960 1980 2000 2020

Car park set to double over the next 25 years

millionmillion

YearYear

0

200

400

600

800

1000

1200

1900 1920 1940 1960 1980 2000 2020

Currently est. 630 m

1,200 m estimated by 2030


Climate Change: CO2 Emissions

CO2 (ppm) in atmosphereCO2 (ppm) in atmosphere

1000 1200 1400 1600 1800 2000

200

300

400

500

YearYear

600

Source: Intergovernmental Panel on Climate Change


CO2 Emissions: Breakdown

Total transportation sector: 24 % of WW CO2 emissionTotal transportation sector: 24 % of WW CO2 emission

ENERGY; 45%ENERGY; 45%

INDUSTRY; 18%INDUSTRY; 18%

RESIDENTIAL; 8%RESIDENTIAL; 8%

Others; 5%Others; 5%

Other; 1%Other; 1%

AIR; 3%AIR; 3%SHIP; 2%SHIP; 2%ROAD; 18%ROAD; 18%

Source: International Energy Agency


Europe: 120g CO2/km

by 201295g CO2/km

by 2020European Commission

Jan. 10, 2007

Europe: 120g CO2/km

by 201295g CO2/km

by 2020European Commission

Jan. 10, 2007

USA: 35 MPG by 2020

Senate Bill June 21, 07

USA: 35 MPG by 2020

Senate Bill June 21, 07

Japan: 16,8 km/lby 2015

Council for transport Policy

February 2007

Japan: 16,8 km/lby 2015

Council for transport Policy

February 2007

CO2 Regulation


Accident Statistics

More than 100 people do not come back home everyday More than 100 people do not come back home everyday

Road safety evolution in EURoad safety evolution in EU July 2006Source EU Commission


Government Safety Goals

Japan: 50% reduction in road fatalities by 2013

Australia: 40% reduction in road fatalities by 2010

USA: 33% reduction in road crashes by 2008

Europe: 50% reduction in road fatalities by 2010

Japan: 50% reduction in road fatalities by 2013

Australia: 40% reduction in road fatalities by 2010

USA: 33% reduction in road crashes by 2008

Europe: 50% reduction in road fatalities by 2010

Governments are reacting Governments are reacting

Valeo answers


Valeo Domains-

Reconciling automobiles and safety by reinforcing the active aspects of accident prevention and avoidance.

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.


Valeo has adapted solutions

- 30- 40% Feasible!

Power onDemand

Power onPower onDemandDemand

ThermalManagement

ThermalThermalManagementManagement

TransmissionAutomation

TransmissionTransmissionAutomationAutomation

HybridizationHybridizationHybridization

EngineOperation

EngineEngineOperationOperation

- 4%

- 3%

-6-15%

-3-5%

- 4-6%

-15-20%

MICRO HYBRID (from StopStart to Regenerative braking)MICRO HYBRID (from StopStart to Regenerative braking)

DUAL CLUTCHtransmission

DUAL CLUTCHtransmission

THEMIS™THEMIS™

Low consumptionA/C compressorLow consumptionA/C compressor

UltimateCooling™UltimateCooling™

CAMLESS SystemCAMLESS System

Air SystemsAir SystemsAir Systems - 5-7%Cooled EGR systemCooled EGR system


Burden for OEMs- Opportunity for suppliers

Powertrain value will significantly growWe expect + €1,000 to €1,500 average for 2012

OEMs have no choice: Best “cost-to-performance” solutions will be their priority

Suppliers who have good solutions portfolio will immediately benefit from this trend

IAA highlights


StARS

StARS: micro-hybrid starter-alternator

Fuel savings: up to 28% in congested urban traffic

StARS

Now standard on

SMART

fortwo mhd


Blind spot detection system

PACE Award 2007

Initial contracts for 2008 GM Buick et Cadillac

Blind spot detection

New contract to be announced shortly


Park4U™

Ultrasonic technology-based driving assistance system

World premiere on the VW Touran. Now on VW Tiguan and Touran Cross

9 new contracts with 5 European BrandsIntroducing the new generation in Frankfurt

H1- 2007 financials


Half-year key figures

ChangeIn euro million

Total operating revenues

Operating incomeas % of total op. revenues

Net income

Basic earnings per share (€)

Return on capital employed*

Net financial debt

H1-2006*H1-2007

5,309

1693.2%

94

1.23

12.0%

1,053

5,286

1693.2%

71

0.92

12.4%

940

-0.4%

==

-24.5%

-25.2%

+0.4pt

-10.7%

* Operating income margin as a % of capital employed excluding goodwill


Net financial debt walkdownin euro million

968(78)

(18)

(17)

94085

Net debt31/12/2006

Freecash flow Capital

increase

Dividends Others

Net debt30/06/2007


December 31, 2006 June 30, 2007

Shareholder's Equity incl. minority interests Net Debt

Shareholder’s equity and net debt

1,752

968

Gearing: 55% Gearing: 51%

940

1,833in euro million

* adjusted


Return on capital employed analysis

* Capital employed excludes goodwill

ChangeIn euro million H1-2006H1-2007

2,500

9,688

3.88

3.2%

12.4%

Capital employed

Annualized revenues

Asset turn (x)

Operating income margin

ROCE

2,597

9,733

3.75

3.2%

12.0%

(3.7%)

(0.5)%

0.13

0.0%

0.4%

Strategy update


Portfolio management

Focus on technology through the Domain approachActive portfolio management

– Acquisitions: JCEED, Connaught Electronics (€473msales)– Disposals: Motors & Actuators, Wiring (€798m sales)


Acquisition of Connaught Electronics Ltd.

Strengthens the Driving Assistance Domain

Expert in camera– based vision solutions for low-speed maneuvering

300 employees in 2 sites in Ireland and the Czech Republic

2007 sales: €37 million


Planned disposal of the wiring harness business

Part of Valeo €2bn sales disposal plan by end of 2008

Disposal following successful restructuring

Rationale of the disposalLow value addedLack of customer diversificationNo value added to our Domain approach

Closing completed by year-end


Remains focused on long term value creation

Portfolio reshuffling

Reiterate 2010 financial objectives6%+ operating marginAbove 4.5x asset turn at constant perimeter

Back up


Share InformationShare Data / ADR Data

Share DataBloomberg TickerReuters TickerISIN NumberShares outstanding as per 30.06.2007

FR FPVLOF.PAFR 00013033878,149,729

ADR DataRatio (ordinary share: ADR)Bloomberg TickerReuters TickerISIN NumberTypeExchangeSponsor

1:2VLEEY USVLEEY PKUS 9191343048Level 1OTCJP Morgan Chase


Quarterly P&L

(in euro million) 1Q-20061Q-2007 2Q-2006NET SALESOther operating revenuesTOTAL OPERATING REVENUESGROSS MARGIN

as % of net salesResearch & Development expenditureSelling expensesAdministrative expensesOther income & expensesOPERATING INCOME

as % of operating revenuesCost of net debtOther financial income and expenseEquity in net earnings of associatesINCOME BEFORE INCOME TAXES

Income taxesINCOME FROM CONTINUING OPERATIONSNon-strategic activitiesNET INCOME FOR THE PERIODMinority interestsNET INCOME ATTRIBUTABLE TO EQUITYHOLDERS OF THE COMPANY

2Q-20072,627

282,655420

16.0%(171)(50)(118)(1)108

4.1%(15)163

112(30)82

(10)72(1)71

2,63024

2,654415

15.8%(174)(51)(122)(31)61

2.3%(16)(7)2

40(14)26(1)25(2)23

2,61135

2,646414

15.9%(177)(50)(114)(18)90

3.4%(15)(10)

570

(28)420

42(4)38

2,61228

2,640396

15.2%(175)(50)(121)

179

3.0%(13)(10)

056

(22)340

34(1)33


Contact

InvestorInvestor RelationsRelations

Rémy DumoulinRémy Dumoulin43, rue 43, rue BayenBayenFF--75848 Paris Cedex 1775848 Paris Cedex 17FranceFranceTel.: +33 (0) 1.40.55.29.30Tel.: +33 (0) 1.40.55.29.30Fax: +33 (0) 1.40.55.20.40Fax: +33 (0) 1.40.55.20.40EE--mailmail: : [email protected]@valeo.comWeb site: Web site: www.valeo.comwww.valeo.com

MainFirst Automotive Conference IAA 2007...China Japan E.Europe S.America N.America 0 2 000 000 4...

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