Valeo (Euronext: FR) is aiming to continue and accelerate its growth strategy presented in March 2015 and is setting new financial objectives through 2021:
- Sales of over 27 billion euros(1), reflecting an average outperformance of more than 7 percentage points for the 2016-2021 period compared to global automotive production, and average annual sales growth in excess of 10%
- Operating margin(2) (as a percentage of sales) of around 9%
- Free cash flow(2) of 3.7 billion euros over the 2017-2021 period, twice the level recorded over the 2012-2016 period of 2 billion euros
Jacques Aschenbroich, Valeo’s Chairman and Chief Executive Officer, commented:
“Thanks to the commitment of all our teams, over the last few years we have built a new, more innovative, technologically focused, dynamic and profitable Valeo. By leveraging the growth opportunities in the automotive industry for electrification, autonomous and connected vehicles, as well as new mobility services driven by digital technology, Valeo is embarking on a virtuous circle of profitable growth underpinned by sustained Research and Development efforts and a selective acquisition policy, allowing us to strengthen our positions on the main markets as well as our technological leadership. All four of our Business Groups will leverage this potential, undergoing several waves of growth as these new technologies enter production.”
During the Investor Day, Jacques Aschenbroich, Chairman and Chief Executive Officer, Christophe Périllat, Chief Operating Officer, Robert Charvier, Chief Financial Officer, and the Presidents and the R&D and Product Marketing Directors of the four Business Groups (Xavier Dupont and Michel Forissier for Powertrain Systems, Francisco Moreno and François Bordes for Thermal Systems, Marc Vrecko and Joachim Mathes for Comfort & Driving Assistance Systems, and Maurizio Martinelli and Christophe Le Ligné for Visibility Systems) will present the new strategic plan and medium-term financial objectives for the Group and its four Business Groups.
As the world leader in CO2 emissions reduction and intuitive driving (particularly autonomous vehicles), Valeo is intent on continuing its R&D efforts in order to meet its customers’ needs and leverage new growth opportunities for electrification, autonomous and connected vehicles, as well as new mobility services driven by digital technology.
Valeo has solid fundamentals thanks to its diversified customer and geographic positioning with an increasing footprint in high-growth potential regions, notably in Asia. Accentuating this trend over the next five years will help Valeo pursue its geographical repositioning, with around 37% of original equipment sales projected to be generated in Asia by 2021, versus 27% in 2016.
Focus on accelerating growth, improving profitability and increasing free cash flow in each of the Business Groups
Driven by growth in the order intake(2) due to the success of its innovations (half of the order intake(2) in 2016), the Group is aiming to accelerate organic growth on the back of higher content per vehicle and a better product mix, to improve profitability and increase free cash flow(2).
All four of our Business Groups will leverage this potential stemming from the new opportunities within the automotive industry and will undergo several waves of growth as these new technologies enter production.
Accelerating organic growth and boosting operational excellence
Leveraging the record level of its order intake(2) over the past few years, Valeo is aiming to achieve average annual organic growth more than 7 percentage points above global automotive production on the back of its innovation-fueled product mix. Assuming that global automotive production increases by an annual average of 2.3% over the next five years, sales would therefore rise to around 22.5 billion euros(1) in 2019 and would exceed 27 billion euros(1) by 2021 (versus 16.5 billion euros in 2016).
Improving operating margin(2)
Valeo is aiming to leverage this sales growth to improve profitability, and has set a target for operating margin(2) (as a percentage of sales) of around 8.5% and 9% for 2019 and 2021, respectively, versus 8.1% in 2016.
Doubling free cash flow(2)
Valeo is aiming to double its free cash flow(2) generation to 3.7 billion euros over the 2017-2021 period, versus 2 billion euros over the 2012-2016 period.
Profitability indicators
Within the scope of its medium-term plan characterized by strong growth in production capacity, particularly in Asia, Valeo is aiming to achieve a return on capital employed (ROCE(2)) of around 30% and a return on assets (ROA(2)) of more than 20%.
Attendees at the Investor Day will be able to learn more about Valeo’s latest innovations and see product presentations demonstrating what will drive the growth of our four Business Groups.
