PARIS — During an investor day organized today in Paris, Valeo presented a new strategic plan focused on the reduction of CO2 emissions reduction and its medium-term financial objectives.
Jacques Aschenbroich, the Group’s chief executive officer, told attendees that he believes two major trends should drive growth in the automotive market in the next few years: CO2 emissions reduction and high growth in emerging markets. "By focusing our investments in these two areas, I am convinced that Valeo will be able to return to organic growth and play an active role in the consolidation of the sector," he said.
A new strategic orientation to drive growth
In the field of CO2 emissions reduction, Valeo already offers many technological solutions for downsized internal combustion engines and for hybrid and electric vehicles. The group plans to devote two-thirds of its advanced research investment to these innovations. Another key focus point is reduced component weight and energy consumption. Valeo expects to double its sales for technologies linked to CO2 emissions reduction by 2013, to 1 billion euros (about $1.4 billion), and more than 5 billion euros (about $6.8 billion) in 2020.
Valeo plans to devote 60 percent of its investments to emerging countries in order to reinforce its historical positions, notably in China, India, Brazil, Thailand and Turkey, and progressively develop its presence in Russia. The Group’s sales in China and India should amount to 1 billion euros (about $1.4 billion) in 2013 and 3 billion euros (about $4.1 billion) in 2020.
Valeo forecasts organic growth higher than that of global automotive output in each region of production, thereby achieving sales of 10 billion euros in 2013 and 15 billion euros in 2020.
At the same time, Valeo will investigate external growth opportunities, particularly in areas related to CO2 emissions reduction. Should there be a further consolidation of the sector, Valeo said it intends to position itself as an active player in this consolidation. The company says it will continually review its business portfolio, looking at two particular criteria – its position as one of the top three players worldwide; and return on capital employed exceeding 20 percent, to achieve the Group objective of 30 percent.
A new organization
To respond to the new demands of the automotive industry and the growing globalization of its markets and its customers, Valeo has established a new organization centered around four business groups and a strengthened role for the national directorates. The goal of this new organization is to accelerate growth and improve efficiency. A dossier has been presented to the European Works Council.
Valeo’s objective is to achieve by 2013 one of the best performances in its sector in terms of return on capital employed (ROCE). With sales of around 10 billion euros in 2013 and an operating margin level of 6 to 7 percent, the Group’s ROCE should be close to 30 percent.
In addition to the lowering of its break-even point to around 7 billion euros in sales and its negative working capital, Valeo has three other levers that will contribute to improving its operating margin by 3 points as of 2013: reduced administrative expenses from around the end of the first half 2011; investment limited to 80 percent of depreciation in 2010 and 2011; and return to Group-average profitability for the Visibility Systems Business Group.
