Valeo: First Quarter 2009 Results

Paris (ots/PRNewswire) -

- Sales decrease of 33.4%, better than the evolution of automobile
production which dropped by 38% worldwide
- Slight improvement since March in Europe thanks to vehicle scrapping
programs and in some emerging markets
- Sound liquidity situation
- Operating loss of 66 million euros and reinforcement of the cost
reduction and cash control plan
- New objectives for 2009:
Reduction of investments by one-third versus 2008
Annualized savings of 600 million euros, of which 500 million
euros in 2009; 183 million euros achieved in the first quarter
Consumption of free cash flow[1] not significantly exceeding
restructuring expenses

Following the meeting of its Board of Directors yesterday,
Valeo presented its results for the first quarter 2009.

In million euros 1 January - 31 March Q4
(Unaudited)
2009 2008 change 2008
Sales[2] 1,624 2,437 -33.4% 1,750
Gross margin 185 391 -52.7% 212
% of sales 11.4% 16.0% -4.6pts 12.1%
Operating margin[3] -66 90 na -38
% of sales -4.1% 3.7% na -2.2%
Operating income -83 86 na -284
% of sales -5.1% 3.5% na -16.2%
Net income (attributable to
equity holders of the
company) -159 43 na -313

First quarter 2009 results

The collapse of global automobile production which began in the
fourth quarter of 2008 (-21%) accelerated significantly in the first
quarter of 2009 (-38%). Since the month of March, there has been a
slight improvement in some key markets in Europe, thanks to vehicle
scrapping programs (Germany, France, Italy), and in Brazil, as well
as a noticeable turnaround in China. In each of the world's major
markets, Valeo registered a decrease in sales lower than the drop in
automobile production. At constant reporting entity and exchange
rates, sales were down by 33%.

The first quarter's gross margin was 185 million euros, or 11.4%
of sales, down by 4.6 points versus the same period in 2008.

The drop in sales led to a decrease in the operating margin which
for the first quarter 2009 stood at -66 million euros (before other
income and expenses). In the fourth quarter of 2008, Valeo launched a
cost reduction program (including the global headcount adaptation
plan for 5,000 permanent employees) the aim of which is to preserve
the Group's competitiveness. At 31 March 2009, 3,230 departures had
been registered worldwide. The savings achieved in the first quarter
amounted to 183 million euros.

Net income attributable to the company's shareholders for the
period showed a loss of 159 million euros versus a profit of 43
million euros in the first quarter 2008. This loss takes into account
the impact of other income and expenses (including inefficient
exchange rate and raw material hedges for 13.5 million euros) as well
as a 35 million euro loss corresponding to restructuring and asset
depreciation announced by the Japanese associate company Ichikoh, in
which Valeo has a 31.6% shareholding.

The Group consumed a free cash flow of 116 million euros in the
first quarter 2009, resulting from the payment of investments
initiated in the second half of 2008, the operating loss and the
financing of restructuring. Working capital requirements provided a
slightly positive contribution. Efficient management reduced
inventory by 75 million euros, enabling an adjustment of working
capital requirements to the level of activity.

Net financial debt totaled 933 million euros. The net financial
debt to equity ratio is 80% (excluding minority interests). At 31
March 2009, none of Valeo's 1.2 billion euros of confirmed credit
lines had been drawn upon. The Group's liquidity therefore remains
intact. For 541 million euros of these credit lines, Valeo has
reached an agreement to substitute a covenant based on the net
financial debt to EBITDA[4] ratio for the one based on the net
financial debt to equity ratio.

Highlights

On 20 March 2009, Thierry Morin left his position as Chairman &
CEO. This decision came as a result of strategic differences and the
will of the Board to change the Group's governance structure by
separating the functions of Chairman of the Board and Chief Executive
Officer. Pascal Colombani was appointed Chairman of the Board for the
period remaining in his term of office as a Board Member. Jacques
Aschenbroich was co-opted as a Board Member and was appointed Chief
Executive Officer.

During the first quarter 2009, Valeo's innovation strategy met
with considerable success, with in particular a contract to equip the
new BMW 7 Series with the Group's wide angle multi-camera system. The
Park4UTM automatic park assist system will see its first application
in North America on Ford vehicles (Lincoln MKS and MKT). Despite the
crisis, this dynamic technological effort will be maintained thanks
in particular to the proactive patent filing policy practiced by
Valeo, which ranked fourth among the leading patent filers in France
in 2008.

In line with the market trend towards more energy-efficient
vehicles, Valeo confirms its intention to play a leading role in the
area of electric vehicles, through the launch of several development
programs in its domains of expertise (in particular in the field of
powertrain and thermal systems).

Outlook

Despite the impact of the various vehicle scrapping programs,
Valeo anticipates a further drop in global automobile production, but
at a less pronounced rate starting in the second quarter 2009. The
Group confirms its forecast of a decrease in global automobile
production of around 30% for the first half and 20% for the full
year.

Valeo will reinforce its cost reduction plans which will enable
it to get through the crisis and optimize the return to growth. The
annualized global savings will be 600 million euros, of which 500
million euros in 2009.

The Group is also focusing on reinforcing its liquidity and
controlling cash. Investments will be cut by one-third. Free cash
flow for the year will be negative but will not significantly exceed
the amount of expenses committed for restructuring programs.

Considering that the publication of quarterly results is no
longer compatible with the rhythm of its activities, as from 2010
Valeo will be publishing quarterly regulated information on its sales
and business activities.

2009 Annual General Meeting

The Valeo Board of Directors called the Combined Annual General
Meeting of Shareholders to be held on June 9, 2009 at 2:30 p.m. at
the Eurosites Center, 28 avenue George V, 75008 Paris.

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, 10
distribution platforms and employs around 49,000 people in 27
countries worldwide.

[1] Net cash provided by operating activities less net tangible
and intangible investment flows less net interest paid

[2] As of 1 January 2009, the presentation of Group results has
been modified, with other operating revenues being reclassified
mainly as research and development expenses. For the first quarter
2008, operating revenues totaled 35 million euros, of which 2 million
euros were reclassified as sales.

[3] Operating income less other income and expenses

[4] Before other income and expenses

For additional information, please contact:

Kate Philipps, Group Communications Director, Tel.:
+33-1-40-55-20-65

Vincent Marcel, Vice-President Financial Affairs, acting
Investor Relations, Tel: +33-1-40-55-37-71

For more information about the Group and its activities,
please visit our web site http://www.valeo.com.

ots Originaltext: Valeo Management Services
Im Internet recherchierbar: http://www.presseportal.de

Contact:
For additional information, please contact: Kate Philipps, Group
Communications Director, Tel.: +33-1-40-55-20-65. Vincent Marcel,
Vice-President Financial Affairs, acting Investor Relations, Tel:
+33-1-40-55-37-71