(AOF) – Valeo announces that it has requested the assistance of an investment services provider for the purposes of carrying out its share buyback program authorized by the general meeting of shareholders of May 24, 2023. This service provider will sell to Valeo, which undertakes to acquire, no later than May 13, 2024, a certain quantity of Valeo shares, up to a limit of 25 million euros. The average price cannot exceed the maximum purchase price of 70 euros as decided by the General Meeting.
These shares will be fully allocated for the purpose of covering the implementation of any free and performance share plan, the allocation of shares to employees as part of their participation in the fruits of the expansion of the company or the implementation of any company savings plan and more generally any allocation of shares within the group.
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Key points
– “Tier 1” automotive supplier, world number 1 in electrification and driving assistance;
– Activity of €17.4 billion, divided into 4 divisions – visibility, propulsion, thermal and comfort & driving assistance, with the original equipment activity providing 84% of sales;
– Strong exposure to Asia (34% of original equipment sales including China, leading market with 16%), behind Europe and Africa (45%) but ahead of the Americas (21%);
– Business model taking advantage of automotive market trends: electrification, acceleration of ADAS and reinvention of life on board (comfort and driving assistance) and lighting;
– Open capital with strong shareholders (5.13% for BPI and 5.16% for the Harris fund), Jacques Aschenbroich chairing the board of directors of 14 members, Christophe Périllat being general manager;
– Cleaned up balance sheet -€3.3 billion in net debt, or 89% of shareholders’ equity- and financial visibility -€4.9 billion in cash.
Challenges
– 2022-25 “Move up” strategy:
– average annual outperformance of original equipment sales greater than 5 points,
– operating margin of 14.5%,
– generation of free self-financing of $800 to & billion,
– disposals of non-strategic assets of €500 million over the duration of the plan;
– Innovation strategy in 2 axes, industrial organization and the offer of ecological and safe solutions, innovation bringing 65% of orders:
– dynamic R&D policy for the 3rd French patent depository and 1st French patent holder in the world (9.9% of sales), with a portfolio of nearly 35,000 patents and 5,000 software engineers including 200 in artificial intelligence,
– open global innovation with start-up incubations and academic partnerships,
– industrial partnerships (Safran, Total, Stellantis, etc.) and pure research, for Valeo.ai;
– “CAP 50” environmental strategy aimed at carbon neutrality in 2050:
– “CAP 50” plan for carbon neutrality in 2050, with, for 2030: – 75% for emissions linked to operational activities, – 15% for those linked to supply and – 15%, for those linked to use final products;
– 2/3 of original equipment sales incorporating products limiting their impact,
– circular economy integrated into production,
– launch of green loan;
– Strong ambitions for Valeo Siemens eAutomotive, specialized in high voltage electrification and now integrated into the group (8% then 12% operating margin in 2022 and 2024 and €2.9 billion in order intake);
– Benefits of the joint company with the Korean Kapec, intended to be the world leader in torque converters (gearboxes) with 21% of the market;
– Production systems division boosted by the total integration of the high voltage electrical activity;
– Order intake of €13.1 billion at the end of June – or 1.7 times original equipment sales – driven by ADAS and electrification.
Challenges
– Reaction to the net loss recorded in the 1st half due to weak market growth, inflation of raw materials, shortage of electronic components and cable harnesses;
– Slowdown in the growth of replacement activity;
– Visibility Systems division affected by an unfavorable product mix in China and North America;
– After a 33% increase in sales in the 3rd quarter, confirmation of the 2022 objectives: sales of €19.2 to €20 billion, operating margin of 3.2 to 3.7% and negative free cash flow of €320 million.
Negotiations with manufacturers
On average, equipment manufacturers represent between 60 to 85% of the manufacturing cost price of a vehicle. According to the Federation of Vehicle Equipment Industries (Fiev) negotiations are very tense with manufacturers regarding the passing on of the increase in costs. The price increases concern electronic components, raw materials, such as steel, nickel, lithium or palladium, energy and transport. The equipment manufacturers mainly negotiate with Stellantis and Renault to set up indices to pass on the increases. They are also betting on innovation, differentiation, moving upmarket and internationalization.