(AOF) – Valeo has acquired the 50% stake held by Siemens in Valeo Siemens eAutomotive, as provided for in the agreement signed with Siemens on February 9. The company integrates 100% of Valeo Siemens eAutomotive, a leader in high-voltage electrification, within its Powertrain Systems activity. The automotive supplier will disburse 277 million euros for the acquisition of Siemens’ stake on a debt-free basis, financed by its available cash.
Net debt increased by around 700 million euros, without substantially modifying the major balances of Valeo’s balance sheet. The French group plans to reduce its debt from 2023.
Thanks to this integration, Valeo is aiming for annual sales growth of more than 12% proforma for its Powertrain Systems activity over the period 2021-2025 and is aiming for sales of more than 8.5 billion euros in 2025 (compared to 5 .4 billion euros in pro forma revenue in 2021).
Proforma Ebitda margin for the Powertrain business will increase from 5.8% in 2021 to over 8% in 2022, over 11% in 2025 and around 13% in 2026. this activity will break even in 2022 and will reach approximately 350 million euros in 2025, allowing the new entity to self-finance its growth.
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Key points
– “Tier 1” automotive supplier, world leader in electrification and driving assistance;
– Activity of €17.4 billion, divided into 4 areas – visibility, propulsion, thermal and comfort & driving assistance, activity 1
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mounts bringing 84% of sales;
– Strong exposure to Asia (34% of sales of 1
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rising, including China, the 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 the BPI and 5.16% for the Harris fund), Jacques Aschenbroich chairing the 14-member board of directors, Christophe Périllat being managing director;
– Cleaned up balance sheet -€3.1 billion in net debt, i.e. 84% of equity and leverage of 1.34- and financial visibility -€4.1 billion in cash.
Challenges
– 2022-25 “Move up” strategy: average annual outperformance of original equipment sales of more than 5 points / operating margin of 14.5% / 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 55% of order intake: dynamic R&D policy for the 3
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French patent agent and 1
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French 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 / global open innovation with start-up incubations, equity investments and industrial partnerships, such as with Safran, and pure research, for Valeo.ai;
– “CAP 50” environmental strategy aiming for 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 related to the end use of the products / 2/3 of the sales of 1
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assembly incorporating products that limit their impact / circular economy integrated into production / launch of green loans;
– Strong ambitions for Valeo Siemens eAutomotive, specializing in high-voltage electrification (8% then 12% operating margin in 2022 and 2024 and €4 billion in order intake);
– Spin-offs from the joint venture with the Korean Kapec, destined to be the world leader in torque converters (gearboxes) with 21% of the market
– Order intake of €15.9 billion.
Challenges
– 3 challenges: weak market growth, inflation of raw materials and shortage of electronic components (-10% automotive production in 2020);
– Lower profitability of the Thermal Systems business;
– 2022 objectives: revenue of €19.2 to €20 billion, operating margin of 3.2 to 3.7% and free cash flow of €320 million.
Negotiations with builders
On average, equipment manufacturers represent between 60 and 85% of the manufacturing cost of a vehicle. According to the Federation of Vehicle Equipment Industries (Fiev), negotiations are very tense with manufacturers regarding the passing on of increased costs. The price increases concern both electronic components, raw materials, such as steel, nickel, lithium or palladium, energy and transport. Equipment manufacturers mainly negotiate with Stellantis and Renault to set up indices to pass on increases. They are also betting on innovation, differentiation, upgrading and internationalization.