A logo of the French automotive supplier Valeo in Paris
French automotive supplier Valeo announced a less ambitious sales target for 2025 on Thursday, citing lower-than-expected growth in the automobile market and a slower-than-expected takeoff of electric vehicles.
The group, a specialist in equipment for hybridization and driving aids, specified in a press release that it now forecast a figure of 24.5 to 25.5 billion euros in 2025, compared to 27.5 billion euros. euros previously. “We built a Move-Up strategic plan on the basis of a market which rose to 98 million cars, 98.5 to be exact in 2025. The market has changed,” declared Christophe Périllat, general manager of Valeo during a conference Press.
He added that he was aiming for stable turnover in high-voltage electricity over the period 2023-2025, “taking into account the current high volatility of the electrification market and the uncertainty regarding the ramp-up schedule of the electrification market. electric vehicle”.
Last year, Valeo received compensation from its manufacturer customers for these lower-than-expected volumes.
Christophe Périllat clarified that the group’s new medium-term objective was based on prudent assumptions in order to create a comfort zone. For 2023, the equipment manufacturer reported an increase of 11% at constant scope and exchange rates in its turnover to 22.04 billion euros in 2023, a notch below the forecasts of analysts, who were counting on 22.07 billion euros according to a consensus provided by the company.
Valeo’s operating margin stood at 3.8%, compared to a consensus of 3.7%. For 2025, the group is still aiming for an improvement in its profitability, but potentially more measured than before since it is targeting a range of 5.5% to 6.5%, compared to a previous objective of 6.5%.
The group intends to accelerate its cost reductions, in particular with a project announced at the start of the year aimed at reorganizing two activities closely linked to the electrification of vehicles, propulsion systems and thermal systems.
By the end of the first half of the year, the management, administration and support functions of the two divisions will be merged, which will result in the elimination of 1,150 positions worldwide, including 735 in Europe, one of the main savings measures of the group.
“Thanks to these measures, Valeo intends to achieve structural savings which will amount, over a full year, to 200 million euros and the first effects of which will appear from the second half of 2024,” he indicated in a press release. .
During a conference call with analysts, Christophe Périllat also explained his decision to close the high-voltage powertrain plant in Bad Neustadt, Germany, because it was too dependent on the volatility of the electric vehicle market.
Valeo is instead focusing on two other factories, one in Hungary and one in Poland, a site present on high voltage but also on low voltage and capable of powering both electric and hybrid vehicles.
“We are working on our industrial footprint,” added the Valeo CEO.
(Reporting Jesus Calero and Nathan Vifflin, edited by Gilles Guillaume)