(AOF) – With a view to withdrawing from its production activities in Russia, Valeo announced on Friday the signing of an agreement with the company NPK Avtopribor for the sale of all the production assets of its Transmission Systems activity in Russia. Completion of this transaction is subject to obtaining the required regulatory approvals. It will allow the 158 Russian employees of this activity to keep their jobs. This sale will be carried out without any capital gain or loss.
Valeo will also have a repurchase option for 10 years, which can be activated from the 6th year.
Valeo’s sales in Russia previously represented less than 1% of group sales and the related assets were impaired in 2022 for a total amount of 43 million euros.
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– “Tier 1” automotive supplier, world leader in electrification and driving assistance;
– Activity of €17.4 billion, divided into 4 divisions – visibility, propulsion, combustion and comfort & driving assistance, with the original equipment activity contributing 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 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 -€3.3 billion in net debt, i.e. 89% of shareholders’ equity- and financial visibility -€4.9 billion in cash.
– Strategy 2022-25 “Move up”:
– average annual outperformance of original equipment sales of more than 5 points,
– operating margin of 14.5%,
– generation of free cash flow from $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 order intake:
– dynamic R&D policy for the 3rd French patent agent and 1st 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 and academic partnerships,
– industrial partnerships (Safran, Total, Stellantis, etc.) and pure research, for Valeo.ai;
– “CAP 50” environmental strategy aiming for carbon neutrality by 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 end of the products;
– 2/3 of original equipment sales integrating products that limit their impact,
– circular economy integrated into production,
– launch of a 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);
– Spin-offs from the joint venture 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 -1.7 times original equipment sales-, driven by ADAS and electrification.
– Reaction to the net loss incurred in the 1st half due to weak market growth, raw material inflation, shortage of electronic components and wiring harnesses;
– Slowdown in the growth of replacement activity;
– Visibility Systems segment affected by an unfavorable product mix in China and North America;
– After a 33% increase in sales in the 3rd quarter, confirmation of 2022 objectives: sales of €19.2 to €20 billion, operating margin of 3.2 to 3.7% and negative free cash flow at €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.