(Corrects a report published on April 25. Please read in §9 that Valeo achieved 14% of its sales in China in Q1 (Chinese manufacturers and JVs), and not only with Chinese manufacturers)
(Reuters) – Valeo reported first-quarter revenue of 5.43 billion euros on Thursday, down 1% from the same period in 2023, as demand for electric vehicles weakens eclipsing the strength of the equipment manufacturer’s traditional activities in thermal, hybrid, driving aids and lighting.
At constant scope and exchange rates, turnover increased by 2% over the period.
“Traditional Propulsion activities benefit from the ramp-up in production in Europe, North America and China, partly offsetting the low level of activity in high-voltage electricity penalized by an unfavorable base effect and the drop in certain platforms,” the group said in a statement.
The drop in production for certain electric vehicle programs, mainly in Europe, resulted in a 49% drop in revenue for Valeo’s high voltage business. However, the group anticipates an improvement in the second quarter and in the longer term, a clear trend in the sector towards 100% electric.
Valeo has already adapted its dedicated factories so that none is no longer specialized in high voltage alone, but each can also produce for thermal and hybrid (low voltage 48 volts) in order to cover all scenarios.
“I think we are ready for a volatile world,” explained Christophe Périllat, Valeo’s chief executive, during a conference call with analysts.
The group can also count on compensation from its manufacturer customers if volumes are not there.
“At 50%, we are completely outside the flexibility corridor provided for in the contracts,” explained the general manager of Valeo. “We expect that what we managed to achieve in 2022 and 2023, we can achieve again in 2024.”
The equipment manufacturer can also rely on its exposure to Chinese automobile manufacturers and benefit from both demand in China or exports from China, which represented 14% of its sales in the first quarter.
Valeo confirmed its objectives for 2024 and 2025, with “margins and free cash flow generation in the second half of 2024 expected to be higher than in the first half”.
The group also indicated that it was in line with its schedule of cost reductions expected from the merger of its thermal systems and propulsion systems activities, representing more than 200 million euros in annual savings.
The 1,150 job cuts planned worldwide – including 735 in Europe – as part of this reorganization will be carried out by the end of June, he added.
(Written by Mathias de Rozario, with Gilles Guillaume, edited by Kate Entringer and Jean-Stéphane Brosse)
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