(AOF) – The Valeo group announces that it is a partner in the launch of SDVerse, a new marketplace founded by General Motors, Magna and Wipro in the United States, responsible for connecting software developers and mobility players in the northern market -American “for greater transparency and interoperability”. Valeo’s software solutions will be available on the platform “later this year.” “Our software engineers are at the heart of preparing for tomorrow’s mobility,” said Jeffrey Shay, president of Valeo North America.
“As cars evolve and are today more electric, autonomous and connected, software has become a key element of modern mobility,” explains the equipment manufacturer. “To respond to these changes, automobile manufacturers are evolving architectures to move from a hardware-based model to a software-defined vehicle architecture.”
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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.