PARIS (Reuters) – The prudence of Valeo’s 2022 objectives was sanctioned on the stock market on Friday, eclipsing the announcement by the automotive supplier of an improvement in its performance over the following three years by surfing on the wave of the electrification of cars.
Around 2:00 p.m., the action of the specialist in hybridization and driving assistance systems, plummets by 11%.
“Investors remain focused on Valeo’s current lackluster performance and macroeconomic risks,” Evercore ISI said in a note. “They will remain on the sidelines as long as Valeo and its new CEO have not returned to better-than-expected results and forecast increases.”
The French group, which says it expects a “difficult” year in 2022, is aiming for an EBITDA margin of between 11.8% and 12.3%, down from 13.4% in 2021, reflecting the context inflationary and the cost of integrating electric motors from the former JV with Siemens.
It also expects free cash flow of around 320 million euros, higher than the average level of 290 million posted in 2020 and 2021, but much lower than the 519 million in 2019.
“These objectives do not take into account the potentially adverse consequences on the economic and financial environment of recent developments in the Russian-Ukrainian crisis, for example a drop in production volumes or an increase in energy or raw material prices. beyond the prices known at the beginning of 2022”, underlined Valeo in a press release.
Under the leadership of Christophe Périllat, who has just taken over as CEO from Jacques Aschenbroich, who embodied the face of Valeo for 13 years, the group also presented its new medium-term strategic plan “Move up”.
He expects more than ten billion euros in additional annual turnover by 2025, to reach 27.5 billion euros, and estimates that his sales could even exceed 40 billion euros in 2030.
The equipment manufacturer is also aiming for an EBITDA margin of around 14.5% for 2025 and a strong increase in its free cash flow to a level of between 800 million and one billion euros.
“We are at the start of a period of mobility transformation which will result in hyper-growth of the electrification and Adas markets for 15 to 20 years”, declared Christophe Périllat during a conference Press.
LOW EXPOSURE TO RUSSIA
As part of its shift towards the electrical business, which will see the group’s exposure to products fitted to thermal vehicles drop to 4% of its sales in 2030 against 11% today, Valeo is also planning 500 million euros of disposals of non-strategic assets over the duration of the plan.
To counter the inflationary risk, it also envisages 100 million euros in additional annual savings by 2023.
The group, which returned to a net profit, group share, of 175 million euros last year, also confirmed its preliminary results published at the end of January, in particular an EBITDA margin at the top of its range of forecasts but also a free cash flow below expectations due to a strong inflation of inventories – refined to 460 million euros – to cope with shortages of chips.
Valeo presented its roadmap to financial analysts and journalists during an event over which the shadow of the war in Ukraine hovered.
Valeo makes less than 1% of its sales in Russia, but Christophe Périllat, who sent a message of sympathy to the Ukrainian people, said he hesitated to maintain the event in the current context.
“I decided that we should have this meeting, not just because business is going on, but because Valeo’s long-term vision does not change and will not change because of this crisis,” he added.
(Gilles Guillaume, edited by Matthieu Protard and Jean-Michel Bélot)