Combined Annual General Shareholders’ Meeting€¦ · June 20, 2008 I 7 1100 1300 1500 1700 1900...
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Combined Annual General Shareholders’ Meeting June 20, 2008
Transcript of Combined Annual General Shareholders’ Meeting€¦ · June 20, 2008 I 7 1100 1300 1500 1700 1900...
Combined Annual General Shareholders’ Meeting
June 20, 2008
AgendaAnnual Ordinary Meeting
AgendaExtraordinary Meeting
Combined Annual General Shareholders’ Meeting
June 20, 2008
2007 ResultsRobert Charvier – Financial Control Director
June 20, 2008 I 6
2007 – Economic environment
Worldwide growth: +4.9%
Automotive production: +5%
Pressure on raw materials / record oil prices
Euro: significant rise versus Dollar and Yen
Continued increase in European interest rates
June 20, 2008 I 7
1100
1300
1500
1700
1900
2100
2300
2500
2700
2900
2003 20052004 2006 2007
Aluminum Evolution of cost in $ US / Ton
2,574
2,812
1,825
1,400 2006: 2,389
2007: 2,743+15%
Monthly cost
Average
June 20, 2008 I 8
1300
2300
3300
4300
5300
6300
7300
8300
2003 20052004 2006 2007
Copper Evolution of cost in $ US / Ton
Monthly cost
7,031 7,454
3,303
1,640
Average
2006: 5,473
2007: 6,556
+20%
June 20, 2008 I 9
15
25
35
45
55
65
75
85
95
2001 2002 2003 20072004 2007 2007
Brent Evolution of price in $ US/Ton
95.9
26.5
June 20, 2008 I 10
2007 highlights
Accelerated growth and improved margins
Successful innovations
Divestiture of non-strategic activities
Targeted reinforcement of certain functions
June 20, 2008 I 11
* Continued operations
2007 Key Figures
In euro million 2007 2006 Change
Total operating revenues 9,689 9,550 + 1.5%
Operating incomeas a % of total op. revenues
319 3.3%
271 2.8%
+ 17.7% + 0.5 pt
Net income as a % of total op. revenues
81 0.8%
161 1.7%
- 49.7% - 0.9 pt
Net income excl. impact from divestitures 132 120 + 10.0%
Earnings per share* 1.82 1.81 + 0.6%
Net financial debt 799 968 - 17.5%
June 20, 2008 I 12
9,6899,550
8 000
9 000
10 000
2006 2007
In million euros
Perimeter -0.2%Currencies -1.5%Prices* -3.0%Volume/Mix +6.2%
* At identical functions
+6.2% en volume
Total operating revenues
+1.5%
June 20, 2008 I 13
Strategic rebalancing of the customer portfolio
* excluding VMA & VCS in 2001
Automakers 2001 2007
Asian 5.7% 14.7%
Big 3 31.7% 21.8%
German 22.5% 24.5%
Mercedes & BMW 7.5% 10.6%
PSA & Renault 28.1% 26.7%
Fiat 5.0% 4.4%
ORIGINAL EQUIPMENT SALES (2001- 2007)*
June 20, 2008 I 14
2006 2007
Gross Margin
1,463 M€
1,497 M€15.5%
15.7%
% of sales
+0.2 pt
June 20, 2008 I 15
Impact of the increase in raw material prices
2006 2007
(Point of sales)
Gross impact
Net impact
1.8
2.0
3.6
4.5
Cumulative impact basis 2003
+0.9 pt
+0.2 pt• More rebilling to customers
• Contract renewals
June 20, 2008 I 16
Operating income
2007/2006
Gross Margin +0.2 pt
• R&D* -
• SG&A +0.1 pt
• Other income and charges +0.2 pt
Operating income +0.5 pt*
* % of total operating revenues
June 20, 2008 I 17
Accelerated margin improvement
Annual change in the operating margin by quarter (2007)
+ 1.1
- 0.4
+ 0.30
-1 pt
0 pt
1 pt
2 pt
Q1 Q2 Q3 Q4
June 20, 2008 I 18
Results (cont’d)
In euro million 2007 2006 ChangeOperating income 319 271 + 17.7%
Cost of net debtOther financial inc./(expenses)Associates
(51)(46)
8
(51)(8)(1)
Income before taxes 230 211 + 9.0%
Taxes Effective tax rateNon strategic activities
(83) 37.4%(59)
(67) 31.6%
22
Minorities (7) (5)Net income 81 161 - 49.7%
Debt level & financial statements
June 20, 2008 I 20
Return on capital employed*
* Excluding VCS & VMA
2.5 2.4 2.4
4.03.7 3.9
2
2,2
2,4
2,6
2,8
3
3,2
3,4
31.12.05 31.12.06 31.12.07
Bn
€
Industrial assets Return on capital employed
June 20, 2008 I 21
31/12/2006 31/12/2007
Shareholders' equity Debt
Consolidated shareholders’ equity / Net financial debt(M€)
45%
968
1,752
799
1,782
55%Gearing
Q1-2008
June 20, 2008 I 23
Q1-08 highlights
Economic environmentSlowdown in auto production versus H2 2007Inflationary pressure on raw materialsFurther depréciation of the Dollar vs the EuroRise in interest rates
ValeoImproved operating margin for third consecutive quarterEarnings per share of continued operations up by 36%Successful innovationsContinued redeployment of the Group’s activities
June 20, 2008 I 24
In euro million Q1-2008 Q1-2007 Variation
Total operating revenues 2,473 2,499 - 1.0%
Gross marginin % of sales
39216.1%
37715.3%
+ 4.0%+ 0.8 pt
Operating margin in % of total operating revenues
90 3.6%
74 3.0%
+ 21.6% + 0.6 pt
Earnings per share* 0.57 0.42 + 35.7%
Net financial debt 786 966 - 18.6%
Key figures – Q1-2008
* Continued operations
Strategy and ObjectivesThierry Morin – Chairman & CEO
June 20, 2008 I 26 I
Strategy
Operational Excellence QualityCostIndustrial footprint
Innovation3 Domains for safer, cleaner andmore comfortable vehicles
QUALITY COST
GLOBAL PRESENCE
TECHNOLOGY
June 20, 2008 I 27 I
Valeo’s 3 Domains
Driving Assistance
Powertrain Efficiency
Comfort Enhancement
Reconciling automobiles and the environment by contributing to the creation of cleaner, more fuel-efficient vehicles
Reconciling automobiles and well-being by making vehicles easier to use and enhancing driver and passenger comfort
Reconciling automobiles and safety by reinforcing
the active aspects of accident prevention and
avoidance
Other
€9.6bnSales*
* 2007
June 20, 2008 I 28 I
Valeo n°1 or n°2 in the world
Driving Assistance
Powertrain Efficiency
Comfort Enhancement
− Alternators− Starter motors− Clutches− Engine cooling− Condensers
− Wiper systems− Front and rear lighting− Ultrasonic sensors
− HVAC systems− Top Column Modules
75% of Valeo sales: N°1 or n° 2 in the world
June 20, 2008 I 29 I
Refocusing the perimeter on the Domains
Identified divestitures worth 2 billion eurosActivities
– Little technological synergy– Low added value– With insufficient competitive positions
Program 50% completed in mid-2008: electric motors, wiringharnesses, truck engine coolingCompetitive valuation multiples: 6.8 X EBITDA
Targeted acquisitionsHigh technology contentWithout deteriorating the Group’s gearing
Operational excellenceLuc Blériot – Chief Operating Officer
June 20, 2008 I 31
Automaker requirements
Cost, cycles, quality
Emerging countries
Low-cost vehicles
June 20, 2008 I 32
Purchasing
Supplier baseReduction (-154)VIP strategic suppliers (79)Low-cost countries (37% of purchasing)
Tools (Bidding On Line: 1.5 billion euros)
June 20, 2008 I 33
Industrial productivity
Cost reduction
Greater flexibility
Return on assets
June 20, 2008 I 34
Optimization of the production footprint
* Continued operations2001 2002 2003 2004 2005 2006 2007
72%
34%
66%
28%
68%
32%30%
70%
38%
62%
44%
56%
48%
52% Other countries
Leading competitive-cost
countries
Supporting customers in emerging countries
Rationalization
Productive headcount* (%)
June 20, 2008 I 35
R&D efficiency
High technology products / Cost reduction
Standardization, simulation
R&D in competitive-cost countries21% of total headcount, 9 R&D Centers
June 20, 2008 I 36
Re-engineering
Quality and Logistics: 20 pilots in 2007
Headcount reduction of 15% Reduction of non-quality andinventory costsDeployment in all sites
Extension of the process to other functions
June 20, 2008 I 37
1532
53
185
10
2003 2004 2005 2006 2007
Quality
CUSTOMER RETURNS in ppm
* Defective parts per million delivered
Delivery quality65% of sites at less than 10 ppm*18 sites at 0 ppm
Lower warranty costs
June 20, 2008 I 38
Quality recognized by customers
Excellent Quality Performance Award from Toyota Group
3 quality awards from Toyota Peugeot Citroën Automobile
Achievement Award and 3 certificates from Toyota North America and Toyota Europe
Supplier Quality Award from Renault
June 20, 2008 I 39
Teams, tools, a culture
Skilled teams
Organization and Methodologies
Culture: ethics, respect, demanding, progress, rigor
Powertrain EfficiencyMichel Forissier – Director of the Domain
June 20, 2008 I 41
Climate change
1000 1200 1400 1600 1800 2000
200
300
400
500
YearYear
600
Source: GIEC
Concentration of CO2 in the atmosphere (ppm)
June 20, 2008 I 42
Skyrocketing oil prices
80
70
60
50
40
30
20
10
0Jan 86 Jan 88 Jan 90 Jan 92 Jan 94 Jan 96 Jan 98 Jan 00 Jan 02 Jan 04 Jan 06
Source: International Energy Agency,Valeo
140 USDMay 2008
Price of crude in $/barrel
June 20, 2008 I 43
Impact on household budgets
The price of super-grade gasoline rose by 62% in 10 years
A household spends 150€ per month on fuel
Transportation is now the second largest expense after lodging
June 20, 2008 I 44
CO2 regulations
Europe: 120g CO2 /km
in 201295g CO2 /km
in 2020European Commission
Jan. 10, 2007
Japan: 16.8 km/l in 2015
Council for Transport PolicyFeb. 2007
USA: 35 MPG in 2020Senate Bill
June 21, 2007
Equivalent (for gasoline engine):5 l/100km 6 l/100km 6.7 l/100kmthen 4 l/100km
June 20, 2008 I 45
0.08 0.10 0.15 0.20 0.25
190
170
150
130
120
110
90
2012- 2020
-20%
Divided by 3
-20%
DIESEL MUST FIRST BECOME CLEANDIESEL MUST FIRST BECOME CLEAN
BUT THE RACE TO REDUCE EMISSIONS BUT THE RACE TO REDUCE EMISSIONS WILL BE DRIVEN BY GASOLINE ENGINESWILL BE DRIVEN BY GASOLINE ENGINES
GASOLINEGASOLINE
DIESEL
GASOLINEDIESEL
>2020
Con
sum
ptio
n(g
CO
2/km
)
Emissions (g NOx/km)
- 30%
Consumption - situation
June 20, 2008 I 46
Valeo consumption reduction solutions
- 40% feasible
Energy management - 3%
Thermal management - 8%
Automated transmissions -4-6%
Engine intake systems -5-7%
Hybridization -6-15%
Engine management -15-20%
June 20, 2008 I 47
Electromagnetic valve actuation
Thermal management
Dual clutch
Stop-Start +Regenerativebraking
Water-cooled charge air cooler
Cooled EGR
Objective = - 40%, from 200 to 120 g/km on a gasoline Laguna GT 2.0 turboEstimated extra cost: less than 1,500 €, or less than a diesel…
OptimizedA/C
Valeo - 40% consumption project
June 20, 2008 I 48
Commercial success for the micro-hybrid
Citröen C2/C3
Smart mhd
Mercedes Class A and B
PSA Peugeot Citroën 1 million vehicles
June 20, 2008 I 49
LOLOww COCO22 MOTION™MOTION™
Electromagnetic valve actuationElectromagnetic valve actuation
StARSmicro-hybrid
StARSmicro-hybrid
Innovations subsidized by public authorities
LOw CO2 MOTION to receive funding from OSEO Innovation worth 61 million euros (including 55 M€ for Valeo) over 3 years
ObjectivesThierry Morin – Chairman & CEO
June 20, 2008 I 51 I
2008 objectives
Tougher operating conditions
Another year of improved results
LeversNew model launchesProven ability to recover a significant share of raw material chargesIdentified operational leversControlled launch and non-quality costs
June 20, 2008 I 52 I
2010 objectives
Doubling of return on capital employed to 27%Operating margin 6%Asset turn 4.5x
LeversGrowthAbsorption of raw material costsOperational excellence and re-engineering
June 20, 2008 I 53 I
2005 2006 2007
32% of order intake from innovative products
8.69.9 10.1
Order intake / X OEM sales
1.1x1.3x 1.3x
Innovative products
Others
In billion euros
32%22%15%
June 20, 2008 I 54 I
Valeo technology start-ups
Micro-hybrids
Torque converters for
automatic transmissions
Radar applications
Camera applications
2007 Sales: 70 M€ 400 M€ in 2010
June 20, 2008 I 55 I
Geographical expansion
14 Production sites12 R&D centers6,830 employees
55 Production sites37 R&D centers29,420 employees
13 Production sites1 R&D center10,480 employees
South America
10 Production sites4,200 employees
3 Production sites1 R&D center1,500 employees
30 Production sites11 R&D centers8,770 employees
North AmericaWestern Europe
Eastern Europe
AfricaAsia
Figures at 31 Dec. 2007
Valeo is close to its customers
June 20, 2008 I 56 I
Expansion in India
Pune
Chennai
Market: 1.5 million vehicles
Valeo Electrical Systems(JV with AK Minda)
Valeo Security Systems(JV with NK Minda)
Valeo Friction Materials(JV with Anand Group)
Valeo ClutchesProduction site(JV with Amalgamations)R&D center
June 20, 2008 I 57 I
2007 2013Production 1.8 M 3.4 M
Sales 1.7 M 3.0 M
Number of automakersRussianForeign
1679
193
16
Market shareRussian (VAZ, GAZ, LADA, TAGAZ)Non Russian
50%50%
25%75%
Russian automobile market – Key figures
June 20, 2008 I 58 I
Valeo’s strategy in Russia
Presence of all product lines
Partnerships under discussionHVAC systems in the Moscow area Transmissions and Security Systems in the Nijni Novgorod area Lighting Systems in the Vladimir area
Achieve significant market shares
500 million euros of sales in 2013
June 20, 2008 I 59 I
Value creation potential
Strong involvement in the promising domains of environment annd safety
Valid business model and solid financial structure
High potential for creating value
Policy of regular growth in dividends; proposing €1.20 for 2007 (+9%)
June 20, 2008 I 60 I
Evolution of shares since 31/12/2007
16
19
22
25
28
31/12 7/1 14
/121
/128
/1 4/2 11/2
18/2
25/2 3/3 10/3
17/3
24/3
31/3 7/4 14/4
21/4
28/4 5/5 12/5
19/5
26/5 2/6 9/6 16/6
23/6
30/6
31/12/07 19/06/08 Δ
VALEO 28.20 21.67 -23.2%
CAC 40 5614.10 4591.39 -18.2%
PEUGEOT 51.85 35.55 -31.4%
RENAULT 97.01 56.14 -42.1%
MICHELIN 78.50 48.59 -38.1%
FAURECIA 46.60 27.41 -41.2%
June 20, 2008 I 61 I
Valuation history (since 01/01/2005)
Enterprise value / EBITDA
maxi
mini average current
Source: data from the companies and from research analysts
0x
1x
2x
3x
4x
5x
6x
7x
8x
Valeo Continental Faurecia Autoliv Magna TRW
PER
0x
5x
10x
15x
20x
25x
30x
Valeo Continental Faurecia Autoliv Magna TRW
Corporate governance
June 20, 2008 I 63
An active, assiduous Board of Directors
Sixteen Board meetings in 2007
Nomination and Remunerations Committee4 meetings
Audit Committee4 meetings
Strategic discussions
June 20, 2008 I 64 I
Agreement with Pardus
A Pardus representative on the Board
Loyalty commitment
Avoidance of conflicts of interest
Limitation of Pardus shareholding in Valeo to 20%
June 20, 2008 I 65 I
Nomination and Remuneration Committee
Composition: 3 independent membersJérôme Contamine (Chairman)Georges PaugetPhilippe Guédon
MissionPrepare the deliberations of the Board relating to the remuneration ofcorporate officers and the stock options policyPrepare the composition of the Company’s management bodies
Work in 2007Proposals relating to the remuneration of the Chairman & CEOProposals relating to the granting of consideration-free shares and stock options to employees and corporate officers most directly involved in theGroup’s development
June 20, 2008 I 66 I
Candidacy of Behdad Alizadeh
Current functionPartner, Pardus Capital Management L.P.
Previous functionsManaging Director of the Bank of New YorkHead of Merchant Banking, Bank of New YorkMember of the Board of Directors of Caliber Collision CentersMember of the Board of Directors of Mid West Wholesale Distribution
EducationMBA degree from Columbia Business SchoolBS degree from New York University
Other functions and mandatesMember of the Board of Directors of the Governor’s Committee on ScholasticAchievementMember of the Supervisory Council of Atos Origin
June 20, 2008 I 67 I
Indemnities in the event of termination of duties of the Chairman & CEO
In accordance with the TEPA law
Amount3 years of fixed remuneration, unchanged since appointment in 2001Complementary retirement via pension fund accrued by Valeo (UK)
ConditionsDismissal (except for gross misconduct)On the Chairman’s initiative in the event of a strategic change followinga recomposition of the Board of Directors
5 performance criteria
June 20, 2008 I 68 I
Share purchase options
Authorization covering 1 million shares, or 1.3% of the capital
Validity: 2009 AGM
No discount for beneficiaries
Valeo undertakes to limit the potential dilution resulting from option plans and the allocation of free shares to the current level of 9.6% of the capital
Statutory auditors’ report
ResolutionsOrdinary General Meeting
June 20, 2008 I 71
Annual Ordinary General Meeting
Approval of the annual non-consolidated and consolidated
financial statements
Resolutions 1 & 2
June 20, 2008 I 72
Approval of an agreement including undertakings made for the benefit of Mr. Thierry Morin in accordance with
article L. 225-42-1 of the French Commercial Code
Annual Ordinary General Meeting
Resolution 3
June 20, 2008 I 73
Approval of regulatory agreements and undertakings
Annual Ordinary General Meeting
Resolution 4
June 20, 2008 I 74
Allocation of profits and distribution of dividends
Annual Ordinary General Meeting
Resolution 5
June 20, 2008 I 75
Authorization granted to the Board of Directors to repurchase the
Company’s shares
Annual Ordinary General Meeting
Résolution 6
June 20, 2008 I 76
Determination of the annual amount of directors’ fees
Annual Ordinary General Meeting
Resolution 7
June 20, 2008 I 77
Appointment of Mr. Behdad Alizadeh as director
Annual Ordinary General Meeting
Resolution 8
ResolutionsExtraordinary General Meeting
June 20, 2008 I 79
Delegation to the Board of Directors of authority to grant options to
purchase shares of the Company
Extraordinary General Meeting
Resolution 9
June 20, 2008 I 80
Delegation of powers to carry out corporate formalities
Extraordinary General Meeting
Resolution 10
