Valeo’s strategic growth plan sees bigger footprint in Asia

Revealing the company’s growth strategy during a presentation for investors yesterday, Valeo CEO Jacques Aschenbroich and the management teams of the four Business Groups said the path forward will be driven by the Group's continued growth in technologies for CO2 emissions reduction and improved vehicle performance as well as intuitive driving, and expansion in Asia and emerging countries.

As the world leader in CO2 emissions reduction and intuitive driving (particularly autonomous vehicles), Valeo says it is intent on continuing its R&D efforts in order to meet its customers' needs. The company says it has solid fundamentals thanks to its diversified customer and geographic positioning with an increasing footprint in high-growth regions, namely Asia and emerging countries. Strengthening this trend over the next five years should help Valeo pursue its geographical repositioning, with the objective of generating more than one-third of its original equipment sales in Asia and around 40 percent in Europe by 2020, compared to 28 percent and 49 percent respectively in 2014.

Focus on accelerating organic growth, improving profitability
Driven by a higher order intake⁾ resulting from the success of its innovations (more than one-third of the order intake over the past few years is for innovative technologies, the Group aims to accelerate organic growth, improve profitability and increase free cash flow¹⁾.

Assuming that global automotive production increases by an annual average of 3 percent over the next five years, sales would therefore rise to around 17 billion euros in 2017 and would exceed 20 billion euros⁾ by 2020 (versus 12.7 billion euros in 2014).

The Group intends to leverage the growth in sales to improve its operating margin and profitability. Accordingly, Valeo has set a target for operating margin (as a percentage of sales) of between 8 percent and 9 percent for 2020 (versus 7.2% in 2014). Operating margin for 2017 is expected to be in the region of 8 percent.

After four years of strong growth in production capacity, particularly in Asia and emerging countries, Valeo aims to increase its free cash flow/EBITDA ratio from 21 percent in 2014 to around 28 percent in 2017, and then to more than 30 percent by 2020.

In 2014, the Group generated sales of 12.7 billion euros and invested over 10 percent of its original equipment sales in research and development. Valeo has 133 plants, 16 research centers, 34 development centres, 15 distribution platforms and employs 78,500 people in 29 countries worldwide.

Image courtesy Valeo