Global automotive Tier 1 supplier, Valeo announced its first-quarter sales of 2020. The original equipment sales for the group slipped eight percent to 3,797 million euros from the previous year (4,121 million euros in Q1 2019). In India, the French company recorded a 15 percent drop in the OE sales (40 million euros) for the first quarter of 2020. The OE sales for the previous year was at 47 million euros.
Aftermarket sales for the group dipped by 2 percent from the same period last year. The miscellaneous sales including tooling revenues (and revenues relating to customer contributions to R&D) fell by 9 percent, due to a lower number of new launches during the period. Despite a challenging economic environment, the dip in the aftermarket sales is minimal thanks to the resilience of the repair and maintenance services of certain workshops that have been able to continue operating, the company said.
Jacques Aschenbroich, Valeo’s chairman and CEO, said, "Despite the 16-point outperformance in the first quarter of the year confirming the acceleration in Valeo’s growth thanks to the technological platforms we have developed over recent years, the lack of visibility over the impact that the Covid-19 crisis will have on the automotive market and on production makes it impossible at this stage to provide a projection of our second-quarter and full-year 2020 results.”
Speaking about the impact of the lockdown to contain the spread of Covid-19, Aschenbroich explained that "During the Covid-19 pandemic, my absolute priority is to protect the health of our employees from the moment operations resume at our plants. We have also implemented drastic cost-cutting and cash preservation measures, and, with 2.3 billion euros in undrawn credit lines, have made sure we have sufficient liquidity to withstand any further prolongation of the current crisis," he added.
Boosted by a favourable product and customer mix, original equipment outperformance accelerated to return to previous highs in all production regions, with the outperformance of 14 percentage points in Europe, 8 percentage points in North America, 16 percentage points in China and 6 percentage points in Asia excluding China. On a global scale, Valeo outpaced automotive production by 16 percentage points. All business groups outperformed the market, spurred by production start-ups and ramp-ups on numerous high-tech innovations, including cameras and other ADAS-related products, 48V electrification and LED lighting.
The company has gradually resumed its production in China in February. All 34 plants of the group in China has started production. Following sluggish activity levels in February, sales in March climbed back to 60 percent of prior-period. The company expects the pace of business to return to 2019 levels during the second quarter. In Europe and North America, Valeo has adjusted production levels in line with stoppages decided by its automaker customers. They expect automakers to resume production progressively by the end of April in Europe and by end April/early May in North America.
Valeo forecasts its global output to be down by 2% in 2020