8 - Valeo

ROADSHOW ISR - Paris
Natixis – November 29, 2013
Michel Forissier – Powertrain Systems Product
Marketing and R&D Director
Jean-Luc di Paola-Galloni – Group External
Affairs & Sustainable Development Vice-President
Thierry Lacorre – Financial Relations Director
November 2013
November 2013 I 1
Key figures 2012
72,,600
72
Employees
Sales
11.8
29
Countries
Bn
€
61
Record order intake:
Research &
Development Centers
12
*
15.1
Bn
€
125
Platforms of
distribution
Production Sites
* Excluding Access Mechanisms business
November 2013 I 2
Valeo in the automotive value chain
Service
Sales by market (as a % of sales)
Original
equipement
85%
Aftermarket(1)
15%
(1) Including miscellaneous sales
Suppliers represent 75 % of cars value-added*
*Source CLEPA
November 2013 I 3
Valeo strategy based on 2 priorities
CO2 emissions
reduction
and innovation
Development
in Asia and
emerging
countries
With the ambition to
ensure a growth higher
than the market in each
production region
November 2013 I 4
Innovation fueling organic growth
and representing approximately 30% of order intake for the 3rd year running
% of order intake
Order intake in bn€
15.1
14.0
Innovation
35%*
11.9
9.7
10.0 10.1
6.6*
9.2
7.4*
5.6*
7.7
4.9
5.0
5.1
6.1
3.4
4.3
4.8
5.0
5.0
2005
2006
2007
2008
H1
H2
*Products or technologies sold by less than 3 years
6.3*
7.4*
7.7*
7.3*
2011
2012
2013
3.1
2009
2010
*Excluding Access Mechanisms business
Since 2009, order intake for
CO2 emissions reduction solutions has increased by around 70%
Intuitive driving solutions by around 130%
November 2013 I 5
4 balanced, coherent Business Groups with
strong market positions
€3.2 billion Sales
(28% of Group total)
17,681 Employees
31 Plants
€2.5 billion Sales
(21% of Group total)
16,270 Employees
30 Plants
Powertrain
Systems
Thermal
Systems
Comfort &
Driving
Assistance
Visibility
Systems
€3.3 billion Sales
(28% of Group total)
16,693 Employees
43 Plants
€2.7 billion Sales
(23% of Group total)
20,687 Employees
32 Plants
November 2013 I 6
Valeo worldwide ranking
Driving
Assistance
Thermal
Powertrain
Interior
Controls
Climate
Control
Wiper
Systems
Electrical
Systems
Transmission
Systems
end 2012
Lighting
Systems
November 2013 I 7
Asia and emerging markets:
Strong geographical rebalancing
>60%
+4 pts
50%
+13 pts
54%
9m
2013
26%
2011
Asia
Mid
term
vision
14%
Eastern
Europe
37%
37%
2007
Asia
&
Emerging
markets
South
America
5%
Western
Europe
9%
Mexico
9%
United
States
Original equipment sales by manufacturing region
November 2013 I 8
A balanced customer portfolio
Other
14%
Asian
7%
20%
U.S.
18%
28%
17%
24%
25%
18%
French
29%
German
Original equipment sales by customer base
November 2013 I 9
Key figures end of June 2013
H1-2013
H1-2013
In millions of euros
as a % of sales
6,166
na
Operating margin
384
6.2%
Net attributable income
190
3.1%
EBITDA
669
10.8%
CAPEX
444
7.2%
Free cash flow
113
na
Net debt
457
na
Gearing
21%
ROCE
28%
ROA
19%
Total sales
November 2013 I 10
One example of Valeo’s
technologies contributing to CO2
emission reduction:
Powertrain technologies
Michel FORISSIER
Powertrain Systems Product Marketing and R&D Director
November 2013
November 2013 I 11
2012 Key Figures
31
Production Sites
11
13
Research Centers
Development Centers
17,681
3,000
People
Development staff
€3.2Bn 2012 sales
November 2013 I 12
4 Product Groups
Electrical Systems
“PES”
Alternators
Starters
Reinforced Starters
Belt Starter Generator
Transmission Systems
“PTR”
Manual Transmissions
Hydraulic Clutch Actuation
Friction Materials
Combustion Engine
“PCE”
Mechanical Actuators
Electronics
“PEL”
Electronics for e-Machines
Powertrain Sensors
Air Charging Systems
High Power Electronics
for HEVs & EVs
Automatic Transmissions
EMS ECUs
Control & Electric Network
Powershift Transmissions
Electric Motors
Ignition & Injection
System Engineering & Transversal Innovation
- CO2 Emission
Reduction
- Pollutants
Emission Reduction
- Hybrid and
Electric
November 2013 I 13
The CO2 regulation is the main market driver
2020
5 l/100 km
(117g CO2/km)
2025
3.9 l/100 km
(54.5 mpg)
China 2020(cars only):106
2020
4.0 l/100 km
(95g CO2/km )
All regulations are converging, and at similar pace.
November 2013 I 14
2020 European ‘CAFE’ prospective
Breakthroughs are a necessity
Drastic improvement
on ICEs needed, at
least 5 points in
efficiency
150
142g
140
130g
130
Even with limited
numbers, EVs (with
100% FE) bring
significative benefit
-17g ICE
120
110
Hybrids are
mandatory to reach
at least 38%
efficiency
-14 g
Hybrids
100
- 4 g EVs
95g
90
80
2010
2015
2020
To reach 95g, ICE and transmissions efficiency is not enough.
Hybrids and EVs will be necessary
November 2013 I 15
Electrification Forecast: Worldwide
Vehicles <6T, Oil barrel $120 2020, Li-Ion Battery 300 €/kWh 2020
Source: 2013 Valeo Powertrain Forecast
Internal
Combustion
Engine
98.2 % ICE
Growth of
Stop-Start
Stop-Start
FULL as
niche, then
growth
MILD
take-off
Emergence
of PHEV
Mild Hybrid
Full Hybrid
PHEV EREV BEV
1,8%
Electrification a key trend. However, Hybrids will take off sooner than EVs
November 2013 I 16
Long term evolution… Not a silver bullet
Gasoline Manual
Semi-Automatic
Electric
Automatic Electric
Gasoline or Diesel
Automatic
Gasoline or Diesel
Plug-In Hybrid
Fuel cell Electric
Gasoline
Automatic
Diesel Manual
Mild Hybrid
Full Hybrid
Gasoline Manual
Gasoline Manual
Mild Hybrid
Gasoline Manual
Gasoline Manual
Gasoline Manual
Zoe
Pivo
Escalade
3-5 series
Golf
208
Logan
Mira
Bajaj RE60
2013
2025
and beyond…
November 2013 I 17
Powertrain solutions for Fuel Economy
3 main technical areas
1
2
Efficiency of Internal
Combustion Engine
(Downsizing)
• Turbocharger/Supercharger
• Gasoline Direct Injection
• Gasoline Cooled EGR
• Variable Valve Activation
• Thermal management
3
Electrification
•
•
•
•
•
•
•
Stop-Start
Mild Hybrid
Full Hybrid
Plug-in Hybrid
Range Extender
Battery Electric Vehicles
Energy management
Downspeeding &
Automation
• Double Clutch Transmission
• Automatic Early lock-up
• Downspeeding
November 2013 I 18
Valeo Powertrain : The CO2 solutions provider
The 2020 powertrain that reaches 95 g CO2/km
Engine solutions
Direct injection
Supercharger
Intake Systems
Hybrid Systems
Electric motor Dual clutch Transmission actuator
E-actuator
ECUs
Cooled EGR
TCUs
Inverter & Charger
Automated Transmissions
November 2013 I 19
What does it mean for us ?
Family of products based on elementary technology bricks
Efficiency of Internal
Combustion Engine
(Downsizing)
Electric Supercharger
No more turbo lag
• Turbocharger/Supercharger
• Gasoline Direct Injection
• Gasoline Cooled EGR
• Variable Valve Activation
• Thermal management
~2015*
*
Gasoline Direct
Injection
Best combustion
~2013*
Thermal Management
Electronic valve:
Accurate and real
time temperature
control
* Technologies with double digit market
CAGR over the period 2013-2023
~2014*
Gasoline EGR system
High efficiency
combustion
~2015*
*
* SOP Valeo
*
November 2013 I 20
*
What does it mean for us ?
Family of products based on elementary technology bricks
StopStart systems
Electrification
•
•
•
•
•
•
•
Valeo only maker with
both ReStarter and
StarterGenerator
Stop-Start
Mild Hybrid
Full Hybrid
Plug-in Hybrid
Range Extender
Battery Electric Vehicles
Energy management
Now
Mild Hybrid
48V System =
Affordable Hybrid
~2016*
*
HEV/ PHEV
Energy management
High Efficiency
generator, the only
“eco-innovation” so far
*
*
~2014*
* Technologies with double digit market
CAGR over the period 2013-2023
EV (Electric Vehicle)
High Voltage
inverters, chargers,
DCDC converters
~2014*
*
* SOP Valeo
Electric motors for
hybrids
~2017*
November 2013 I 21
*
What does it mean for us ?
Family of products based on elementary technology bricks
Dual Clutch
Transmissions
Downspeeding &
Automation
Fuel economy of
mechanical, Comfort of
automatic
• Double Clutch Transmission
• Automatic Early lock-up
• Downspeeding
~2014*
*
Torque converters
Compact torus, early
lock up, fuel efficient
automatic transmission
Now*
Dampers
Hybrid Modules
Full modular Hybrid
package for
transmissions
* Technologies with double digit market
CAGR over the period 2013-2023
~2018*
*
* SOP Valeo
High efficiency
vibrations dampers for
strong downspeeding
Now*
November 2013 I 22
*
Powertrain Systems - Conclusions
The Powertrain market will face a revolution
The main technology trends cover engine, transmission
and electric systems
Valeo’s innovations cover the full range of solutions needed
until 2025 with double digit market CAGR
There is a very favourable mix evolution in value, linked to
the technology evolution
November 2013 I 23
Building sustainable growth
Jean-Luc Di Paola-Galloni
Group External Affairs & Sustainable Development Vice-President
November 2013
November 2013 I 24
Governance
The Board of Directors includes 9 independent members
out which 3 are women ( since 2011 )
Valeo recognized by the AMF in terms of the transparency
of remuneration:
« Ainsi, la société VALEO donne des informations
particulièrement précises sur la clef de répartition de la
rémunération variable »
Rapport annuel 2013 de l’AMF sur le gouvernement d’entreprise et la rémunération des dirigeants
November 2013 I 25
A culture of excellence : our DNA
5 Axes driven by
continuous
improvement
7.1 defective parts per million at end December 2012
99.9993% good parts
end 2012
November 2013 I 26
Social and environmental responsibility
A steadfast commitment
Safety
Environment
Diversity
Top Employer
Reduction in
lost-time accidents
Reduction in direct CO2
emissions
(Number of accidents with lost-time
per million hours worked)
(t C02e/sales in €m)
Percentage of women
among new hires on
permanent contracts
+40%
- 31%
5.5
- 52%
32%
16
23%
11
1,120,000 training
hours in 2012
2.64
2007
2012
2007
2012
2009
2012
November 2013 I 27
Sustainable development strategy within Valeo
From sustainable development DNA of Valeo to measurable progress: internally and externally
Content
dimension
The claim
Responsible
business
partners and
suppliers
Commitment
to upholding
legal
environmental
and social,
standards
and we ask
our business
research/
partners and
suppliers to
do the same
Product
responsibility
Production
responsibility
Safe, clean,
and fuelefficient
components
and systems
developped in
order to
provide
customers with
sustainable
and connected
mobility
solutions
In line with the
environmental
and risk
management
procedures,
we invest in
environmentall
y compatible
production and
process
technologies
Employee
responsibility
and respect
their diversity
Offer attractive
working
conditions in
order to
express our
appreciation of
our employees
and promote
their
development
Ethical
responsibility
Social
responsibility
(sociétal)
Set a good
example, orient
business
operations in
line with
sustainability
and aim to
achieve the
greatest
possible
success via
ethically correct
methods
Undertake
activities aside
of the business
operations in
order to
contribute for
the
communities in
which Tiers 1
are located
and reinforce
the values
Management Responsibility
Involvement of stakeholders affected by Group activities, transparent reporting, development and
implementation of a Group-wide sustainability program, monitoring of sustainability measures
Key issues
measurement
... preceeding
KPI
• Develop and
self assess
measurement
best practices
within the
supply chain
• R&D partners
• Governmental
& Official
institutions
• NGOs
Constant work
on getting
approval through
dialogue with
regulators/
authorities for
• Emissions
reduction
• Connectivity
• Safety devices
• Measurement
and
improvement for
CO2 emissions,
pollutant, noise,
water, electricity,
waste reduction
and energy
efficiency
• Risk mitigation
• CSR dialogue
with Unions
• CSR
communication
employees
•CSR
measurement
with IRS
agencies
Measurement of
sustainable and
ethical actions
• Dvt of
compliance
• Code of Ethics
• Large training
deployment
Measurement
of local self
declared« plant
initiatives »
actions
• volunteering
• Health care
• Educational
promotion
November 2013 I 28
Example of external stakeholders responsible
dialogue
Member of international
technological platforms
Strong research collaborations
An array of universities and
labs, mainly in :
• France
• Germany
• China
• Japan
Commitment to professional
consortia and associations
Cooperations with French financial
institutions and agencies
November 2013 I 29
Responsible business partners and suppliers
Monitoring our Supply Chain through CSR surveys/audits/inquiries
Breakdown of direct purchases by geographic area reflecting the
Group’s purchasing strategy of establishing a local supplier base in
high growth regions
Amount of 2012 purchases by area of
origin (location of suppliers)
Europe
48%
Breakdown of 2012 purchases by
geographic area of consumption
AsiaPacific
27%
AsiaPacific
37%
North
South America
America 12%
3%
Europe
53%
North
America
South 16%
America
4%
All suppliers must sign and respect the “Supplier Sustainable Development
Commitments” which follow all the principles of the UN Global Compact, the
Valeo Code of Ethics and the principles of fundamental human rights
November 2013 I 30
Production responsibility (1/3)
Global approach to risks
Environmental culture in all Valeo
sites
Continuous improvement of
environmental performance
Strict performance monitoring
Voluntary and stringent process of
certification
98% of sites certified ISO 14001
89% of sites certified OHSAS 18001
November 2013 I 31
Production responsibility (2/3)
Strict performance monitoring
2012 Results
(base 2009)
Unit
Reduction in water consumption
-32%
cu.m/sales
Reduction in energy consumption
-18%
kWh/sales
Reduction in packaging materials consumption
-3%
Metric t/sales
+13%
metric t/sales
-3%
%
-9%
metric t
CO2/sales
Objective
Sustainable use of
resources
Reduction in waste production
Waste management * Waste recovery rate
Carbon emissions
Reduction of direct and indirect greenhouse gas emissions
* Increase mainly linked to sales growth; CAGR +16% between 2009 & 2012
Hazardous waste represent 12% of total waste generated
79% of waste are recovered
November 2013 I 32
Production responsibility (3/3)
Rigorous management of environmental performance
Theme
Target
Unit
Reduction in water consumption
-10%
cu.m/sales
Reduction in energy consumption
-10%
kWh/sales
Reduction in packaging materials consumption
-7%
metric t/sales
Production of waste
Reduction in the production of hazardous and non-hazardous
waste
-7%
metric t/sales
Carbon emissions
Reduction of direct and indirect greenhouse gas emissions
-10%
metric t
CO2/sales
ISO 14001 and OHSAS 18001 certification
100%
% of sites
ISO 50001 certification (energy management)
10%
% of sites
Sustainable use of
resources
Management
systems
Biodiversity
Suppliers and
service providers
2013-2015 objectives (base = 2012)
Promotion of local biodiversity initiatives
Reinforcement of performance-evaluation criteria and environmental compliance of the
Group’s subcontractors, suppliers and service providers
November 2013 I 33
Employee responsibility and respect of their
diversity (1/3)
Reducing employees injuries
Group frequency rate (FR1/FR2)
November 2013 I 34
Employee responsibility and respect of their
diversity (2/3)
Program “Diversity” launched in 2012 with 4 priorities:
Gender
Disability
Cultural issues
Generational
“Well-being at work” program
Boost skills to keep pace with technological changes, the
Group’s international development and improve staff
employability
88% of Valeo employees have followed a training session in 2012
November 2013 I 35
Employee responsibility and respect of their
diversity (3/3)
33% of women in the workforce
« Valeo Women Connected » working group to promote gender equality
The Group’s workforce comprised employees
of 106 different nationalities
November 2013 I 36
Ethical responsibility
A Chief Ethics and Compliance Officer appointed in 2012
Total commitment of the Leadership to Integrity, Compliance
with local and global legislations and to do business in line
with the highest ethical standards: Large use of Valeo Code
of Ethics
Special focus on anti-trust and anti-corruption laws
Policies and numerous tools, tailored to specific needs,
available in multiple languages
22 000 employees deeply trained on Anti-trust and Antibribery matters in their own languages 2012 - 2013
November 2013 I 37
Social commitments
Valeo implements its profitable growth strategy within a
framework of sustainable development
Long-term Human Resources policy in a tough and short term
delivery working pressure context
Long term commitment to UN Global Compact (10 years)
Implementation of Global Reporting Initiative (GRI) indicators since
2011
Local “Plants Initiatives” on each Group sites :
donations, education program,
employees financial supports…
November 2013 I 38
A recognized player in sustainability
The extra-financial agency SAM/DJSI awarded Valeo as “Best Sector
Mover” for his sustainable development performance in 2012
Oekom extra-financial agency appointed Valeo as the 3rd automotive
supplier in its 2013 rating
Significant upgrade in CDP (Carbon Disclosure Project) Score in 2013 :
76C vs 61E in 2012
Valeo is more and more seen as responsible and sustainable
Group thanks to employees’ actions and involvement
November 2013 I 39
November 2013 I 40
Back-up slides
November 2013
November 2013 I 41
Worldwide presence
9,486 Employees
13 Production Sites
17% of sales*
37,504 Employees
60 Production Sites
51% of sales*
(including Africa)
4,015 Employees
8 Production Sites
6% of sales*
21,595 Employees
44 Production Sites
26% of sales*
* In % of OE sales
end 2012
November
July 2013 I 42
Employee responsibility and respect of their
diversity
Breakdown of total headcount by geographic area
2010
2012
Africa
11% 2%
8%
16%
13% 2%
Eastern Europe
16%
6%
Western
Europe
Asia
21%
South America
30%
33%
42%
North America
November 2013 I 43
Research & Development
North America
1 Research Center
5 Development Centers
South America
30% of Order Intake involves Innovations
10% of OE sales dedicated to R&D
21 Research Centers
40 Development Centers
722 New Patents
8 800 People
end 2012
4
Development Centers
Europe (incl. Africa)
16 Research Centers
19 Development Centers
Asia
4 Research Centers
12 Development Centers
November
July 2013 I 44