Combined Annual General Shareholders Meeting June 20, 2008 Annual - PowerPoint PPT Presentation

Combined Annual General Shareholders’ Meeting June 20, 2008

Annual Ordinary Meeting Agenda

Extraordinary Meeting Agenda

Combined Annual General Shareholders’ Meeting June 20, 2008

2007 Results Robert Charvier – Financial Control Director

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 6

Aluminum Evolution of cost in $ US / Ton 2900 Monthly cost 2,812 2700 Average 2500 2,574 2300 2100 1900 2007: 2,743 1,825 1700 +15% 1500 2006: 2,389 1,400 1300 1100 2003 2004 2005 2006 2007 June 20, 2008 I 7

Copper Evolution of cost in $ US / Ton 8300 Monthly cost 7,454 Average 7,031 7300 6300 5300 4300 2007: 6,556 3300 3,303 +20% 2300 1,640 2006: 5,473 1300 2004 2005 2006 2007 2003 June 20, 2008 I 8

Brent Evolution of price in $ US/Ton 95.9 95 85 75 65 55 45 35 26.5 25 15 2001 2002 2003 2004 2007 2007 2007 June 20, 2008 I 9

2007 highlights Accelerated growth and improved margins Successful innovations Divestiture of non-strategic activities Targeted reinforcement of certain functions June 20, 2008 I 10

2007 Key Figures 2007 2006 Change In euro million 9,689 9,550 Total operating revenues + 1.5% Operating income 319 271 + 17.7% as a % of total op. revenues 3.3% 2.8% + 0.5 pt - 49.7% 81 161 Net income as a % of total op. revenues - 0.9 pt 0.8% 1.7% Net income excl. impact from divestitures 132 120 + 10.0% 1.82 1.81 Earnings per share* + 0.6% Net financial debt 799 968 - 17.5% * Continued operations June 20, 2008 I 11

Total operating revenues In million euros +6.2% en volume 10 000 9,689 +1.5% 9,550 Perimeter -0.2% Currencies -1.5% 9 000 -3.0% Prices* +6.2% Volume/Mix * At identical functions 8 000 2006 2007 June 20, 2008 I 12

Strategic rebalancing of the customer portfolio ORIGINAL EQUIPMENT SALES (2001- 2007)* 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% * excluding VMA & VCS in 2001 June 20, 2008 I 13

Gross Margin % of sales 15.7% +0.2 pt 15.5% 1,497 M€ 1,463 M€ 2006 2007 June 20, 2008 I 14

Impact of the increase in raw material prices (Point of sales) Cumulative impact basis 2003 4.5 Gross impact +0.9 pt Net impact 3.6 • More rebilling to customers +0.2 pt 2.0 • Contract renewals 1.8 2006 2007 June 20, 2008 I 15

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 16

Accelerated margin improvement Annual change in the operating margin by quarter (2007) 2 pt + 1.1 1 pt + 0.3 0 0 pt - 0.4 -1 pt Q1 Q2 Q3 Q4 June 20, 2008 I 17

Results (cont’d) 2007 2006 Change In euro million Operating income 319 271 + 17.7% Cost of net debt (51) (51) Other financial inc./(expenses) (46) (8) Associates 8 (1) Income before taxes 230 211 + 9.0% Taxes (83) (67) Effective tax rate 37.4% 31.6% Non strategic activities (59) 22 Minorities (7) (5) Net income 81 161 - 49.7% June 20, 2008 I 18

& financial statements Debt level

Return on capital employed* 3,4 3,2 3 4.0 3.9 2,8 Bn € 3.7 2,6 2,4 2.5 2.4 2.4 2,2 2 31.12.05 31.12.06 31.12.07 Industrial assets Return on capital employed * Excluding VCS & VMA June 20, 2008 I 20

Consolidated shareholders’ equity / Net financial debt (M€) 1,782 1,752 55% Gearing 45% 799 968 31/12/2006 31/12/2007 Shareholders' equity Debt June 20, 2008 I 21

Q1-2008

Q1-08 highlights Economic environment � Slowdown in auto production versus H2 2007 � Inflationary pressure on raw materials � Further depréciation of the Dollar vs the Euro � Rise in interest rates Valeo � Improved operating margin for third consecutive quarter � Earnings per share of continued operations up by 36% � Successful innovations � Continued redeployment of the Group’s activities June 20, 2008 I 23

Key figures – Q1-2008 Q1-2008 Q1-2007 Variation In euro million 2,473 2,499 Total operating revenues - 1.0% 392 377 + 4.0% Gross margin in % of sales 16.1% 15.3% + 0.8 pt 90 74 + 21.6% Operating margin in % of total operating revenues 3.6% 3.0% + 0.6 pt Earnings per share* 0.57 0.42 + 35.7% 966 Net financial debt 786 - 18.6% * Continued operations June 20, 2008 I 24

Strategy and Objectives Thierry Morin – Chairman & CEO

Strategy Operational Excellence COST QUALITY � Quality � Cost � Industrial footprint TECHNOLOGY GLOBAL Innovation PRESENCE � 3 Domains for safer, cleaner and more comfortable vehicles June 20, 2008 I 26 I

Valeo’s 3 Domains Powertrain Efficiency Reconciling automobiles and the environment by contributing to the creation of cleaner, more fuel-efficient vehicles Sales* Driving €9.6bn Comfort Assistance Enhancement Reconciling automobiles and safety by reinforcing Reconciling automobiles the active aspects of and well-being by making vehicles easier to use accident prevention and and enhancing driver avoidance and passenger comfort Other * 2007 June 20, 2008 I 27 I

Valeo n°1 or n°2 in the world Driving Assistance − Wiper systems − Front and rear lighting − Ultrasonic sensors Powertrain Efficiency − Alternators − Starter motors − Clutches − Engine cooling − Condensers Comfort Enhancement − HVAC systems − Top Column Modules 75% of Valeo sales: N°1 or n° 2 in the world June 20, 2008 I 28 I

Refocusing the perimeter on the Domains Identified divestitures worth 2 billion euros � Activities – Little technological synergy – Low added value – With insufficient competitive positions � Program 50% completed in mid-2008: electric motors, wiring harnesses, truck engine cooling � Competitive valuation multiples: 6.8 X EBITDA Targeted acquisitions � High technology content � Without deteriorating the Group’s gearing June 20, 2008 I 29 I

Operational excellence Luc Blériot – Chief Operating Officer

Automaker requirements Cost, cycles, quality Emerging countries Low-cost vehicles June 20, 2008 I 31

Purchasing Supplier base � Reduction (-154) � VIP strategic suppliers (79) � Low-cost countries (37% of purchasing) Tools (Bidding On Line: 1.5 billion euros) June 20, 2008 I 32

Industrial productivity Cost reduction Greater flexibility Return on assets June 20, 2008 I 33

Optimization of the production footprint Supporting customers in emerging countries Rationalization 72% 70% 68% 66% 62% 56% 52% Other countries Productive headcount* (%) Leading 48% competitive-cost 44% 38% countries 34% 32% 30% 28% 2001 2002 2003 2004 2005 2006 2007 * Continued operations June 20, 2008 I 34

R&D efficiency High technology products / Cost reduction Standardization, simulation R&D in competitive-cost countries � 21% of total headcount, 9 R&D Centers June 20, 2008 I 35

Re-engineering Quality and Logistics: 20 pilots in 2007 � Headcount reduction of 15% � Reduction of non-quality and inventory costs � Deployment in all sites Extension of the process to other functions June 20, 2008 I 36

Quality Delivery quality � 65% of sites at less than 10 ppm* � 18 sites at 0 ppm 185 CUSTOMER RETURNS in ppm 53 32 15 10 2003 2004 2005 2006 2007 * Defective parts per million delivered Lower warranty costs June 20, 2008 I 37

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 38

Teams, tools, a culture Skilled teams Organization and Methodologies Culture: ethics, respect, demanding, progress, rigor June 20, 2008 I 39

Powertrain Efficiency Michel Forissier – Director of the Domain

Climate change Concentration of CO 2 in the atmosphere (ppm) 600 500 400 300 200 Year 1000 Year 1200 1400 1600 1800 2000 Source: GIEC June 20, 2008 I 41

Skyrocketing oil prices 140 USD May 2008 Price of crude in $/barrel 80 70 60 50 40 30 20 10 0 Jan 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 June 20, 2008 I 42

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 43

CO 2 regulations Europe: 120g CO 2 /km Japan: in 2012 16.8 km/l USA: 95g CO 2 /km in 2015 35 MPG in 2020 Council for Transport Policy in 2020 Feb. 2007 European Commission Senate Bill Jan. 10, 2007 June 21, 2007 Equivalent (for gasoline engine): 5 l/100km 6 l/100km 6.7 l/100km then 4 l/100km June 20, 2008 I 44