Valeo: Half Year Results; First Steps Toward Recovery
PARIS--July 25, 2001--(Paris:FR; OTC: VLEEY)--Valeo's Supervisory Board meeting on July 24th approved the Group's consolidated accounts for the first half 2001:
1st Half
In millions of euro 2001 2000 +/-
Sales 5,471 4,491 +21.8%
Gross margin 867 869 -0.2%
% Sales 15.8% 19.4%
Operating income 178 299 -40.5%
% Sales 3.3% 6.7%
Net income from
consolidated companies (128) 213
% Sales -2.3% 4.7%
Net income (185) 170
% Sales -3.4% 3.8%
(a) un-audited numbers
Quarterly Financial Data(a)
In millions of euro 2nd Quarter 1st Quarter +/-
Sales 2,776 2,695 +3.0%
Gross margin 463 404 +14.6%
% Sales 16.7% 15.0%
Operating income 124 54 +129.6%
% Sales 4.5% 2.0%
Net income from
consolidated companies 25 (153)
% Sales 0.9% -5.7%
Net income (6) (179)
% Sales -0.2% -6.6%
(a) un-audited numbers
Valeo's sales grew by 22% in the first half. From a geographical standpoint, the sales growth was for the most part achieved in Europe boosted by the acquisitions of the previous year. In the first half of 2001, Valeo generated 68% of its sales in Europe, 23% in North America, 5% in Asia, and 4% in other countries. The positive impact of changes in the reporting entity accounted for 21%, while currency variations contributed 1.5%; excluding currency and reporting entity variations, Valeo generated stable sales in a global automotive market which fell by 5%.
While the first quarter was marked by a fall in gross margin, the actions implemented by the new management team enabled Valeo to reverse this trend in the second quarter with the gross margin rate increasing to 16.7% of sales. This, together with increased volumes, allowed Valeo to reach back the amount of first-half 2000 gross margin.
Operating margin reflects the impact of measures to contain selling and administrative expenses on the one hand, and to increase the productivity of the research and development expenses, on the other.
The net financial result was negative reflecting the increase in indebtedness as the acquisitions made in 2000 were self financed.
Net income was affected by both market conditions and one-off items, as other income and expenses included notably EUR 135 millions in provisions for the restructuring of Valeo's Rochester site in the United-States, as well as expected losses following the divestments in progress and additional restructuring costs. The net result of the second quarter before losses on divestments is back to positive.
In order to turn around short term profitability, management has focused on industrial efficiency and the integration of recently acquired companies.
In order to facilitate industrial, technical and commercial cooperation and synergies between Valeo's Branches, the Group was reorganized into three areas: Mechanical and Thermal Systems, Electrical and Electronic activities and Distribution. Line and staff management has been reinforced at all levels by internal promotions or external recruitment.
Valeo announced in June the divestment of Filtrauto, and in July a plan to divest its non-automotive wiring activities and its Telma speed reducers. Over and above theses disposals, Valeo aims to reinforce the activities of the Group that are at the heart of its core businesses.
Commenting Valeo's strategy and prospects, Thierry Morin, Chairman of the Management Board, said: "We are intensifying our efforts to transform this initial turn around into a durable trend and emerge from the present crisis even stronger than before".