Valeo's Third Quarter Results
PARIS--Oct. 18, 2001--Following a meeting of the Supervisory Board on October 18, 2001, Valeo (Paris: FR; OTC: VLEEY) presented its consolidated accounts for the third quarter 2001:
In millions of euros
3rd Quarter(a) 9 Months
2001 2000 Variation 2001 2000 Variation
Sales 2,335 2,012 +16% 7,806 6,503 +20%
Gross
margin 396 367 +8% 1,263 1,236 +2%
% sales 17.0% 18.2% 16.2% 19.0%
Operating
income 98 107 8% -276 406 -32%
% sales 4.2% 5.3% 3.5% 6.2%
Net income
from
Consolidated
companies 40 145(b) 72%(b) - (88) 358 -125%
% sales 1.7% 7.2% - 1.1% 5.5%
Net income 11 120(b) 91%(b) (174) 290 -160%
% sales 0.5% 6.0% - 2.2% 4.5%
(a) unaudited quarterly figures
(b)2000 net income including a 73 million euro profit from dilution
Third quarter 2001 sales rose by 16% compared with the same period
in 2000. The impact of changes in the reporting entity was +16%, while
currency variations were insignificant. At constant reporting entity
and exchange rates, Group sales were stable in a world automotive
market that shrank by 3% (-10% in North America, +4% in Europe).
The Group generated 66% of its third quarter sales in Europe, 24%
in North America, 6% in Asia and 4% in other countries.
Net income was positive in the third quarter.
Against a background made even more difficult by the events of
mid-September, the Group continued its recovery begun in the second
quarter:
2001 Margin levels(c)
1st Quarter 2nd Quarter 3rd Quarter
Gross margin in
% sales 15.0 16.7 17.0
Difference vs.
2000 gross margin in
percentage points -4.4 -2.6 -1.2
Operating income
in % sales 2.0 4.5 4.2
Difference vs.
2000 operating income in
percentage points -4.5 -2.3 -1.1
(c) unaudited quarterly figures
Valeo improved its gross margin rate from 16.7% in the second quarter to 17.0% in the third. The Group benefited from actions to improve industrial efficiency and to integrate Sylea, in particular:
| -- | As part of the ongoing adaptation of the industrial base, 6 sites were closed in the third quarter, while 12 other restructuring projects are being studied; |
| -- | The selective disposal policy presented at the May 2001 Annual General Meeting of Shareholders is already being implemented with the actions taken concerning 17 sites; |
| -- | The continuous rationalization of the supply base has led to a reduction in the number of suppliers (cut by more than 600 at the end of September), the growing use of "bidding on line" for certain categories of supplies, and the creation of new web catalogs. |
Valeo's technological focus also produced results in the third quarter:
-- The Group booked the biggest order ever placed in the field of
ultrasonic park assist systems;
-- Valeo signed its first two contracts for smart lighting
systems which improve visibility in road bends by controlling
the direction of light beams;
-- Two of the Group's products were awarded an International
Grand Prize for Technical Innovation at the Equip Auto trade
show: the Silencio(tm) Flat Blade wiper blade and the
Reglolux(tm) photometric-geometric diagnostic tool for
headlamps.
The Group is involved in a large number of technological projects. Valeo, in partnership with Ricardo, has launched the development of 42 Volt electrical and thermal energy management systems, which target a 30% reduction in fuel consumption thereby significantly reducing pollutant emissions.
Restructuring in the U.S.
The automotive market will continue to deteriorate following the mid-September events. Special offers and promotions from automakers designed to sustain sales will only have a temporary effect. It is essential that the Group accelerate the restructuring actions initiated in the second quarter, particularly within one of its U.S. subsidiaries, Valeo Electrical Systems, Inc. ("VESI"):
-- In a highly deteriorating industry environment, and as labor
negotiations appear to be deadlocked despite the efforts of
management, the measures envisaged at the end of the first
quarter are no longer sufficient;
-- A plan taking this new environment into account is being
implemented in order to eliminate a situation of chronic
losses. This plan will represent, depending on the options, a
cost of 100-200 million euros, which corresponds to
restructuring costs spread over several years, added to which
will be an accelerated amortization of goodwill and tangible
assets representing a total of 250-300 million euros.
Commenting on this outlook, Thierry Morin, Chairman of the Management Board, declared: "Valeo is continuing its recovery despite the drop in the automotive market: the third quarter has confirmed the improvement in our operational performance. The Group is intensifying its restructuring work in order to adapt to the evolution of the market, and is taking all necessary measures to confront the situation in the U.S. At the same time, Valeo's technological orientation within its various domains of expertise will enable us to continue to gain market share in this difficult period."
Valeo is an independent industrial Group fully focused on the design, production and sale of components, integrated systems and modules for cars and trucks. Valeo ranks among the world's top automotive suppliers. The Group has 156 plants, 53 R&D centers, 10 distribution centers and employs 77,000 people in 25 countries worldwide.