Valeo first quarter 2003 results

Paris, April 23 -- - Continuing margin growth

Following a meeting of the Board of Directors on April 22, Valeo presented its consolidated accounts for the first quarter 2003.

In millions of Euro                 First Quarter               
                                    2003         2002     Variation     
Sales                              2,440        2,550     - 4 / +1.5% (1)
Gross Margin                         428          422                 
% Sales                             17.5%        16.5%     + 1.0 point
Operating Income                     109           98                 
% Sales                              4.5%         3.8%     + 0.7 point
Net income                            22           20      + 10 %     
% Sales                              0.9%         0.8%

(1) At constant reporting entity and exchange rates unaudited quarterly figures

Group results for the first quarter 2003

Sales of 2,440 million euros in the first quarter 2003 grew 1.5% as compared with the first quarter 2002 at constant reporting entity and exchange rates. The impact of exchange rates was - 5.5%, giving a gross sales drop of 4%.

Apart from in North America, where the Group will benefit from the restructuring of its VESI subsidiary from 2004, sales outperformed automobile production in all regions: in Europe, sales increased 2% whilst production dropped 4% and in Asia sales grew 27% in a market that grew by 15%.

The Gross Margin at 17.5% of sales improved by 1.0 point compared with the year ago quarter due to the ongoing improvements in industrial organization and supplier integration. The operating margin increased by 0.7 points to 4.5% of sales.

The net financial charge reflects stable debt levels and includes a provision of 4.3 million euros for the loss in value of its own-held shares. These shares were valued at 23.10 euros at the end of March 2003 and have significant upside potential.

Net income of 22 million euros is up by 10% as compared with the first quarter 2002.

The net debt to shareholder equity ratio is 27%, comparable to that at end December 2002.

Ongoing improvement actions and growth prospects

All the Branches and functions contributed to the improvement in the Group's results through continuing the rationalization of their activities. The following industrial reorganization actions were undertaken during the quarter:

The Wiper Systems activities in Bietigheim, Germany were transferred to their new facility allowing the closure of the old site;

The Group announced its plan to open a fifth site in Poland (Chrzanow for Lighting Systems);

In the context of the selective divestment program, four wiring sites in India, which had been acquired with Sylea, were sold;

The sites of Fort Worth, USA (Switches and Detection Systems), Barcelona, Spain (Lighting Systems) and Jablonec, Czech Republic (Wiring) were closed. The ongoing industrial rationalization efforts continue at their planned rate to adapt to the drop in automotive production volumes: at the end of March 2003 the Group had 132 industrial sites as compared with 140 at 31 December 2002. The Group thus has the means to continue to progress in 2003.

The order intake represented 1.3 times sales in the quarter; these contracts reinforce the internal growth prospects of Valeo.

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 132 plants, 54 R&D centres, 9 distribution centres and employs around 69,000 people in 25 countries worldwide (first quarter 2003).

Kate Philipps, Group Communications Director, Tel.: +33 (0) 1.40.55.20.65 Bruno-Roland Bernard, Investor Relations Director, Tel.: +33 (0) 1.40.55.37.86