Valeo - First Quarter 2004 Results

- Continuing Margin Growth and Debt Reduction

PARIS, April 20 -- Following a meeting of the Board of Directors today, Valeo announced its consolidated results for the first quarter 2004.

  In millions of euros                            First Quarter

                                     2004            2003        Change

  Sales                             2,415           2,440          - 1%
  Gross margin                        429             428
  % sales                            17.8%           17.5%     + 0.3 pt
  Operating income                    111             109
  % sales                             4.6%            4.5%     + 0.1 pt
  Operating income less financial     115              92
   charges
  % sales                             4.8%            3.8%     + 1.0 pt
  Net income                           74              22
  % sales                            3.1%             0.9%     + 2.2 pts

                                         Non audited quarterly figures

  Group results for the first quarter 2004

Sales of 2,415 million euros fell by 1% compared with the first quarter 2003. Currency variations had a negative impact of 3% whilst changes in the reporting entity had a positive contribution of 5%, in particular through the increase in Valeo's stake in Zexel Valeo Climate Control (December 2003) and in Shanghai Valeo Automotive Electrical Systems (January 2004).

The gross margin rate for the first quarter 2004 improved by 0.3 points as compared with the first quarter 2003, to reach 17.8 % of sales. This growth reflects the ongoing progress made in the Group's industrial organization and supplier integration. Valeo was thus able to sustain an increased level of research and development and improve its operating margin by 0.1 point to 4.6% of sales. The operating income less financial charges grew by 25% due in particular to the reduced debt level. The increase was 1.0 point to reach 4.8% of sales.

After taking into account an exceptional tax refund, net income strongly increased to reach 74 million euros versus 22 million euros in the first quarter 2003.

Cash generation from operations and from the exceptional tax refund allowed a marked reduction in the Group's financial debt. The debt-to-equity ratio fell to 19% from 29% at the end of December 2003.

Ongoing rigorous management and growth prospects

The order intake represented 1.3 times sales in the first quarter, reflecting the commercial dynamism shown by the Group since 2002. In particular Valeo won orders for new solutions with high technology content such as the Blind Spot Detection System and the Lane Departure Warning System.

During 2004 Valeo will continue to see the benefits of its rigorous management. The start of production of contracts won over the past two years will strengthen internal growth from the end of the year.

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 129 plants, 65 R&D centers, 9 distribution centers and employs 68,700 people in 26 countries worldwide (end of March 2004).