Valeo: Strong Rise in First Half 1999 Results; Growth in Net Earnings Per Share
1 September 1999
Valeo: Strong Rise in First Half 1999 Results; Growth in Net Earnings Per Share
PARIS, Aug. 31 -- The following was issued today by Valeo:
Growth of 33% in 1st half 1999 sales
(In millions of euros) S1 99 S1 98 Change
Sales 3,890 2,924 + 33%
The 33% increase in first half 1999 sales was fueled by original equipment
sales, up by 39%, and aftermarket sales, up by 17%.
Strong rise in results
(In millions of euros) S1 99 S1 98 Change
Gross margin 762 594 + 28%
In % sales 19.6% 20.3%
Net income from consolidated companies 151 109 + 39%
In % sales 3.9% 3.7%
Net income
Before amortization of goodwill 186 145 + 28%
In % sales 4.8% 5.0%
After amortization of goodwill 154 128 + 20%
In % sales 4.0% 4.4%
* Valeo's gross margin amounted to 19.6% of sales; it integrates the
activities of Electrical Systems acquired in September 1998. The latter's
gross margin rose to 17.3%, compared with 14.5% in 1997. Excluding this
acquisition, Valeo generated a gross margin of 20.3%. It is stable as
compared with the first half of 1998, despite the economic crisis in South
America and extra costs related to the launch of new lighting products.
* Research & Development, Selling and Administrative expenses accounted
for 13.3% of sales. They are down versus 1998 when they stood at 13.5% of
sales.
* Net income from consolidated companies, up by 39%, grew faster than
sales and includes an effective tax rate of 28.8%.
* Net income before amortization of goodwill rose by 28%. After the
amortization of goodwill, net income amounted to 20%.
Increase in net earnings per share
S1 99 S1 98 Change
Net income 154 128 + 20%
In millions of euros
Average number of shares 82.5 75.3 + 17%
In millions
Net EPS after amortization of goodwill 1.87 1.81 + 3%
euros/share
*Net earnings per share rose by 3%, despite a 17% increase in the average
number of shares.
Commenting first half results, Noel Goutard, Chairman & CEO of Valeo,
said, "At the time of the capital increase carried out in August 1998, we
assured our shareholders that the operations of ITT Electrical Systems, which
we acquired concurrently, would rapidly have an accretive effect on earnings
per share, despite the strong increase in goodwill. This commitment was kept
within the semester following the integration of these activities."
Financial structure strengthened
(In millions of euros) S1 99 S1 98 Change
Cash flow 395 306 + 29%
Capital expenditures 251 208 + 21%
At 06/30/99 At 12/31/98
Shareholders' equity 2,203 2,090 + 5%
Net indebtedness 459 610 - 25%
Debt-to-equity ratio 21% 29%
Group capital expenditures were largely covered by cashflow. Working
capital requirements were down to 3.4% of sales at June 30, 1999, compared
with 4.6% at December 31, 1998. The Group's financial structure improved with
the debt-to-equity ratio standing at 21% at the end of June 1999.
Outlook 1999
Valeo's sales for 1999, including recent acquisitions, should exceed the
7.5 billion euro mark, that is an increase of over 25 %, which is
significantly greater than that of the last five years. The Group is
intensifying its relentless drive to increase productivity. This is the key
challenge faced by Valeo this year in order to sustain and expand margins.
Drastic measures were taken to rationalize operations in South America and
Europe, resulting, notably, in the closure of 12 sites and the disposal of
three non-strategic businesses. They were matched by new investments in
Poland, the Czech Republic and Mexico, in order to reduce production costs.
At the same time, Valeo is pursuing its profitable growth strategy. In
July 1999, Valeo acquired Mando's alternators/starters business in South
Korea. This operation ranks Valeo among the leaders in this market and marks
another step forward for the Group in Asia. The Group is also setting up two
new electronics facilities in Vezprem in Hungary and Fort Worth in Texas,
thereby strengthening Valeo's high-technology-content activities.
Through these initiatives and developments, Valeo is continuing to support
and serve ever more rapidly evolving technologies and globalization in the
automotive industry.
Valeo is an independent industrial Group fully focused on the design,
manufacture and sale of components, integrated systems and modules for cars
and trucks. The Group employs 50,400 people at 141 production and Research
& Development sites and 10 distribution centers in 20 countries worldwide and
ranks among the world's top 10 automotive suppliers.
For more information on the Group and its businesses, please consult
Valeo's web site: http://www.valeo.com .
CONTACT: Kim Derderian of Valeo, +33-1-40-55-20-34