Valeo: 2006 Results

Valeo: 2006 Results

February 13, 2007

    PARIS, Feb. 13 /Xinhua-PRNewswire/ -- Following a
meeting of the Board of Directors, Valeo announced its
audited results for 2006. 


     (in euro millions)               2006            2005 
         % change 

     Total operating revenues        10,086          9,834*
           + 2.6%
     Gross margin(1)                  1,539          1,559*
            -1.3%
           % of sales                 15.4%          16.0% 
          -0.6 pt 
     Operating margin(2)                341            374*
            -8.8%
           % of total revenues         3.4%           3.8% 
          -0.4 pt 
     Net income attributable            161            142*
           +13.4%
      to the company's shareholders                        
                
                                                   
     Net income per share (euros)      2.10          
1.80*/**         +16.7%
     Net debt                           968          1,080 
           -10.4%

    *  as required by IFRS norms, this data has been
restated, mainly 
       relating to non-strategic activities (IFRS 5
criteria). 
    ** including 0.47 euro and -0.15 euro respectively for
non-strategic 
       activities in 2006 and 2005.

    (1) Sales less selling cost
    (2) Operating income before other financial income and
expenses


    Customer diversification, the recovery of the
aftermarket business and rigorous management lessened the
impact on margins of the decline in automotive production
in the Group's key markets and the increase in raw material
prices. Valeo has entered 2007 with reinforced
competitiveness in the areas of quality, industrial
organization and technological innovation. The sale of the
Electric Motors and Actuators business reflects the
rationalization of Valeo's portfolio and enhances the
Group's financial resources.  

    Annual results

    At 10,086 million euros, total operating revenues were
up by 2.6% compared to 2005. Changes in perimeter had a
positive impact of 1.5%, and currency fluctuations
accounted for 0.6% of the increase in sales. On a
like-for-like basis, and restated to take into account
deflation in sales prices at identical functions, total
operating revenues increased by 4.3%. 

    The gross margin was down by 1.3% to 1,539 million
euros, representing 15.4% of sales, compared to 16.0% in
2005. The rising cost of raw materials reduced the gross
margin by 0.7 points. 

    Taking into account 70 million euros of other expenses
(50 million euros in 2005), operating income was 271
million euros (2.7% of total operating revenues) compared
to 324 million euros (3.3%) in 2005.

    Net income attributable to Valeo shareholders was 161
million euros, compared to 142 million euros in 2005. It
includes a contribution of 36 million euros from the sale
of the Electric Motors and Actuators business on December
27, 2006, and 38 million euros from the sale of the Logitec
logistics business and the financial investment in Parrot.

    Cash flow and debt levels

    At December 31, 2006, Valeo's net debt totaled 968
million euros, down by 112 million euros compared to
January 1, 2006. This change reflects in particular the
sale of the Electric Motors and Actuators business (impact
of 122 million euros) and payments to shareholders (89
million euros), with free cash flow(3) remaining positive
(26 million euros). At December 31, 2006, the
debt-to-equity ratio was 55%, compared to 63% at January 1,
2006. 

    (3) Extra-accounting aggregate: cash flow less taxes
less change in 
        working capital requirements less financial
expenses plus subsidies 
        less gross tangible and intangible investments.

    Highlights

    Valeo continued to rationalize its business portfolio.
The Electric Motors and Actuators business was sold to the
Japanese group Nidec at the end of the year, and the
Logitec logistics business and the financial investment in
Parrot were also sold. At the same time, the potential of
the Group's thermal and lighting systems businesses was
reinforced, respectively through the acquisition of 50% of
the Korean radiator manufacturer Threestar and the creation
of a joint venture in China with Ichikoh. Valeo also signed
a Memorandum of Understanding with a view to buying a
thermal systems plant in North America from Ford. 

    The Group's competitiveness was reinforced. Quality
indicators improved for the fifth consecutive year, and the
Group continued to optimize its industrial footprint.
Following the measures taken during the year, 54% of the
production workforce was located in leading
competitive-cost countries at end 2006, compared to 51% at
end 2005 and 38% in 2001. In addition, Valeo continued to
successfully promote its innovative technologies, receiving
its first order for the Park4U(TM) semi-automatic park
assist system. 

    The Group's improved worldwide competitiveness was
reflected in the order intake vs. sales ratio, which was
1.3, the highest level since 2001.

    Proposed dividend

    Taking into account the level of results and
shareholder payments during the year, the Board of
Directors will propose to the Annual General Meeting of
Shareholders to maintain a dividend of 1.10 euro per
share.

    Outlook

    The expected stabilization in automotive production in
the Group's key markets is not expected to occur before the
second half of 2007. In this context, and assuming a
stabilization of raw material prices, Valeo aims to improve
its operational profitability by stepping up efforts to
increase competitiveness. The Group is launching a
re-engineering of its principle functions in order to
optimize its resources and processes. 

    Valeo is an independent industrial group dedicated to
the design, production and sale of components, integrated
systems and modules for cars and trucks. It is one of the
world's leading automotive suppliers. The Group has 129
production sites, 68 R&D centers, 9 distribution
platforms, and employs 69,800 people in 29 countries
worldwide.

    
     Simplified accounts for the fourth quarter 

     (in euro millions)                  2006*        2005*
          % change
 
     Total operating revenues           2,514       
2,511**           + 0.1%
     Gross margin                         369         
390**            -5.4%
           % of sales                   14.9%        15.7% 
          -0.8 pt 
     Operating margin                      74          
94**           -21.3%
           % of total revenues           2.9%         3.7% 
          -0.8 pt 
     Net income attributable               60           41 
           +46.3%
      to the company's   
      shareholders                                         
     
           % of total revenues           2.4%         1.6% 
          +0.8 pt 

    *  unaudited
    ** as required by IFRS norms, this data has been
restated, mainly   
       relating to non-strategic activities (IFRS 5
criteria). 


    For more information, please contact:

     Kate Philipps
     Group Communications Director, Valeo
     Tel:  [phone]

     Remy Dumoulin
     Investor Relations Director, Valeo
     Tel:  [phone]


SOURCE  Valeo