Valeo : Présentation – résultats du 1er semestre 2021 (en anglais)

PRESS RELEASE

Paris, July 22, 2021

Solid operating performance in the first half, in an environment marked by the shortage of electronic components:

• Sales of 4,327 million euros in the second quarter, up 73% on a like-for-like basis versus second-quarter 2020
• Sales of 8,994 million euros in the first half, up 31% on a like-for-like basis versus first-half 2020
• EBITDA margin at 13.4% of sales
• Free cash flow of 145 million euros
• Strong order intake of 10.6 billion euros for Valeo, plus 1.1 billion euros for Valeo Siemens eAutomotive
• Confirmation of 2021 objectives despite weaker-than-expected growth in automotive production and the rise in raw material prices

Jacques Aschenbroich, Valeo's Chairman and Chief Executive Officer, commented:

"I'd like to thank our teams once again for their unrelenting commitment - particularly in managing the shortage of electronic components. Thanks to their efforts, we were able to supply our customers without any interruption and achieve very solid performances in our plants.

Leveraging our unique positioning in electrification and ADAS, we outperformed automotive production by more than 10 percentage points in all regions compared to first-half 2019.

Additionally, the deployment of our technological platforms enables us to structurally reduce our gross Research and Development expenditure by 207 million euros and capital spending by 228 million euros, while offering increasingly innovative solutions to our customers, and to generate free cash flow of 145 million euros.

The EBITDA margin, which is up 90 basis points versus 2019 at 13.4% of sales, reflects our operating efficiency and strict management of all of our costs.

In a challenging environment marked by a shortage of electronic components and rising raw material prices, we can confirm our objectives for full-year 2021."

1

Paris, July 22, 2021. At today's meeting, Valeo's Board of Directors approved the condensed interim consolidated financial statements for the six months ended June 30, 2021(1). The results for first-half 2021 shown below have been prepared in accordance with IFRS.

To provide readers with a better understanding of how Valeo's business has performed, the Group has decided to present an analysis of its performance compared to 2019, the year before the crisis.

				H1 2021
	Sales		(in €m)	8,994
	Original equipment sales		(in €m)	7,512
	Gross margin		(in €m)	1,586
			(as a % of	17.6%
			sales)
	R&D expenditure		(in €m)	(756)
			(as a % of	(8.4%)
			sales)
	Selling and administrative expenses		(415)
		(in €m)
			(as a % of	(4.6%)
			sales)
	Operating margin excluding share in net		(in €m)	415
	earnings (losses) of equity-accounted		(as a % of
	companies		4.6%
		sales)
	Share in net earnings (losses) of		(in €m)	(119)
		(as a % of
	equity-accounted companies		(1.3%)
			sales)
	Operating margin including share in net		(in €m)	296
	earnings (losses) of equity-accounted		(as a % of
	companies*		3.3%
		sales)
	Net attributable income (loss)		(in €m)	90
			(as a % of	1.0%
			sales)
	Basic earnings per share		(in €)	0.38
	EBITDA*		(in €m)	1,205
			(as a % of	13.4%
			sales)
	Change in operating working capital		(in €m)	(218)
	Investments in property, plant and equipment		(in €m)	(570)
	and intangible assets
	Free cash flow*		(in €m)	145
	Net debt*		(in €m)	3,147
	ROCE*			13%
	ROA*			7%

* See financial glossary, page 14.

	H1 2020		Change
	7,058		+27%
	5,863		+28%

507 +213%

7.2%

+10.4 pts

1. -19%

(13.1%)

+4.7 pts

1. -1%

(5.9%)

+1.3 pts

1. -149%

(11.9%)
+16.5 pts

1. -28%

(2.4%)		+1.1 pts
(1,006)		-129%
(14.3%)		+17.6 pts
	(1,215)			-107%
	(17.2%)		+18.2 pts
	(5.08)			N/A

202 +497%

2.9%	+10.5 pts

1. N/A

1. -20%

	(1,049)	-114%
	4,037	-890m
	N/A	N/A
	N/A	N/A

		H1 2019		Change
		9,776		-8%
		8,220		-9%
1,754	-10%
17.9%		-0.3 pts

1. -4%

(8.0%)

-0.4 pts

1. -9%

(4.6%)

0.0 pts

514 -19%

5.3%
	-0.7 pts

1. +11%

(1.1%)

-0.2 pts

407 -27%

4.2%

-0.9 pts

162 -44%

1.7%	-0.7 pts

0.68 -44%

	1,218		-1%
	12.5%		+0.9 pts

1. N/A

1. -41%

1. -39%

2,877 +270m

12% N/A

8% N/A

1 The Statutory Auditors issued an unqualified review report on the condensed interim consolidated financial statements.

2

Change in sales

Business in the first half of the year was impacted by the shortage of electronic components, penalizing the supply chain and our customers' production schedules. The second quarter was particularly hard hit by a fall of around 10% in automotive production compared to the first quarter of 2021.

	H1 2021 sales		As a % of		2021				vs. 2020						vs. 2019
		H1 2021						LFL*						LFL*
	(in millions of euros)			H1		H1 2020			Change		H1 2019			Change
		sales				change				change
	Original equipment	84%		7,512		5,863	+32%	+28%		8,220	-6%	-9%
	Aftermarket	11%		1,030		824	+30%	+25%		1,005	+8%	+2%
	Miscellaneous	5%		452		371	+25%	+22%		551	-15%	-18%
	Total H1		100%		8,994		7,058		+31%		+27%		9,776		-5%		-8%

* Like for like(2).

Consolidated sales advanced 31% on a like-for-like basis compared to first-half2020, to 8,994 million euros. Changes in exchange rates had a negative 4% impact, primarily due to the appreciation of the euro against the US dollar and the Japanese yen. Changes in Group structure had a negligible impact on sales for the period.

Like-for-likeoriginal equipment sales grew by 32%, spurred by the good momentum enjoyed by the Group in fast- growing technologies such as front cameras and 48V.

Like-for-likeaftermarket sales rose 30%, an excellent performance led by customers' stockpiling to meet the upturn in demand and manage the shortage of electronic components.

"Miscellaneous" sales rose by 25% on a like-for-like basis, confirming the upturn in business and the forthcoming production launches.

	Q2 2021 sales		As a % of			2021						vs. 2020						vs. 2019
		Q2 2021							LFL*						LFL*
	(in millions of euros)		Q2				Q2 2020		Change			Q2 2019		Change
		sales					change				change
	Original equipment	83%			3,575	2,066	+78%	+73%	4,099	-10%	-13%
	Aftermarket	12%			522	333	+63%	+57%	504	+9%	+4%
	Miscellaneous	5%			230	171	+37%	+35%	332	-28%	-31%
				100%									+73%	+68%					-9%	-12%
	Total Q2			4,327	2,570	4,935

* Like for like(2).

Like-for-like sales in the second quarter came in 73% higher year on year at 4,327 million euros, buoyed by a highly favorable comparison basis on account of plant shutdowns in second-quarter 2020.

2 See financial glossary, page 14.

3

Change in original equipment sales by destination region

	Original equipment	As a % of		2021				vs. 2020							vs. 2019
	sales		H1		H1		LFL*			Outperf. vs.			H1		LFL*	Outperf. vs.
	2021 sales
				change			IHS/CPCA**				change	IHS/CPCA**
	(in millions of euros)
	Europe & Africa	48%		3,606		2,765	+32%		+2 pts			4,025	-10%	+11 pts
	Asia, Middle East &	32%		2,379		1,925	+26%		-2 pts			2,381	+3%	+10 pts
	Oceania
	14%		1,022
	o/w China			797	+26%		-2 pts			861	+19%	+21 pts
	o/w Japan	7%		548		486	+22%		+7 pts			637	-10%	+6 pts
	o/w South Korea	8%		583		498	+19%		+8 pts			651	-7%	+4 pts
	o/w India	1%		93		47	+105%		+22 pts			89	+11%	+20 pts
	North America	18%		1,390		1,070	+40%		+8 pts			1,624	-9%	+11 pts
	South America	2%		137		103	+57%		-5 pts			190	+4%	+25 pts
	Total H1	100%		7,512		5,863		+32%		+2 pts			8,220		-6%	+8 pts

• Like for like(3).
• Based on IHS automotive production estimates released on July 16, 2021/CPCA estimates for data relating to China.

Compared to first-half2019, original equipment sales delivered an outperformance of more than 10 percentage points in all production regions, reflecting the Group's strong positioning:

• in Europe and Africa, original equipment sales fell by 10% on a like-for-like basis, outperforming automotive production by 11 percentage points, thanks in particular to the robust performance of the Comfort & Driving Assistance Systems (ADAS) and Powertrain Systems (48V, transmission systems and actuation systems) Business Groups;
• in Asia, original equipment sales grew by 3% on a like-for-like basis, outpacing automotive production by
  10 percentage points:
• • in China, original equipment sales were up 19% on a like-for-like basis, outperforming automotive production by 21 percentage points. China is the only region that recorded first-half 2021 sales significantly above pre-Covid-19 levels. All of Valeo's Business Groups contributed to this momentum (more particularly, the Comfort & Driving Assistance Systems, Thermal Systems and Visibility Systems Business Groups) serving both international and Chinese automakers,
  • in Japan, original equipment sales declined by 10% on a like-for-like basis, representing an outperformance of 6 percentage points, driven in particular by the solid performance of the Visibility Systems Business Group for Toyota through its subsidiary Ichikoh,
  • in South Korea, original equipment sales retreated by 7% on a like-for-like basis, outpacing automotive production by 4 percentage points, driven mainly by the ramp-up of new contracts with Hyundai for 48V and actuation systems;
• in North America, original equipment sales dropped by 9% on a like-for-like basis, outperforming automotive production by 11 percentage points, driven mainly by the ramp-up of a number of projects in ADAS and lighting systems for North American customers;
• in South America, original equipment sales expanded by 4% on a like-for-like basis, outperforming automotive production by 25 percentage points.

3 See financial glossary, page 14.

4

	Original equipment	As a % of
	sales
	2021 sales
	(in millions of euros)
	Europe & Africa	48%
	Asia, Middle East &	32%
	Oceania
	o/w China	14%
	o/w Japan	7%
	o/w South Korea	8%
	o/w India	1%
	North America	18%
	South America	2%
	Total Q2	100%

2021

Q2

1,710

1,143

504

254

280

43

657

65

3,575

			vs. 2020
	Q2		LFL*			Outperf. vs.
		change			IHS/CPCA**
872	+99%		+9 pts
908	+29%		+5 pts
508	-3%		0 pts
162	+75%		+23 pts
208	+36%		+25 pts
7	+459%		+52 pts
270	+164%		+32 pts
16	+357%		+56 pts
	2,066		+78%		+24 pts

			vs. 2019
	Q2		LFL*	Outperf. vs.
		change	IHS/CPCA**
1,996	-14%	+11 pts
1,181	0%	+8 pts
433	+17%	+15 pts
306	-11%	+9 pts
330	-13%	+3 pts
42	+9%	+28 pts
824	-15%	+10 pts
98	-4%	+23 pts
	4,099		-10%	+7 pts

• Like for like(4).
• Based on IHS automotive production estimates released on July 16, 2021/CPCA estimates for data relating to China.

Compared to second-quarter2019, original equipment sales outperformed in all production regions. On a global level, the outperformance came out at 7 percentage points. Performance was impacted by an unfavorable geographic mix and difficulties related to production disruptions, which were particularly severe during the quarter.

Balanced customer portfolio and geographic positioning

	Production regions		H1 2021	H1 2020	H1 2019
	Western Europe	33%	32%	32%
	Eastern Europe & Africa	16%	16%	17%
	China	14%	14%	11%
	Asia excluding China	17%	18%	18%
	United States	8%	9%	9%
	Mexico	11%	10%	11%
	South America	1%	1%	2%
	Total		100%	100%	100%
	Asia and emerging countries	59%	59%	59%
	Customers		H1 2021	H1 2020	H1 2019
	German	32%	30%	31%
	Asian	32%	33%	31%
	American	17%	18%	19%
	French	14%	13%	14%
	Other	5%	6%	5%
	Total		100%	100%	100%

4 See financial glossary, page 14.

5