Successful Completion of 2023 Guidance
Achieved 100% of 2023 guidance with sales of EUR 22 billion, an EBITDA of 12%, an operating margin of 3.8%, and a free cash flow of EUR 379 million.
Valeo SA (EU)
· VLEEY
February 29th, 2024
Summary
- Earnings Call Date:
- 2024-02-29
- Change Since:
- +43.69%
- Next Earnings Date:
- 2026-07-22
Earnings Call Sentiment
NeutralThe earnings call highlighted successful completion of 2023 guidance, record order intake, and significant ESG progress, demonstrating strong operational performance. However, challenges remain in the Chinese market and Thermal business profitability, alongside high debt levels. The company plans strategic measures to address these issues, aiming for growth and improved margins in the coming years.
Company Guidance
During the earnings call for Q4 2023, Valeo's management provided detailed guidance, projecting 2024 sales between EUR 22.5 billion and EUR 23.5 billion, with EBITDA expected in the range of 12.1% to 13.1%, and an operating margin between 4.0% and 5.0%. For 2025, they anticipate sales of EUR 24.5 billion to EUR 25.5 billion, EBITDA of 13.5% to 14.5%, and an operating margin of 5.5% to 6.5%. The company aims to generate around EUR 500 million in cash for 2024, targeting a free cash flow of approximately EUR 350 million after allocating EUR 150 million to exceptional self-help measures. For 2025, a free cash flow around EUR 650 million is anticipated after similar allocations. Valeo expects to achieve a leverage ratio reduction to 1x EBITDA by 2025. Additionally, the company highlighted their strategy to drive growth through cost reduction, order intake transformation, and a reinforced cash culture, emphasizing a cautious market approach with a 3% volume discount on S&P estimates for greater comfort in achieving these targets.
Record Order Intake
Set a record for order intake in 2023 at almost EUR 35 billion, with more than half related to driving assistance system technologies, interior experience software-defined vehicle, and EUR 6 billion in High Voltage electrification.
ESG Progress
Achieved a 9% decrease in CO2 emissions in absolute terms and 20% in relative terms since 2019. Continued efforts in gender diversity and safety improvements.
Improved Financial Metrics
Valeo's net attributable income reached EUR 221 million, an increase of almost 50% compared to 2022 on an adjusted basis.
Christophe Perillat-Piratoine
Good evening to all, and thank you for joining the presentation of our 2023 annual results. So this will be a joint presentation with Edouard de Pirey, the group's new CFO. And let me first take the opportunity to express my sincere gratitude to Robert Charvier, who is retiring after 24 years at Valeo. Most of you have known Robert for a long time as he has been our CFO during the last 14 years. So thank you, Robert, for your dedication to our company. Today's presentation will be slightly longer than usual, lasting around 45 minutes. As announced, we'll first go back over the 2023 highlights, then we'll go into detail about the results and the performance for 2023. We will then detail our strategic and financial road map for '24 and '25 as we are at the halfway point in our Move Up strategic plan.
You'll see our growth, you'll see our improvement trajectory over this period and how we're going to get there. And this presentation will be followed by a Q&A session for another 45 minutes that I will handle with Edouard. So let's start. Let's start with the highlights of 2023. We achieved 100% of our 2023 guidance. Sales of €22 billion, an EBITDA of 12%, and operating margin of 3.8%, and a free cash flow of €379 million. Last July, we were together, and we explained our priorities for H2 '23. And you can see that they have -- we have stuck to them.
We delivered on the first step of Thermals recovery with 2 points improvement in EBITDA in H2 compared with H1. We have completed a new phase of our synergy and efficiency program, we are ahead of our plan. And we have completed th...
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