VALEO Q3 2018 sales

Sales up 5% at constant exchange rates to 4.5 billion euros in the third quarter of 2018, following the successful integration of three recent acquisitions – Ichikoh in Japan, Valeo-Kapec in South Korea and FTE automotive in Germany

2 percentage point market outperformance (on a like-for-like basis) in a complex environment, driven mainly by an outperformance of 3 percentage points in North America and Asia excluding China, and 18 percentage points in Brazil

Consolidated growth impacted by WLTP in Europe and market downturn in China in the third quarter, effects of which expected to continue into fourth quarter

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

“On July 25, we made it clear that Valeo’s sales would be impacted in the third quarter, temporarily by WLTP in Europe and by the market slowdown in China.

In this complex environment, Valeo outperformed the market by 2 percentage points during the period.

The impact of WLTP in Europe is set to continue into the fourth quarter, and market conditions in China will remain challenging.

The Group responded to these changing market conditions and the continued rise in raw material prices as early as July, implementing a vigorous action plan aimed at reducing its capital expenditure by 100 million euros compared with 2017 and cutting costs by around 100 million euros. These measures will be maintained into 2019 as necessary.

In light of this situation, the Group is revising its objectives for full-year 2018:
• sales growth of around 6% at constant exchange rates, after the successful integration of Ichikoh in Japan, Valeo-Kapec in South Korea and FTE automotive in Germany, and an original equipment sales outperformance of around 2 percentage points over the second half of the year;
• operating margin excluding share in net earnings of equity-accounted companies at between 6.2% and 6.5% of sales, and free cash flow generation of between 120 and 150 million euros.

We remain very confident in the relevance of our strategy and the solidity of our growth model, driven by our unique portfolio of technologies and products designed to meet the automotive industry’s major challenges, namely powertrain electrification and the rise of the autonomous and connected vehicle. Production start-up for new contracts leveraging these innovations, which include cameras, 48V solutions and LED lighting, will enable us to achieve a stronger outperformance versus global automotive production throughout 2019.”

Third-quarter 2018:

• Consolidated sales of 4,488 million euros:
– up 5% at constant exchange rates;
– down 1% like for like.

• Original equipment sales of 3,904 million euros:
– up 4% at constant exchange rates;
– down 1% like for like, outpacing automotive production by 2 percentage points.

• Aftermarket sales up 11% at constant exchange rates and up 3% like for like.

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