Valeo (FR) H1 2024 earnings summary

Executive summary

• Sales reached €11.1 billion in H1 2024, up 1% like-for-like but down 1% reported due to FX and scope effects, with EBITDA at €1,383 million (+6%) and operating margin at 4.0% (+0.8 pts year-over-year).

• Free cash flow after restructuring costs was €121 million, up €277 million from H1 2023, and net attributable income increased 18% to €141 million.

• Strategic reorganization merged Thermal and Powertrain Systems into the POWER Division, targeting €200 million in annual cost savings and enhancing flexibility.

• Asset disposal program advanced, including the completed sale of the Thermal Commercial Vehicle business, generating €212 million in cash proceeds and a €94 million capital gain.

• Margins and cash flow aligned with full-year guidance despite challenging market conditions and lower order intake.

Financial highlights

• EBITDA margin rose to 12.4% (+0.8 pts), and operating margin to 4.0% (+0.8 pts) year-over-year.

• Free cash flow reached €121 million after restructuring costs, with net debt stable at €4.0 billion and leverage ratio at 1.5x.

• Gross margin improved by 1.4 pts to 18.5% due to operational efficiency and cost control.

• Net attributable income was €141 million (1.3% of sales, +18% year-over-year).

• Order intake was €9.1 billion, down 52% year-over-year due to project postponements and a more selective approach.

Outlook and guidance

• 2024 sales guidance revised to ~€22 billion (previously €22.5–23.5 billion); 2025 guidance now €23.5–24.5 billion.

• EBITDA margin expected at 12.1–13.1% in 2024 and 13.5–14.5% in 2025; operating margin target: 4.0–5.0% in 2024, 5.5–6.5% in 2025.

• Free cash flow expected at ~€350 million after exceptional costs in 2024 and €650 million in 2025.

• Margins and free cash flow objectives reaffirmed, with higher margin expected in H2 2024.

• Cost control, supply base savings, R&D reduction, and completion of divestment program prioritized for H2.