Valeo (FR) H1 2025 earnings summary

Executive summary

• H1 2025 saw improved profitability and cash generation, with operating margin up 0.5 pts year-over-year and free cash flow more than doubling despite €80m in one-off restructuring costs.

• Gross margin rose to 19.6% of sales, up 1.1 pts YoY, and EBITDA margin reached 13.8%, up 1.4 pts, driven by cost reductions and operational discipline.

• Order intake surged 30% to €11.8bn, reflecting strong commercial momentum, especially with Chinese automakers, and recognition from major OEMs.

• Cost-cutting, strict price management, and focus on higher-margin contracts drove financial improvements.

• All divisions reported progress despite a challenging global automotive environment.

Financial highlights

• H1 2025 sales were €10,660m, down 4% year-over-year (like-for-like -1.4%), with EBITDA at €1,472m (+6% YoY) and operating margin at 4.5% (+0.5 pts YoY).

• Net income was €104m (1.0% of sales), down from €141m (1.3%) in H1 2024.

• Free cash flow after restructuring costs was €252m, more than double H1 2024.

• Net debt increased to €4,183m, mainly due to a €260m FX impact; leverage ratio at 1.4x EBITDA.

• Gross R&D expenditure fell 11% to €1.25bn; investments in property, plant, and equipment dropped 29%.

Outlook and guidance

• FY 2025 sales guidance revised to ~€20.5bn (from €21.5–22.5bn) due to €750m adverse currency effect and market softness; EBITDA and operating margin guidance unchanged at 13.5–14.5% and 4.5–5.5% of sales, respectively.

• Free cash flow guidance maintained at €450–550m after restructuring costs; cumulative free cash flow for 2024–2025 expected at ~€1bn.

• H2 2025 margins and cash generation expected to be higher than H1.