Valeo (FR) Q2 2024 earnings summary

Executive summary

• H1 2024 sales reached €11.1 billion, up 1% like-for-like, with EBITDA at €1,383 million (+6%) and operating margin at 4.0% (+0.8 pts year-over-year), despite a challenging market.

• Free cash flow after one-off restructuring costs was €121 million, a €277 million improvement over H1 2023, aligning with full-year objectives.

• Margins and cash flow aligned with full-year guidance, supported by strict cost and cash control and segment reorganization.

• Strategic reorganization combined powertrain and thermal solutions, enhancing flexibility and reducing break-even point.

• Asset disposal program advanced with the sale of the thermal commercial vehicle business.

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 one-off restructuring costs, up €277 million from H1 2023.

• Net attributable income was €141 million (+18%), and EBITDA totaled €1.4 billion (+6%).

• Gross margin increased by 1.4 pts to 18.5% due to operational control and self-help measures.

• Net debt stood at €4.0 billion with a leverage ratio of 1.5x EBITDA.

Outlook and guidance

• 2024 sales guidance adjusted to around €22 billion; 2025 expected between €23.5–24.5 billion due to continued softness in high-voltage powertrain sales.

• Margins and free cash flow objectives for 2024 and 2025 reaffirmed, with higher margin expected in H2 2024.

• 2024 guidance: EBITDA margin 12.1–13.1%, operating margin 4.0–5.0%, free cash flow ~€350 million.

• 2025 guidance: EBITDA margin 13.5–14.5%, operating margin 5.5–6.5%, free cash flow €650 million.

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