Valeo (FR) Q3 2024 earnings summary

Executive summary

• Navigated a challenging 2024 with significant drops in activity, especially in EV platforms in Europe and inventory destocking in North America.

• Third-quarter 2024 sales reached €5.0 billion, down 2% like-for-like, outperforming global automotive production by 3 percentage points.

• All divisions outperformed automotive production, with BRAIN and LIGHT divisions showing strong momentum, while POWER was impacted by weak high-voltage activity.

• Proactive cost management and self-help measures, particularly in the POWER Division, helped offset lower activity.

• H2 margins and cash generation expected to be significantly higher than H1, with 2024 margin and cash guidance confirmed.

Financial highlights

• Q3 2024 total sales reached €4,967m, with OEM sales at €4,197m and aftermarket sales at €538m.

• Q3 reported sales declined 5% year-over-year, with like-for-like OEM sales up 3% and aftermarket up 3%.

• YTD total sales at €16,084m, flat like-for-like, with OEM up 4% and aftermarket down 1%.

• Group structure changes and FX had negative impacts of 1.6% and 1.8%, respectively.

• Q3 sales outperformed global automotive production by 3 points.

Outlook and guidance

• 2024 sales guidance revised to ~€21.3bn–€22.0bn, with margin and free cash flow targets maintained.

• EBITDA margin: 12.1%–13.1%; operating margin: 4.0%–5.0%.

• Free cash flow before one-off/exceptional costs: ~€500m; after: ~€350m.

• H2 2024 margins and cash generation expected to be higher than H1.

• 2025 guidance to be published with FY 2024 results, focus on further improvement in results and cash generation.