Valeo (FR) Q4 2025 earnings summary

Executive summary

• Achieved all 2025 financial objectives, including record free cash flow before restructuring and interest, improved profitability, and strong order intake of €24.6 billion, with significant progress and contract wins in China and a major Battery Energy Storage System contract.

• Operating margin improved to 4.7% of sales, up from 4.3% in 2024, and net income rose 23% to €200 million.

• Free cash flow before one-off restructuring costs reached a record €756 million; after restructuring and net financial interest, free cash flow was €371 million, up 50% year-over-year.

• Strategic progress in China, with 63% of order intake and 54% of OEM sales from Chinese OEMs, and expansion into Beyond Automotive.

• Operational excellence, strict pricing discipline, and cost controls enabled resilience against headwinds such as tariffs, forex, and component shortages.

Financial highlights

• Total sales reached €20.9 billion in 2025, up 0.5% like-for-like, exceeding guidance by €400 million.

• Gross margin rose to 20.2%, the highest since 2017, up 1.2 pts year-over-year.

• Adjusted EBITDA margin increased to 14.7% of sales.

• Net attributable income was €200 million (1.0% of sales), up 23% year-over-year.

• Dividend proposed at €0.44 per share for 2025.

Outlook and guidance

• 2026 guidance: sales between €20–21 billion, with operating margin targeted at 4.7%–5.3% and free cash flow above €400 million.

• Guidance assumes no major changes in tariffs, trade restrictions, or macroeconomic environment.

• Numerous production launches planned for 2026; return to growth expected in 2027, with China leading recovery in H2 2026.

• Elevate 2028 targets: sales of €22–24 billion, operating margin of 6–7%, free cash flow >€500 million, leverage ratio <1.0x.