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Valeo met the low consensus expectations for its Q3 23 trading update and stuck to its FY23 outlook, whilst implying a strong performance for Q4. The CEO’s confident speech contrasted with the recent share price trend (-46% over the 3M preceding the Q3 results) translating the market’s worries that the weakening demand for BEV could prevent the company from delivering on its targets. The implied strong performance in Q4 and limited visibility on FY24 calls for a prudence which is likely overdone
Companies: Valeo (FR:EPA)Valeo SE (FR:PAR)
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Valeo reported H1 23 results which required perhaps too many adjustments to understand that the underlying drivers remain robust, yet with a cost of debt we had underestimated. The group showed robust H1 23 results at the operating level. The unfavourable timing of cash ins drove a miss on FCF, while the FY23 remained sticky. This does not alter our view, supported by the restoration of shareholder confidence, while accelerating the benefits of the past investments.
Valeo’s Q1 23 trading update was as expected on the figures and guidance (confirmed), albeit with a reminder that the bulk of the performance is planned for H2. Amidst a pool of investors worried by the likelihood of a price-war-driven plunge in demand for new cars and caution about the Chinese recovery, Valeo offered only a limited amount of new news. However, some worthwhile comments were shared on the success of PTS’s high-voltage powertrain and the expanding business with Chinese OEMS.
Kudos to Valeo’s forecasting skills as the company delivered on its FY22 guidance, which had been set the day after the beginning of the war in Ukraine. The FY22 figures were close to expectations with revenues topping, and the margin bottoming their respective guided range. The Q4 22 was much stronger than expected, helped by easing supply chain bottlenecks. However, the FY23 FCF outlook disappointed at “<320m” vs. the €440m expected by the consensus, which we see as an all-weather guidance wit
Valeo’s Q1 22 sales topped analysts’ forecasts by c.5% on the back of strong volume outperformance in every region, Aftermarket sales maintained their momentum and there was a booster FX impact. For those who had expected increased headwinds from the war in Ukraine and lockdowns in China, Valeo answered with a noticeable guidance confirmation from sales to FCF. LVP updated forecast remains within the range used to set the initial outlook. We expect volumes in China to be decisive.
FY22 guidance was weaker than expected on the profitability and FCF front, as cost inflation and a late reversion of overstocks should weigh. THe mid-term plan confirmed that the targets set in 2019 will not be reachable even with a 5-year delay. With a plan relying on organic top-line growth, any success is highly dependent on global auto production targets. Bad news given the pending risks from the current geopolitical tensions.
Valeo released preliminary results which matched the upper end of the sales and margin guidance (CEO’s base case scenario). However, FCF generation took a strong hit (30% below consensus) due to overstocking to mitigate the supply-chain bottlenecks. With OEMs needing to rebuild their own inventories when tight supply eases, a saloon door effect is likely on suppliers’ FY22 FCF. We stick to our positive view on the stock seeing a good entry point, ahead of the CMD.
Valeo’s sales showed more resilience than expected in Q3 on the back of a growing aftermarket business but also a temporary pricing power at a level rarely seen in its history. FY21 guidance was cut by 5.5% in sales and implied EBITDA. Expectations for FCF were kept unchanged with a negative, as lower capex is likely to compensate for the rising WCR induced by spiking inventories. The risk of a postponement of the breakeven of Valeo-Siemens is reinforcing.
Valeo topped consensus on margins after a well-managed H1 21, disrupted by the chip shortage. Lower R&D and capex were the first glimpse of return from the 2017-19 investments. The market outlook was downgraded, though FY21 guidance was still confirmed with an upside risk on the EBITDA margin.
Valeo reported solid Q1 21 results, though underperforming auto production due to an unfavourable geographical mix. Based on 2019, lfl sales are almost at equilibrium. Rising input and logistic costs should be, at least partly, passed-on to OEMs. FY21 guidance was kept unchanged to account for the uncertainties remaining as of now.
Valeo posted declining sales in 9M 20 (-21% yoy), though showing some recovery vs. H1 20 (-27.8% yoy). The contraction was led by the OEM segment (-22% yoy), with the recovery down to Aftermarket stabilization (falling by “only” 2% yoy lfl in Q3 20). Due to a second wave of lockdowns in Europe (c. 47% of OEM sales), the recovery is expected to stop in Q4 20 (still expecting North America to continue recovering, accompanied by strong growth in China).
Companies: Valeo SE (FR:PAR)Valeo SE (0RH5:LON)
Valeo posted a surprisingly high H1 loss at €-1.2bn, driven by its Original equipment in Europe (Q2: -56% yoy) and North America (-68% yoy). A c. €-1bn FCF and a c. €4bn net debt (c. +38% yoy) suggest a strong case for a recap. Still, Valeo expects to undo by H2 much of the harm experienced in H1.
Companies: Valeo SE
Valeo’s Q1 revenue experienced an 8% yoy contraction, driven by declining OEM, Valeo’s largest division. As expected, Asia took the heaviest blow, though saw some relief during the latter part of March. China’s OEM contracted the most in Asia, followed by South Korea. In contrast, Europe and North America experienced increased signs of uncertainty during late March/early April. Due to such market development and the deterioration of Valeo’s largest geographical markets, we expect a declining Q2
While Valeo’s revenue and EBITDA numbers were very much in line with our projections, all other profit numbers were lower. Management blames a sizeable depreciation increase as having been one reason. The other was the negative at-equity contribution which alone was €50m higher than we had expected. Of this loss of €237m, €260m stemmed from the Valeo Siemens eAutomotive joint-venture.
Valeo had shown a sales fall of 1% for H1 and EBIT had collapsed by 44%. However, as revenue increased by 7.6% in Q3 and management sees an accelerating outperformance over the course of this year, it sees the full-year EBIT margin only slightly below last year’s.
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