Valeo: 2006 Results

Paris (ots/PRNewswire) - Following a meeting of the Board of
Directors, Valeo announced its audited results for 2006.

(in euro millions) 2006 2005 % change
Total operating revenues 10,086 9,834(i) + 2.6%
Gross margin(1) 1,539 1,559 -1.3%
% of sales 15.4% 16.0% -0.6 pt
Operating margin(2) 341 374(i) -8.8%
% of total revenues 3.4% 3.8% -0.4 pt
Net income attributable to 161 142(i) +13.4%
the company's shareholders
Net income per share (EUR) 2.10 1.80(i)/(ii) +16.7%
Net debt 968 1,080 -10.4%

(i) as required by IFRS norms, this data has been restated, mainly
relating to non-strategic activities (IFRS 5 criteria).

(ii) including 0.47 euro and -0.15 euro respectively for
non-strategic activities in 2006 and 2005.

Customer diversification, the recovery of the aftermarket business
and rigorous management lessened the impact on margins of the decline
in automotive production in the Group's key markets and the increase
in raw material prices. Valeo has entered 2007 with reinforced
competitiveness in the areas of quality, industrial organization and
technological innovation. The sale of the Electric Motors and
Actuators business reflects the rationalization of Valeo's portfolio
and enhances the Group's financial resources.

Annual results

At 10,086 million euros, total operating revenues were up by 2.6%
compared to 2005. Changes in perimeter had a positive impact of 1.5%,
and currency fluctuations accounted for 0.6% of the increase in
sales. On a like-for-like basis, and restated to take into account
deflation in sales prices at identical functions, total operating
revenues increased by 4.3%.

(1) Net Sales Less cost of sales

(2) Operating income before other income and expenses

The gross margin was down by 1.3% to 1,539 million euros,
representing 15.4% of sales, compared to 16.0% in 2005. The rising
cost of raw materials reduced the gross margin by 0.7 points.

Taking into account 70 million euros of other expenses (50 million
euros in 2005), operating income was 271 million euros (2.7% of total
operating revenues) compared to 324 million euros (3.3%) in 2005.

Net income attributable to Valeo shareholders was 161 million
euros, compared to 142 million euros in 2005. It includes a
contribution of 36 million euros from the sale of the Electric Motors
and Actuators business on December 27, 2006, and 38 million euros
from the sale of the Logitec logistics business and the financial
investment in Parrot.

Cash flow and debt levels

At December 31, 2006, Valeo's net debt totaled 968 million euros,
down by 112 million euros compared to January 1, 2006. This change
reflects in particular the sale of the Electric Motors and Actuators
business (impact of 122 million euros) and payments to shareholders
(89 million euros), with free cash flow(3) remaining positive (26
million euros). At December 31, 2006, the debt-to-equity ratio was
55%, compared to 63% at January 1, 2006.

Highlights

Valeo continued to rationalize its business portfolio. The
Electric Motors and Actuators business was sold to the Japanese group
Nidec at the end of the year, and the Logitec logistics business and
the financial investment in Parrot were also sold. At the same time,
the potential of the Group's thermal and lighting systems businesses
was reinforced, respectively through the acquisition of 50% of the
Korean radiator manufacturer Threestar and the creation of a joint
venture in China with Ichikoh. Valeo also signed a Memorandum of
Understanding with a view to buying a thermal systems plant in North
America from Ford.

The Group's competitiveness was reinforced. Quality indicators
improved for the fifth consecutive year, and the Group continued to
optimize its industrial footprint. Following the measures taken
during the year, 54% of the production workforce was located in
leading competitive-cost countries at end 2006, compared to 51% at
end 2005 and 38% in 2001. In addition, Valeo continued to
successfully promote its innovative technologies, receiving its first
order for the Park4UTM semi-automatic park assist system.

The Group's improved worldwide competitiveness was reflected in
the order intake vs. sales ratio, which was 1.3, the highest level
since 2001.

(3) Extra-accounting aggregate: cash flow less taxes less change
in working capital requirements less financial expenses plus
subsidies less gross tangible and intangible investments.

Proposed dividend

Taking into account the level of results and shareholder payments
during the year, the Board of Directors will propose to the Annual
General Meeting of Shareholders to maintain a dividend of 1.10 euro
per share.

Outlook

The expected stabilization in automotive production in the Group's
key markets is not expected to occur before the second half of 2007.
In this context, and assuming a stabilization of raw material prices,
Valeo aims to improve its operational profitability by stepping up
efforts to increase competitiveness. The Group is launching a
re-engineering of its principle functions in order to optimize its
resources and processes.

Valeo is an independent industrial group dedicated to the design,
production and sale of components, integrated systems and modules for
cars and trucks. It is one of the world's leading automotive
suppliers. The Group has 129 production sites, 68 R&D centers, 9
distribution platforms, and employs 69,800 people in 29 countries
worldwide.

For all additional information, please contact:

Kate Philipps, Group Communications Director, Tel:
+33-1-40-55-20-65

Remy Dumoulin, Investor Relations Director, Tel:
+33-1-40-55-29-30

Simplified accounts for the fourth quarter

(in EUR million) 2006(i) 2005(i) % change
Total operating revenues 2,514 2,511(ii) + 0.1%
Gross margin 369 390(ii) -5.4%
% of sales 14.9% 15.7% -0.8 pt
Operating margin 74 94(ii) -21.3%
% of total revenues 2.9% 3.7% -0.8 pt
Net income attributable to 60 41 +46.3%
the company's shareholders
% of total revenues 2.4% 1.6% +0.8 pt

(i) unaudited

(ii) as required by IFRS norms, this data has been restated,
mainly relating to non-strategic activities (IFRS 5 criteria).

ots Originaltext: Valeo Management Services
Im Internet recherchierbar: http://www.presseportal.de

Contact:
For all additional information, please contact: Kate Philipps, Group
Communications Director, Tel: +33-1-40-55-20-65. Remy Dumoulin,
Investor Relations Director, Tel: +33-1-40-55-29-30


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