Valeo: Fourth Quarter 2009: Operating Margin of 5.5%, Free Cash Flow of 153 Million Euros and Positive Net Income of 56 Million Euros

Paris, February 24, 2010 (ots/PRNewswire) -

- Sales Growth of 21%
- Gross Margin at 17.7% of Sales and Operating Margin at 5.5% of Sales:
Highest Levels Recorded in the Past Five Years
- Positive Net Income of 56 Million Euros, Bringing 2009 Full-Year Net
Income Group Share to a Loss of 153 Million Euros
- Strengthened Free Cash Flow[1] in the Fourth Quarter, at 153 Million
Euros
- Decrease in Net Financial Debt of 95 Million Euros in the
Fourth Quarter, to 722 Million Euros at December 31, 2009

Following the meeting of its Board of Directors today, Valeo
presented its results for the fourth quarter 2009.

Jacques Aschenbroich, Valeo Chief Executive Officer, declared: "I
would like to thank Valeo employees for their mobilization throughout
2009, which enabled the Group to achieve a significant cost reduction
and, in the fourth quarter, an encouraging level of profitability.
Moreover, in this difficult period, we have prepared for the future
by increasing our Research and Development expenses and our
investments in Asia and in emerging countries during the year."

In million euros Quarterly evolution
2009 2008 2009/2008
Q1* Q2* Q3* Q4* Q4* D
Sales 1,624 1,848 1,913 2,114 1,750 +21%
Gross margin[2] 185 268 310 375 212 +77%
% of sales 11.4% 14.5% 16.2% 17.7% 12.1% +5.6pts
Operating margin[3] (66) 15 68 116 (38) na
% of sales -4.1% 0.8% 3.6% 5.5% -2.2% +7.7pts
EBITDA[4] 73 156 192 249 99 +151%
% of sales 4.5% 8.4% 10.0% 11.8% 5.7% na
(159) (54) 4 56 (313) na
Net income
Group share
Free cash flow1 (88) 84 6 153 14 na
Net financial debt 933 841 817 722 821 -12%

* Unaudited

Fourth quarter consolidated results

The turnaround of automotive production that began in the second
quarter 2009 continued throughout the year and particularly in the
fourth quarter (+21% versus the fourth quarter 2008). The positive
impact of vehicle scrapping schemes and other incentives enabled
sustained production in Europe and the acceleration of growth in
emerging countries, particularly in Asia (+103% in China) and in
Brazil (+52%). Automotive output in North America also improved in
the fourth quarter.

Original equipment order intake totaled 1.52 times sales for the
quarter, the highest ratio ever (with a similar level of performance
among all Business Groups). Supporting its customers' interest in the
Group's technologies, Valeo pursued its R&D efforts with a net
expenditure of 125 million euros in the fourth quarter (5.9% of
sales).

Benefiting from a more favorable automotive environment and the
outperformance of the original equipment activity on its main
markets, the Group generated 2,114 million euros in sales in the
fourth quarter 2009, up by 21% versus the fourth quarter 2008 (+10.5%
versus the third quarter 2009).

Sales in Europe totaled 1,329 million euros (63% of consolidated
sales), up by 21% versus the fourth quarter 2008 (+10% versus the
third quarter 2009). In Asia, the Group's second largest contributing
region, sales reached 364 million euros (17% of consolidated sales),
up by 31% versus the fourth quarter 2008 (+16% versus the third
quarter 2009). Valeo's performance was particularly notable in China
(the leading contributing country in Asia) and in Brazil where sales
growth was 84% and 71%, respectively, versus the fourth quarter 2008
(+16% and +3% versus the third quarter 2009).

Thanks to improved sales and the implementation of the cost
reduction and productivity enhancement plan, gross margin rose to 375
million euros in the fourth quarter 2009, or 17.7% of sales, the
highest level recorded in the past five years (up by 1.5 point versus
the third quarter 2009).

Operating margin (less other income and expenses) was 116 million
euros in the fourth quarter 2009, or 5.5% of sales, also the highest
level recorded in the past five years (up by 1.9 point versus the
third quarter 2009).

Net income in the fourth quarter showed a profit of 56 million
euros, following a profit of 4 million euros in the third quarter
2009.

Improved operating performance, combined with the strict
management of investments (down by 26 million euros versus the fourth
quarter 2008) and working capital, enabled the Group to generate a
positive free cash flow of 153 million euros, versus 6 million euros
in the third quarter 2009.

Net financial debt stood at 722 million euros at December 31,
2009, down by 95 million euros versus the third quarter 2009 (817
million euros).

Simplified accounts for 2009

In million euros 2008* 2009* Change
Sales 8,677 7,499 -14%
Gross margin 1,327 1,138 -14%
% of sales 15.3% 15.2% -0.1pts
Operating margin[5] 230 133 -42%
% of sales 2.7% 1.8% -0.9pt
Operating income (52) 84 na
% of sales -0.6% 1.1% +1.7pt
Cost of financial debt (45) (60) +33%
Other financial income and (59) (57) -3%
expenses
Equity in net earnings/losses of 9 (34) na
associates
Net income Group share (207) (153) -26%
Basic earnings per share -2.73 -2.04 +25%
(continued operations) (EUR)
Free cash flow[6] 118 155 +31%
Net financial debt 821 722 -12%

* audited

For the year 2009, sales were down by 14% versus 2008. Following
a difficult first quarter 2009, during which Valeo recorded a 33%
drop in sales, the Group benefited from a turnaround in automotive
production starting in the second quarter, thanks to the
implementation of vehicle scrapping schemes in Europe and accelerated
growth in emerging countries, particularly in Asia.

The cost reduction and productivity enhancement plan amounting to
480 million euros (144 million euros in savings achieved during the
fourth quarter 2008 and 336 million euros achieved in 2009 despite
the turnaround of business starting in the second quarter), enabled
the Group to adjust its cost structure to the current level of
activity and therefore lower its break-even point (at the level of
operating margin) by 13%, corresponding to around 7 billion euros in
sales.

Despite the continuous rise of raw material prices, at end 2009
their average cost remained lower than in 2008, contributing to a 1
point improvement in margins for the year.

Despite the negative impact of the decrease in sales, gross
margin amounted to 15.2% of sales (1,138 million euros) versus 15.3%
of sales (1,327 million euros) in 2008, thanks in particular to the
savings measures implemented since the start of the crisis and which
took effect in 2009. Operating margin was 1.8% of sales (133 million
euros) versus 2.7% of sales (230 million euros) in 2008.

The cost of net financial debt was 60 million euros, up by 15
million euros versus 2008. This change reflects the renegotiation and
renewal of confirmed bank lines within a degraded credit market
environment, as well as the setting up of European Investment Bank
funding of 225 million euros reinvested in a context of particularly
low short-term interest rates.

Other financial income and expenses showed a net expense of 57
million euros versus a net expense of 59 million euros in 2008,
following the booking of a 17 million euro expense in 2008 and a 5
million euro expense in 2009 relating to raw material hedges which
turned out to be overhedged in the context of an unfavorable
evolution of prices.

Valeo's share of the results of associated companies is a loss of
34 million euros, including -36.5 million euros from the share in the
negative result of the Japanese group Ichikoh (in which Valeo holds a
31.6% stake). Therefore the income before taxes showed a loss of 67
million euros (versus a loss of 147 million euros in 2008).

Net income Group share showed a loss of 153 million euros versus
a loss of 207 million euros in 2008.

Improved operating performance following the implementation of
the cost reduction plan, combined with controlled restructuring
expenses and the strict management of investments and working
capital, enabled the Group to generate a free cash flow of 155
million euros in 2009.

Thanks to the generation of cash and the setting up of 225
million euros in funding from the European Investment Bank, at
December 31, 2009 the Group had a cash balance of 860 million euros.
The Group also benefits from confirmed bilateral lines of credit
worth 1 billion euros which remained undrawn at end December.

Net financial debt totaled 722 million euros at December 31,
2009, down by 99 million euros versus December 31, 2008 (821 million
euros).

The leverage ratio remained stable at 1.1 times EBITDA
(calculated over 12 months). The gearing ratio (net financial debt to
shareholders' equity excluding minority interests) was 59%, down
versus December 31, 2008 (63%).

Highlights

As part of its development strategy in high growth potential
countries, Valeo increased its stake to 100% (up from 60%) in the
Changchun, China-based entity Valeo Compressor (Changchun) Co., Ltd,
which develops and produces compressors.

This operation confirms Valeo's interest in the Chinese market,
where it has facilities in the five automotive industry hubs
(Shanghai, Wuhan, Nanjing, Guangzhou and Changchun). The Group
employs 4,400 people in China in 8 development centers, 15 production
plants, and a distribution center.

Valeo's 2009 consolidated sales in China totaled 448 million
euros, up by 46% versus 2008.

Annual General Shareholders' Meeting notice

It will be proposed to the Annual General Shareholders' Meeting
to be held on June 3, 2010 not to pay a dividend for 2009. It will
also be proposed to renew as Board Members Daniel Camus and Jérôme
Contamine whose terms of office are set to expire, to ratify the
cooptation of Michel de Fabiani as a Board Member and to appoint
Noëlle Lenoir as a new Board Member. Mrs Lenoir is a lawyer, a Member
of the French Council of State, a former Member of the French
Constitutional Council, and a former Deputy Minister in charge of
European Affairs.

Outlook

For 2010, Valeo expects, as compared with 2009, a continued
turnaround of global automotive production with a more sustained
growth in the first half and situations that vary according to the
region:

- In a still uncertain environment, a slight decrease in
production in Europe
- A further improvement in Asia
- A recovery in North America

Based on this scenario, Valeo has set as its objective for 2010
an operating margin level around double that of 2009.

Valeo Investor Day

An Investor Day will be held on March 10, 2010 in Paris.

Valeo is an independent industrial Group fully focused on the
design, production and sale of components, integrated systems and
modules for cars and trucks. Valeo ranks among the world's top
automotive suppliers. The Group has 120 plants, 21 Research centers,
40 Development centers, 10 distribution platforms and employs 52,200
people in 27 countries worldwide.

[1] Free cash flow corresponds to net operating cash flow less
net disbursements on tangible/intangible assets. This indicator is
therefore calculated before payment of financial expenses

[2] As of January 1, 2009, the presentation of the financial
statements has been modified, with other operating revenues now being
mainly reclassified as deductible research and development expenses

[3] Operating income less other income and expenses

[4] Operating margin less amortization

[5] Operating income less other income and expenses

[6] Free cash flow corresponds to net operating cash flow less
net disbursements on tangible/intangible assets. This indicator is
therefore calculated before payment of financial expenses

For more information about the Valeo Group and its activities,
please visit our web site http://www.valeo.com.

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

Contact:
CONTACT: For additional information, please contact: Kate Philipps,
ValeoGroup Communications Director, Tel.: +33-1-40-55-20-65, Thierry
Lacorre,Valeo Group Investor Relations Director, Tel.: +33-1-40-20-39