Shortage of components, falling car production, restrictions in China, inflation, war in Ukraine… There have been many headwinds for the automotive sector in general and for Valeo in particular.
Despite everything, the French group saw its turnover increase by 5% in the first half to 9,410 million euros, but the result fell into the red with a net loss of 48 million euros.
The group’s margins suffered especially due to the shortage of electronic components, sanitary measures in China, the rise in the price of raw materials and even a writedown of assets of 32 million euros in Russia.
Component shortages and restrictions in China
Amid a crisis in the global auto industry, the leader was particularly pleased with the “high level of order intake” that underlines the auto supplier’s business dynamics.
They reached €13.1 billion in the first half for Valeo and €2.9 billion for Valeo Siemens eAutomotive (VSeA), which specializes in electric motor components. Demand is strong in the field of driving assistance, which shows a performance 7 points higher than the world’s car production.
The group expects a recovery in car sales worldwide in the second half of 2022 to reach 80.8 million vehicles sold during the year, according to S&P Global Mobility forecasts.
Final prices go up
“Original equipment” turnover increased slightly in the first half (+1%) thanks to “increased content per vehicle”, although car production fell. On the other hand, the turnover of the replacement market jumped 11%, a figure described as “exceptional” by Christophe Périllat.
In China, where Valeo is well established, the lockdowns “had a significant impact on sales for the month of April” but activity “returned to its normal level since the beginning of June”.
Finally, regarding the rise in the prices of raw materials, Valeo says that it has put in place “a compensation plan” by increasing its prices to its customers with a remaining charge for the group amounting to 200 million euros.
The company also generated free financial flows of 179 million euros, “above expectations”, and maintained its margin targets for 2022.
Finally, the integration of Valeo Siemens eAutomotive, a joint venture with Siemens in which Valeo has bought all the shares, “will allow reaching 120 million euros in synergies by 2025”, said Christophe Périllat.
Source: BFM TV
