Valeo

Earnings Release • Aug 2, 2010

Rating Action: Moody's upgrades Valeo to Ba1; outlook stable

Global Credit Research - 29 Jul 2010

Frankfurt, July 29, 2010 -- Moody's Investors Service has today upgraded Valeo's corporate family rating to Ba1 from Ba2. The outlook is stable.

Falk Frey, lead analyst for Valeo, said: "The upgrade reflects the sizeable achievements in adjusting the company's cost base and improvements in its operating footprint." Frey went on: "Financial results for the first half of 2010 evidence the company's progress ahead of expectations incorporated in the previous rating. Although the phase-out of scrapping schemes across Europe will adversely affect Valeo, we expect the company to meet financial ratios in line with a Ba1 rating in 2010."

On July 27, Valeo reported revenues of EUR4,787 million for the first six months of 2010, up 38% compared to the prior year period. The Operating profit as reported (before Moody's adjustments) amounted to EUR292 million (6.1% of sales) versus an operating loss of EUR51 million in 2009. Reported net financial debt before Moody's adjustments) reduced to EUR438 million from EUR722 million at the end of 2009.

While the strong improvements were supported by the scrapping incentives introduced across Europe in 2009, the results also reflect operational and structural improvements at Valeo. The company estimates to have lowered its break-even point from EUR 8.1 billion pre-crisis to EUR 7 billion. Major elements of recent restructuring efforts were a shift of production capacity from high cost/low growth to high growth/low cost countries and a significant reduction of the company's workforce. In addition, management has streamlined the group's purchasing activities and Valeo continued to enhance its operating efficiency.

Although we expect a notable, though temporary, decline in European car production volumes as the effect of the various scrapping schemes is phasing out, we believe these improvements will allow for financial ratios in line with the current rating. This view also considers that Valeo generates approximately one third of revenues outside Europe. The current rating reflects the guidance laid out previously for an upgrade, ie that Valeo should achieve in Moody's view an EBIT-margin of 3% or more in 2010 with further improvement onwards, (ii) positive free cash flow generation in 2010 as well as (iii) Debt/EBITDAreduced towards 3.5x or lower in 2010 with further improvement in the years beyond (all ratios after Moody's adjustments).

Major risks in our view are a more pronounced decline in production rates, in Europe or elsewhere, driven by a deterioration in the overall economic environment, increasing price pressure from OEM-customers and potential volatility in raw material costs.

The further development of Valeo's rating will be largely driven by evidence that the recent recovery in financial results can be maintained on a sustainable basis or even surpassed in future.

Upgrades:

..Issuer: Valeo S.A.

• ....Probability of Default Rating, Upgraded to Ba1 from Ba2
• ....Corporate Family Rating, Upgraded to Ba1 from Ba2
• ....Multiple Seniority Medium-Term Note Program, Upgraded to Ba1, Ba2 from Ba2, Ba3
• ....Senior Unsecured Regular Bond/Debenture, Upgraded to Ba1 from Ba2

The principal methodology used in rating Valeo was Moody's Global Auto Supplier Industry Methodology, published in January 2009 and available on www.moodys.com in the Rating Methodologies sub-directory under the Research & Ratings tab. Other methodologies and factors that may have been considered in the process of rating this issuer can also be found in the Rating Methodologies sub-directory on Moody's website.

Moody's last rating action on Valeo was a downgrade of the Corporate Family Rating from Ba1 (negative outlook) to Ba2 (stable outlook) on 12 August 2009.

Headquartered in Paris, Valeo S.A., is one of the leading global suppliers of automotive components. In 2009 Valeo generated net sales of EUR 7.5 billion.

Frankfurt Falk Frey Senior Vice President Corporate Finance Group Moody's Deutschland GmbH JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454

Paris Eric de Bodard MD - Corporate Finance Corporate Finance Group Moody's France S.A. JOURNALISTS: 44 20 7772 5456 SUBSCRIBERS: 44 20 7772 5454

© 2010 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

CREDIT RATINGSARE MOODY'S INVESTORS SERVICE, INC.'S ("MIS") CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MIS DEFINES CREDIT RISKAS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONSAS THEY COME DUEANDANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESSANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGSARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS DO NOT CONSTITUTE INVESTMENT OR FINANCIALADVICE,AND CREDIT RATINGSARE NOT RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. CREDIT RATINGS DO NOT COMMENT ON THE SUITABILITY OFAN INVESTMENT FORANY PARTICULAR INVESTOR. MIS ISSUES ITS CREDIT RATINGS WITH THE EXPECTATIONAND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, INANY FORMOR MANNER OR BYANY MEANS WHATSOEVER, BYANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT. All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided "AS IS" without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning ^a credit rating is of sufficient quality and from reliable sources; however, MOODY'S does not and cannot in every instance independently verify, audit or validate information received in the rating process. Under no circumstances shall MOODY'S have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of MOODY'S or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if MOODY'S is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information. The ratings, financial reporting analysis, projections, and other observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities. Each user of the information contained herein must make its own study and evaluation of each security it may consider purchasing, holding or selling. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITYOR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S INANY FORMOR MANNER WHATSOEVER.

MIS, a wholly-owned credit rating agency subsidiary of Moody's Corporation ("MCO"), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MIS have, prior to assignment of any rating, agreed to pay to MIS for appraisal and rating services rendered by it fees ranging from \$1,500 to approximately \$2,500,000. MCO and MIS also maintain policies and procedures to address the independence of MIS's ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading "Shareholder Relations — Corporate Governance — Director and Shareholder Affiliation Policy."

Any publication into Australia of this document is by MOODY'S affiliate, Moody's Investors Service Pty Limited ABN 61 003 399 657, which holds Australian Financial Services License no. 336969. This document is intended to be provided only to "wholesale clients" within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY'S that you are, or are accessing the document as a representative of, a "wholesale client" and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to "retail clients" within the meaning of section 761G of the Corporations Act 2001.