Valeo — Investor Presentation 2010

Jul 27, 2010

H1-2010 Results

Jacques Aschenbroich – CEO

July 27, 2010

• 1H1-10 Highlights
• 2OE sales outperforming the market in each region
• Highest operating margin recorded in the last 10 years3
• Strong cash flow generation and significant debt reduction4
• 2010 outlook5
• Ahead of the 2013 Strategic Plan6

H1-10 Highlights

H1-10 highlights

OE sales outperforming the market in each region

• Order intake at a record level
• Operating margin of 6.1%, the highest level in 10 years
• -Positive impact of break-even point decrease
• -Turnaround of the Visibility Systems Business Group
• Strong free cash flow generation of €291M
• -Net financial debt significantly reduced to €438M

2010 outlook

-Given current market conditions, operating margin revised upwards to higher than 5%

Ahead of the 2013 Strategic Plan

H1-10 Key figures

	H 1 0 8 -	H 1 0 9 -	H 1 1 0 -	H / H ▲ 1- 1 0 1- 0 9
T l l t o a s a e s ( M € )	4 8 4 8 ,	3 4 2 7 ,	4 8 7 7 ,	3 8 % +
O E S l ( ) a e s M €	4 0 2 6 ,	2 7 4 3 ,	3 9 5 7 ,	4 4 % +
W l d i d i d i l i h t t t t o r w e a u o m o v e p r o u c o n g – h i l ( ) v e c e s M i t n s u	3 6 7	2 6 3	3 6 5	3 9 % +
G i r o s s m a r g n ( f l ) % a s o s a e s	1 6 4 %	1 3 0 %	1 7 9 %	4 9 t p s +
O i i t ( f ) p e r a n g m a r g n % l a s o s a e s	4 2 %	1. % 5 -	6 1 %	6 7 t p s +
E B I T D A ( f l ) % a s o s a e s	1 0 4 %	6 6 %	1 1 8 %	5 2 t + p s
N l t t ( f ) e r e s u % l a s o s a e s	2 1 %	6 1 % -	3 5 %	9 5 t p s +
F h f l * r e e c a s o ( M € ) w	1 2 3	( ) 4	2 9 1	n a
N h f l t e c a s o ( M € ) w	1 7 7	( ) 4 9	2 4 1	n a
f N i i l d b t t ( ) e n a n c a e M €	6 2 1	8 4 1	4 3 8	4 8 % -
O C R E **	1 7 %	1 % -	2 5 %

* Before interest payments

** Operating margin / capital employed excluding goodwill, 12 months rolling

OE sales outperformingthe market in each region

Worldwide automotive production

Continued improvement

Automotive production by region (*)

YoY change in %

	H 1- 0 8 ( M i ) ts un	H 2 0 9 - ( M i ) ts un	▲ / H 2- 0 9 H 2- 0 8	H 1- 1 0 ( M i ) ts un	▲ / H 1- 1 0 H 1- 0 9
E A f i r o p e u r c a +	1 2 2	9 1	-3 %	1 0 0	2 3 % +
A i h t s a +o e r s	1 5 6	1 7 0	2 3 % +	1 8 7	4 3 % +
N h A i t o r m e r c a	6 9	5 1	-1 0 %	5 9	2 % 7 +
S h A i t o m e r c a u	2 0	2 0	1 1 % +	2 0	1 7 % +
W l d i d o r w e	3 6 7	3 3 2	8 % +	3 6 6	3 9 % +

* JD Power light vehicle production estimates

July 27, 2010I 8

Asian OE sales

Outperforming the market in each country

Customer mix

Increasing position with German and Asian customers

C t u s o m e r s ( f O E l ) % o s a e s	H 1 0 8 -	H 1 0 9 -	H 1 1 0 -
G e r m a n	5 2 %	2 9 %	2 7 %
F h * r e n c	2 5 %	2 6 %	2 4 %
A i s a n	1 8 %	1 9 %	2 1 %
A i m e r c a n	1 9 %	1 6 %	1 8 %

* Excluding Nissan

** Including Nissan

Sales by Business Group

Powertrain and Thermal Business Groups outperforming the market

* JD Power light vehicles production estimates

In € million

Main exchange rates variation vs Euro :Appreciation of Real Brazil, Polish Zloty and South Korean Won

Order intakeRecord order intake at €6.5 billion

C t u s o m e r s ( f o ) % de in ke ta o r r	H 1- 1 0
G e r m a n	3 1 %
F h * r e n c	2 4 %
i A ** s a n	1 8 %
A i m e r c a n	2 3 %

* Excluding Nissan

** Including Nissan

Highest operating margin recorded in the last 10 years

H1-10 results

Highest operating margin recorded in the last 10 years

I i l l i n m o n e r o s u	H 1 0 8 -	H 1 0 9 -	H 1 1 0 -	▲
T l l t o a s a e s	4 8 4 8 ,	3 4 2 7 ,	4 8 7 7 ,	3 8 % +
G i r o s s m a r g n	9 7 7	4 3 5	8 6 5	8 9 % +
f % l o s a e s	1 6. 4 %	1 3. 0 %	1 7. 9 %	4 9 t p s +
N R & D t e	( ) 2 6 7	( ) 2 3 4	( ) 2 6 7	1 4 % +
f l % o s a e s	5 7 % -	6. 7 % -	5 6 % -	1. 1 t p +
S G & A e x p e n s e s	( ) 3 1 8	( ) 2 0 7	( ) 2 9 7	1 0 % +
f l % o s a e s	6. 6 % -	7. 8 % -	6 2 % -	1. 6 t p +
O i i t p e r a n g m a r g n	2 0 3	( ) 5 1	2 9 2	n a
f l % o s a e s	4 2 %	1. 5 % -	6. 1 %	7. 6 t p s +
O i i t p e r a n g n c o m e	1 8 2	( ) 8 8	2 6 1	n a
f l % o s a e s	3 8 %	2 5 % -	5 5 %	8 0 t p s +
N l t t e r e s u	1 0 0	( ) 2 1 3	1 6 8	n a
f l % o s a e s	2 1 %	6. 1 % -	3 5 %	9. 6 t p s +

Gross margin walkdown

As % of sales

July 27, 2010I 16

Worldwide headcount evolution

Flexibility of the cost structure

vs situation end of H1-2008

Gross marginIn euro million and as % of sales

Gross margin

July 27, 2010I 18

Operating margin

Highest margin recorded in the last 10 years

H1-10 Results

Strong improvement of net income

I € i l l i n m o n	H 1 0 8 -	H 1 0 9 -	H 1 1 0 -	▲
T l l t o a s a e s	4 8 4 8 ,	3 4 7 2 ,	4 7 8 7 ,	3 8 % +
O i i t p e r a n g m a r g n f % l a s o s a e s	2 0 3 4 2 %	( ) 1 5 1. 5 % -	2 9 2 6. 1 %	n a 7. 6 t p s +
O h i & t e r n c o m e e x p e n s e s f % l a s o s a e s	( ) 2 1 0. 4 % -	( ) 3 7 1. 1 % -	( ) 3 1 0. 6 % -	1 6 % - 0. 5 t p +
O i i t p e r a n g n c o m e f l % a s o s a e s	1 8 2 3 8 %	( ) 8 8 2 5 % -	2 6 1 5 5 %	n a 8 0 t p s +
C f d b t t t o s o n e e O h f i i l t e r n a n c a e p e n s e s x A i t s s o c a e s	( ) 2 2 ( ) 6 7	( ) 2 1 ( ) 3 7 ( ) 4 0	( ) 3 2 ( ) 1 4 1 1	5 2 % + 6 2 % - n a
f I b t n c o m e e o r e a e s x	1 6 1	( ) 1 8 6	2 2 6	n a
T a x e s E f f i t t t e c v e a x r a e N i i i i t t t t o n s r a e g c a c v e s M i i i d h t t t t n o r y n e r e s a n o e r s	( ) 6 5 3 6 % ( ) 1 ( ) 4	( ) 2 6 N A 1 ( ) 2	( ) 4 7 2 2 % ( ) 2 ( ) 9	8 1 % + n a n a n a
N i t e n c o m e	1 0 0	( ) 2 1 3	1 6 8	n a

Strong cash flow generationand significant debt reduction

Strong cash generation of €291 M

Key factors

Net financial debt

Reduced by €284 M to €438 M by June 30, 2010

July 27, 2010I 24

Strong cash generation

Net financial debt reduced by €284 M to €438 M over H1-10

i € i l l i n m o n	H 1 0 8 -	H 1 0 9 -	H 1 1 0 -
E B I T D A	0 3 5	2 2 9	6 4 5
O i k i i l t t p e r a n g o r n g c a p a w	3 9	1 7 7	3 2
R i & i l t t t e s r u c u r n g s o c a c o s s	( ) 3 9	( ) 6 9	( ) 4 5
O h i l i t t t e r o p e r a o n a e m s	( ) 8 4	( ) 8 5	( ) 2 7
C a p e x	( ) 2 9 6	( ) 2 6 5	( ) 2 1 9
f F h l r e e c a s o w ( b f i ) t t t e o r e n e r e s p a y m e n s	1 2 3	( ) 4	2 9 1
I t t n e r e s	( ) 3 4	( ) 3 9	( ) 4 3
O h f i i l i t t e r n a n c a e m s	8 8	( ) 6	( ) 7
N h f l t e c a s o w	1 7 7	( ) 4 9	2 4 1
N f i i l d b t t e n a n c a e	6 2 1	8 4 1	4 3 8

July 27, 2010I 27

Financial resources

Cash available to be used for 2011 debt maturity reimbursement

2010 outlook

July 27, 2010I 29

Worldwide automotive production in 2010

2010 production forecasts revised upwards

( h Y Y ) c a n g e o	F l l u i p r e o s v u	e a r y i d r e s e v
( ) E & A f i r o p e u r c a	2 % -	6 % +
i ( ) A & h t s a o e r s	9 % +	1 8 % +
N h A i t o r m e r c a	2 4 % +	3 0 % +
S h A i t o u m e r c a	1 % 5 +	1 2 % +
i W l d d o r e w	8 % +	1 6 % +

2010 outlook

Production forecasts revised upwards

• -Europe & Africa: increase of 6%
• -Asia & others continued improvement of 18%
• -North America: strong recovery of +30%
• -South America: continued improvement of 12%

Flexibility of the cost structure maintained

4 Business Groups organization deployment on track

Given market assumptions,

2010 operating margin revised upwards to higher than 5%

Ahead of the 2013 Strategic Plan

€10 Bn sales target in 2013

Main growth levers

Asian and North American production ahead of the Plan

• In 2013, production in Europe and North America expected to stay below pre-crisis level

€1 Bn of 2013 OE sales related to CO² emission reduction -€308 M in H1-10

Growth in Asia and emerging countries

-60% of the Capex

Order intake at a record level of 1.64 or €6,478 M

82% of 2013 OE sales already in the order book (72% at 2009 year end)

July 27, 2010I 33

CO2

emission reduction Powertrain Systems Business Group: Torque Converter development

• High hydraulic performances for automatic transmissions
• Enhanced driving experience
• High standardization level
• Superior shifting quality
• Less noise & vibration
• Fuel savings and emissions reduction of more than 6%

i-StARS

• Second generation of Stop Start system: control electronics integrated into the electrical machine
• Cut off of the engine as soon as the vehicle's speed falls below 8 km/h with an automated transmission and 20 km/h with a manual transmission
• CO² emissions reduced by 5g per kilometer on average, and by up to 15% in congested urban traffic
• System launched by PSA Peugeot Citroën to equip a million vehicles by 2013
• Valeo is the only supplier to offer two micro-hybrid systems, either starteralternator or reinforced starter-based.
• Since the system was first marketed, the Group has booked orders to equip 50 vehicle models from more than 10 different automakers

Growth in Asia and in the emerging countries

Presence of all Business Groups in China (40% of Asian sales)

July 27, 2010I 36

EBITDA by Business Group

Convergence of Visibility Systems with other Business Groups performance

Operating margin: target of 6% to 7%

In H1-10, highest margin recorded in the last 10 years

Capital turnover of 4.7

In H1-10, strict management of capital employed

* Calculated on a 12 month rolling basis

ROCEH1-2010 profitability in line with 2013 objective

	2 0 0 9	H 1 1 0 -	2 0 1 3	∆ / 2 0 1 3 2 0 0 9
T l l t o a s a e s	€ 7 5 b n	€ 4 8 b n	€ 1 0 b n	3 3 % +
O i i t p e r a n g m a r g n	1 8 %	6 1 %	6 % 7 -	4 5 t p + -
C i l t t a p a u r n o v e r	3 9	* 4 7	5	1 1 +
R O C E	7 1 %	5 * 2 %	≥ 3 0 %	2 0 t p > +

* Calculated on a 12 month rolling basis

** Ebit / capital employed excluding goodwill

H1-10 highlights

OE sales outperforming the market in each region

• Order intake at a record level
• Operating margin of 6.1%, the highest level in 10 years
• -Positive impact of break-even point decrease
• -Turnaround of the Visibility Systems Business Group
• Strong free cash flow generation of €291M
• -Net financial debt significantly reduced to €438M

2010 outlook

-Given current market conditions, operating margin revised upwards to higher than 5%

Ahead of the 2013 Strategic Plan

Contact

Investor Relations

Thierry Lacorre

43, rue BayenF-75848 Paris Cedex ¹⁷FranceTel.: +33 (0) 1.40.55.37.93Fax: +33 (0) 1.40.55.20.40E-mail: thierry.lacorre@valeo.comWeb site: www.valeo.com

Back-up

Half year P&L

	2 0 0	8	2 0 0	2 0 1 0
( in mi ll io n) €	H 1	H 2	H 1	H 2	H 1
To l s les ta a	4, 8 4 8	3, 8 2 9	3, 4 2 7	4, 0 2 7	4, 7 8 7
in G ro ss m ar g	7 9 7	5 3 0	4 5 3	6 8 5	8 5 6
% f s les as o a	1 6. 4 %	1 3. 8 %	1 3. 0 %	1 7. 0 %	%
R & D d itu ex p en res	( ) 2 7 6	( ) 2 2 5	( ) 2 3 4	( ) 2 3 9	( ) 2 6 7
Se l l ing & dm in is ive tra t a ex p en se s	( ) 3 1 8	( ) 2 7 8	( ) 2 7 0	( ) 2 8 2	( ) 2 9 7
O he inc & t r om e ex p en se s	( ) 2 1	( ) 2 6 1	( ) 3 7	( ) 1 2	( ) 3 1
O in in t p er a g co m e	1 8 2	( 2 3 4 )	( 8 8 )	1 2 7	2 6 1
% f s les as o a	3. 0 %	6. 1 % -	-2 5 %	4. 3 % -	-5, 5 %
Co f n de b t o t t s e	( 2 2 )	( 2 3 )	( 2 1 )	( 3 9 )	( 3 2 )
O he f ina ia l inc d e t r nc om e a n xp en se s	( 6 )	( 5 3 )	( 3 7 )	( 2 0 )	( 1 4 )
Eq ity in ing f a ia t e tes ne ar n s o ss oc u	7	2	( 4 0 )	6	( 1 1 )
In be fo in ta co m e re co m e xe s	1 6 1	( ) 3 0 8	( ) 1 8 6	1 1 9	2 2 6
Inc tax om e es	( ) 5 6	( ) 5	( ) 2 6	( ) 5 3	( ) 4 7
In fro in in t co m e m c on u g io t op er a ns	1 0 5	( 3 0 3 )	( 2 1 2 )	6 6	1 7 9
No ic iv it ies tra teg t n-s ac	( ) 1	0	1	( ) 1	( ) 2
Ne in fo he io d t t co m e r p er	1 0 4	( ) 3 0 3	( ) 2 1 1	6 5	1 7 7
M ino ity int t r er es	0	( ) 4	( ) 2	( ) 5	( ) 9
Ne in t co m e	1 0 4	( 3 0 ) 7	( 2 1 3 )	6 0	1 6 8

Highlights by segmentH1-09 and H1-10

( ) i l l ion f e In m s o ur os	Se i d ty cu r a n iv in As is Dr ta g s nc e Sy te s m s	in Po tr w er a Sy te s m s	T he l rm a Sy te s m s	is i i i V b l ty Sy te s m s	O O he he t t r r	T O T A L
F irs ha l f 2 0 1 0 t-
Ne le t s a s
(e ) in Gr lu d t • s eg m en xc g ou p	8 3 2	1 3 3 3	1 4 3 7	1 1 4 7	1 1	4 8 7 7
( ) in Gr te t • rs eg m en ou p	1 6	1 1	1 0	1 2	( ) 4 9	-
(1 ) E B I T D A	1 0 0	1 3 1	1 9 3	1 3 5	5	6 4 5
h d lo d i Re De t e tu t se ar c an ve p m en xp en re ne ,	( ) 6 9	( ) 4 7	( ) 6 7	( ) 6 3	6	( ) 2 6 7
In in la d ip tm ts ty t a t ve s en p ro p er p n n eq u m en , d in i b le ta ts an ng a ss e (2 ) Se t a ts g m en ss e	6 0 1 0 9 4	6 0 1 1 3 7	3 6 1 4 3 5	4 2 1 3 3 1	2 1 1 4	2 0 0 9 5 7 5
irs ha l f 2 0 0 9 F t-
Ne le t s a s
(e ) lu d in Gr t • s eg m en xc g ou p	6 1 3	9 4 2	1 0 1 1	8 9 6	1 0	3 4 7 2
( ) in Gr te t • rs eg m en ou p	1 4	9	1	8	( ) 3 2	-
(1 ) E I T D A B	3 8	8 6	6 2	4 1	2	2 2 9
Re h d De lo d i t e tu t ar re se c an ve p m en xp en ne ,	( ) 6 0	( ) 5 3	( ) 6 5	( ) 5 6	-	( ) 2 3 4
In in la d ip tm ts ty t a t ro er ve s en p p p n n eq u m en , d in i b le ta ts an ng a ss e	5 8	8 3	3 7	5 7	2	2 3 7
(2 ) Se t a ts g m en ss e	1 0 2 3	1 5 8 6	1 2 7 1	1 3 7 9	( ) 2 2	5 2 3 7

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B l b T i k o o m e r g c e r	F R F P
R T i k t e e r s c e r u	O V L F P A
S I I N N b m e r u	F R 0 0 0 1 3 0 3 3 8
S h d i 3 0 0 6 2 0 1 0 t t a r e s o s a n n g a s p e r u	8 2 0 9 6 1 7 7 , ,

ADR Data

T i k / d i b l t c e r r a n g s y m o C U S I P N b u m e r E h x c a n g e ( ) R i A D R d t a o : o r	V L E E Y 9 1 9 1 3 4 3 0 4 O T C 1 2 :
D i B k t e p o s a r y a n	J P M o r g a n