Valeo : Press release – Q1 2019 Sales

Press release

First-quarter sales of 4,841 million euros

4 percentage point market outperformance

2019 objectives confirmed

Jacques Aschenbroich, Valeo's Chairman and Chief Executive Officer, commented:

"Our outperformance versus automotive production accelerated in the first quarter, in line with our roadmap, in a challenging automotive market. This outperformance is set to continue to accelerate throughout the year in our four Business Groups and in all our geographic areas, thanks to the start of production on high-tech innovations.

In a particularly unstable economic and geopolitical environment, we are pressing ahead with our plan to reduce costs and capital expenditure and we confirm our objectives for 2019."

∙Consolidated sales of 4,841 million euros, down 1%, or 3% on a like-for-like basis(1).

∙Original equipment sales of 4,121 million euros, down 1%, or 3% on a like-for-like basis outpacing global automotive production by 4 percentage points.

∙Aftermarket sales down 4% as reported and on a like-for-like basis.

1See Financial Glossary, page 7.

1

2019 outlook: guidance unchanged

In a context of:

∙volatile global automotive production (estimated growth of between 0% and -1% over the year compared with 2018) with a decline in the first half (due to the economic environment in China), and an improvement in the second half;

∙uncertainty regarding the price of raw materials and electronic components.

Valeo's 2019 objectives remain unchanged:

∙a stronger market outperformance than in second-half 2018, increasing gradually during the year thanks to the start of production on new contracts, particularly in the camera, electrical and transmission systems, and lighting segments;

∙roll-outof the program, announced in February, to reduce costs by more than 100 million euros and capital expenditure by more than 100 million euros;

∙EBITDA growth(1) (in value terms);

∙higher free cash flow(1) generation than in 2018;

∙operating margin excluding share in net earnings of equity-accounted companies (as a % of sales) of between 5.8% and 6.5%, depending on the trends in automotive production and in the price of raw materials and electronic components;

∙a "share in net earnings of equity-accounted companies" line which, as announced, is expected to have a similar impact on Valeo's 2019 statement of income as it did in 2018.

1See Financial Glossary, page 7.

2

Paris, France, April 25, 2019 - Following the meeting of its Board of Directors today, Valeo released its sales figures for the first quarter of 2019:

Global automotive production

	Automotive production		First-quarter 2019
			IHS*
	(year-on-year change)
	Europe and Africa	-4%
	Asia, Middle East and Oceania	-9%
	of which China	-13%
	of which Japan	+1%
	of which South Korea	0%
	of which India	-3%
	North America	-2%
	South America	-5%
	TOTAL		-7%

* Based on IHS automotive production estimates released on April 16, 2019.

Global automotive production contracted by 7%, impacted primarily by:

-The 13% fall in automotive production in China, related to the low number of new vehicle registrations and the inventory reduction trend observed in the sector;

-The 4% decrease in automotive production in Europe over the period.

Sales

			As a %			First-quarter
	Sales		of						Chang		LFL
			Q1 2019	2019		2018
									e		change*
	(in millions of euros)		sales
	Original equipment		85%	4,121		4,154		-1%		-3%
	Aftermarket		10%	501		523		-4%		-4%
	Miscellaneous		5%	219		204		+7%		+5%
	Total		100%	4,841		4,881			-1%		-3%

* Like for like (constant Group structure and exchange rates)(1).

In the first quarter of 2019, sales fell 1%, or 3% like for like:

-Original equipment sales were down 1%, or 3% like for like;

-Aftermarket sales were down 4% like for like;

-Miscellaneous sales, mainly consisting of tooling revenues related to the launch of new projects and customer contributions related to Research and Development projects, increased by 5% like for like.

Changes in exchange rates had a positive 2% impact during the period, primarily reflecting the depreciation of the euro against the US dollar, Japanese yen and Korean won.

Changes in Group structure did not have a material impact during the first quarter.

1See Financial Glossary, page 7.

3

Original equipment sales by region

								First-quarter
	Original equipment sales				2019		2018			LFL*		Outperf. vs.
	(in millions of euros)									change		IHS**
	Europe and Africa						2,072			-2%		+2 pts
					2,029
	Asia, Middle East and Oceania						1,263			-9%		0 pts
					1,188
	∙	of which China					526			-16%		-3 pts
					450
	∙	of which Japan					334			-7%		-8 pts
					331
	∙	of which South Korea					274			+1%		+1 pt
					286
	∙	of which India					52			-8%		-5 pts
					47
	North America						717			+5%		+7 pts
					812
	South America						102			-1%		+4 pts
					92
	TOTAL				4,121			4,154		-3%		+4 pts

*Like for like (constant Group structure and exchange rates)(1).

**Based on IHS automotive production estimates released on April 16, 2019.

Original equipment sales were down 3% like for like in first-quarter 2019, outperforming global automotive production by 4 percentage points (IHS estimates):

∙in Europe (including Africa) (49% of original equipment sales), like-for-like(1) original equipment sales fell 2%, outpacing automotive production by 2 percentage points;

∙in Asia (29% of original equipment sales), like-for-like(1) original equipment sales contracted by 9%, in line with automotive production, due to an unfavorable customer mix in China and Japan:

in China, like-for-like(1) original equipment sales decreased by 16%, underperforming automotive production by 3 percentage points;

in Japan, like-for-like(1) original equipment sales retreated by 7% (an underperformance of 8 percentage points);

in South Korea, like-for-like(1) original equipment sales advanced by 1%, outperforming automotive production by 1 percentage point thanks in particular to a favorable comparison basis versus the same period in 2018, when performance was impacted by geopolitical tensions between China and South Korea.

∙in North America (20% of original equipment sales), like-for-like(1) original equipment sales rose 5%, outpacing automotive production by 7 percentage points thanks to a favorable product and customer mix;

∙in South America (2% of original equipment sales), like-for-like(1) original equipment sales retreated by 1%, outpacing automotive production by 4 percentage points.

1See Financial Glossary, page 7.

4

Balanced geographic alignment of Valeo's businesses

Year-on-year changes in the share of original equipment sales in the four main production regions in first-quarter

2019 were as follows:

-a fall of 1 percentage point for Europe, accounting for 49% of original equipment sales;

-a fall of 2 percentage points for Asia, accounting for 29% of original equipment sales;

-a rise of 3 percentage points for North America, accounting for 20% of original equipment sales;

-stable for South America, accounting for 2% of original equipment sales.

Balanced customer portfolio

Year-on-year changes in the share of original equipment sales among the Group's customers in first-quarter 2019 were as follows:

-stable for Asian customers, accounting for 32% of original equipment sales;

-a rise of 1 percentage point for German customers, accounting for 30% of original equipment sales;

-a rise of 1 percentage point for US customers, accounting for 19% of original equipment sales;

-a fall of 1 percentage point for French customers, accounting for 14% of original equipment sales.

Sales by Business Group

							First-quarter
	Business Group sales		2019		2018		Change		Change in		Outperf.
	(in millions of euros)						in sales		OE sales*		vs. IHS**
	Comfort & Driving		964		938		+3%		+0%		+7 pts
	Assistance Systems
	Powertrain Systems		1,266		1,326		-5%		-4%		+3 pts
	Thermal Systems		1,143		1,140		-0%		-3%		+4 pts
	Visibility Systems		1,502		1,514		-1%		-4%		+3 pts
	TOTAL		4,875			4,918	-1%		-3%		+4 pts

* Like for like (constant Group structure and exchange rates)(1).

** Based on IHS automotive production estimates released on April 16, 2019.

The sales performance for the Business Groups reflects the specific product, geographic and customer mix and the relative weighting of the aftermarket in their activity as a whole.

Thanks to its original equipment operations, the Comfort & Driving Assistance Systems Business Group reported the highest rate of like-for-like(1) growth, outperforming global automotive production by 7 percentage points. The 3% increase was driven by higher content per vehicle (take rates) in the driving assistance business as well as a favorable customer mix in China.

The Powertrain Systems, Thermal Systems and Visibility Systems Business Groups reported like-for-likegrowth in original equipment sales in line with consolidated sales.

1See Financial Glossary, page 7.

5