Valeo Unveils Elevate 2028

Core Insights - Valeo has launched its Elevate 2028 plan, aiming for steady profit increases, higher cash generation, and a return to sales growth by 2028 [1][4][11] Financial Trajectory - By 2028, Valeo anticipates sales between €22-24 billion, an operating margin of 6-7%, and free cash flow after interest of at least €500 million [2][39] - The 2025 guidance for sales and adjusted EBITDA remains confirmed, with free cash flow before interest revised upwards to slightly above €550 million [3][30] Profit Improvement - Valeo is committed to a steady increase in profit starting from 2022, with a target operating margin improvement from 4.3% in 2024 to 6-7% by 2028 [14][25] - The company expects gross margin to remain above 19% of sales, aided by improved industrial performance and AI integration [13][12] Cash Generation - The company aims for a record-high free cash flow of at least €700 million before one-off restructuring costs in 2025, translating to over €500 million by 2028 after restructuring and interest [18][21] - Cash generation improvements are driven by reduced CAPEX and lower gross R&D expenses, with a projected €200 million decrease in R&D for 2025 [19][20] Growth Strategy - Valeo expects to return to sales growth in 2027, supported by a strong order book accumulated from 2022 to 2025 [22][23] - The cumulative order intake from 2022 to H1 2025 is 1.4 times its cumulative OEM sales, with significant contracts expected to ramp up sales [23][24] Technological Leadership - Valeo is positioned as a global leader in electrification, safety, and software-defined vehicle technologies, with a focus on expanding in key markets like China, India, and North America [11][30] - The POWER division is projected to see significant growth, with sales expected to rise from €10.5 billion in 2024 to between €10.5-11.5 billion in 2028 [25][28] Market Expansion - In China, Valeo anticipates a 40% growth in POWER sales from 2024 to 2028, leveraging its strong market position [24][32] - The company expects its sales in India to triple from €220 million in 2024 to approximately €700 million by 2028 [32] Sustainability Commitment - Valeo aims to achieve Net Zero by 2050, with significant reductions in greenhouse gas emissions planned by 2030 [42][43] - The company has been recognized by major ESG rating agencies for its sustainability performance, maintaining high ratings across various assessments [40][41]