auto parts manufacturers,auto parts suppliers

Valeo’s Annual General Shareholders’ Meeting (AGM) was held today under the chairmanship of Thierry Morin, the Group’s Chairman & CEO.

2007 results and outlook

The AGM approved Valeo’s 2007 accounts which were published on February 12, 2008. In 2007, Valeo recorded a strong rise in sales volumes (+6.2%) related to growth in emerging countries where the Group has reinforced its presence. Valeo’s innovation and operational excellence strategy enabled it to achieve a 17.7% increase in operating income. At the same time, innovative products account for 32% of the Group’s order intake.

Valeo pursued the rationalization of its product portfolio, divesting its wiring harness activity and acquiring the Irish company Connaught Electronics, a specialist in image processing. These operations are in line with the Group’s strategy of focusing on three Domains: Driving Assistance, Powertrain Efficiency and Comfort Enhancement.

Valeo’s results continued to improve in the first quarter 2008. Net earnings per share were up by 36% versus the same period in 2007, while the operating margin improved by 22% to 3.6% of sales.

The coming months will continue to be marked by very high raw material prices and a tough automotive market. Against this backdrop, Valeo confirms its objective for an improvement of its results in 2008.

Thierry Morin reminded the AGM that, in a context of stricter regulations on CO2 emissions and high oil prices, Valeo’s innovative solutions for significantly reducing fuel consumption are increasingly attractive to automakers and motorists.

Valeo announced today that it has signed an agreement for the creation of a joint venture for the production of HVAC (heating, ventilation and air-conditioning) systems with Itelma, a Russian supplier of automotive systems to Russian automakers. The new company, Valeo Climate Control Tomilino LLC, will be 95% owned by Valeo and 5% by Itelma.

Located in Tomilino (10 km from Moscow), the joint venture will develop, produce and sell Valeo Climate Control products and systems, including HVAC modules for passenger cars.

Thierry Morin, Valeo Chairman and CEO, said: “This joint venture is our first step in our growth strategy for Russia, where local production is growing by 20% a year and is expected to reach 4 million vehicles by 2015. We are entering the market at a very appropriate time as global automakers ramp up production in the country.”

Alexander Postnikov, Itelma Chairman, said: “Itelma is pleased to announce this joint venture with Valeo. We are sure that Itelma’s solid position in the Russian automotive market and Valeo’s technology will enable us to better serve our traditional and new OEM customers.”

Itelma is one of the leading manufacturers of engine management and on-board electronics, wire harnesses and exhaust systems for the automotive industry in the Russian Federation.

Valeo is an independent industrial group dedicated to the design, production and sale of components, integrated systems and modules for cars and trucks. It is one of the world’s leading automotive suppliers. The Group has 125 production sites, 62 R&D centers, 9 distribution platforms, and employs 61,300 people in 28 countries.

Valeo announces that it has strengthened its role in the management of Ichikoh Industries Ltd., a leading Japanese manufacturer of automotive lighting in which Valeo holds almost 32% of the capital, through a new agreement on the corporate governance and management of Ichikoh.

Under the terms of this agreement Ichikoh will be managed by two Representative Directors with equal management power who will be nominated respectively by Ichikoh and Valeo and chosen from the Board of Directors.  The proposed Valeo Representative will be Kazuo Kawashima, currently Group Quality Vice President. The number of Board Members will also be reduced from nineteen to nine, with six proposed by Ichikoh and three by Valeo. 

In terms of operational management, Valeo managers will be in charge of quality, electronic engineering, purchasing, financial control and several of the industrial sites.

The appointment of the new Board of Director members will be submitted to the Ichikoh annual shareholder meeting on June 27, 2008.

The Board of Directors has decided to propose the appointment of Mr. Behdad Alizadeh to stand for election as a director of Valeo at the shareholders meeting to be held on June 20, 2008, pursuant to the terms of the agreement between the Pardus investment fund and Valeo.

The principal terms of the agreement, which is annexed hereto, are summarized below.

Valeo nominates Mr. Behdad Alizadeh, a Pardus partner, to stand for election as a member of the Board of Directors.

Pardus has undertaken to address Valeo’s concerns regarding potential conflicts of interests stemming from Pardus’s shareholding in Visteon.

In particular, Pardus has agreed not to seek representation in any management bodies of or management positions in any company with activities similar to or in competition with Valeo, and in particular in Visteon and Delphi.

In addition, Pardus has agreed that its representative on the Board of Directors will not vote or participate in any deliberations of the company’s Board of Directors during which relations between Valeo and Visteon are discussed.

Moreover, Pardus will not acquire more than 10% of the capital or voting rights of any Valeo competitor (without prejudice to its shareholding in Visteon).

Pardus has agreed that it will not increase its shareholding in the company beyond 20% of the capital and voting rights.

Pardus may, however, acquire double voting rights (in accordance with statutory conditions), but has agreed to not exercise voting rights representing more than 20% during shareholders’ meetings.

If Pardus sells its shares, under certain conditions, Valeo will have a right of first offer and a pre-emption right.

The provisions in the agreement will remain in force until the end of the annual shareholders meeting of Valeo called to approve the accounts for the year ended December 31, 2011.

Nonetheless, Pardus may terminate the agreement at any time, subject to a four-month notice period.

In such case, Pardus’ representative on the Board of Directors will resign from the Board of Directors.

In the event of a tender offer by a third party for the shares of Valeo that is approved by the Autorité des marchés financiers, if the Pardus representative resigns from the Board of Directors, Pardus may immediately terminate the agreement.

The Board of Directors approved the execution of this agreement at its meeting held on May 21, 2008. The Board is pleased to nominate Mr. Behdad Alizadeh, a Pardus partner, to stand for election as a Director of Valeo at its next shareholders meeting, in order to contribute to Valeo’s long-term development.