Valeo's first quarter 2002 profit of 20 million euros (0.8 percent of sales) is a 111 percent improvement on the loss of 179 million euros in first quarter 2001.

Sales of 2,550 million euros were down 5.5 percent on the same period in 2001 but Valeo says this drop is due to the impact of changes in the reporting entity of -2.7 percent resulting from an "ongoing selective divestment programme".

Currency variations had a positive impact of +1.4 percent, mostly due to the strength of the US dollar. At constant reporting entity and exchange rates, the decrease in sales was 4.1 percent, outperforming the market: automotive production was down seven percent in Europe and 14 percent in South America and up two percent in North America and Japan.

The group generated 67 percent of its first quarter sales in Europe, 25 percent in North America, five percent in Asia (18 percent including sales outside the consolidation perimeter) and three percent in Latin America.

Gross margin improved by 1.5 points to 16.5 percent, reflecting the industrial reorganisation and supplier integration undertaken in the past year. Operating income improved by 1.8 points - an increase of 81 percent.

Net financial expenses were maintained at the same level as in the first quarter of 2001 and the operating income less financial expenses doubled to reach 86 million euros (3.4 percent of sales).

During the first quarter Valeo closed the Velenje site in Slovenia (wiring) and opened a new factory in Zielonki in Poland (wiper systems); three plant closure projects were announced; and, in North America, VESI made significant progress, especially since the end of the quarter, in its negotiations to establish the long-term viability of the Rochester plant.

At the same time, recent business wins provide growth prospects: in the first quarter, Valeo has been awarded contracts for ultrasonic park-assist, bi-Xenon and bending lights and advanced thermal systems (combined engine cooling and air-conditioning).

The Valeo shareholders meeting on 10 June will be asked to approve a plan to set up two wholly-owned subsidiaries for its clutches and friction materials activities (Transmissions Branch). The aim of this plan is to align the legal and operational structures, to simplify administration and to provide greater clarity in terms of the industrial activities' results.

The setting-up of these two wholly-owned subsidiaries will take the form of a contribution by Valeo to its two subsidiaries of the assets and liabilities relating to the transferred activities.