Valeo continued its recovery in 2003, reporting net income of 181 million euros – 34% ahead of 1992’s figure. However, the company said that consolidated sales declined by 6% in 2003, reflecting the impact of the weak dollar (at constant reporting entity and exchange rates, Valeo put the fall at 1%).

Valeo said that the continued rationalisation of the industrial base contributed significantly to the increase in the gross margin rate, which improved by 0.5 points to reach 17.9% of sales.

Valeo’s operating margin reached 5.0% of sales in 2003, the same level as in 2002.

In Europe, Valeo sales were stable at constant reporting entity and exchange rate, in line with automobile production.

However, in North America, sales fell by 13% at constant reporting entity and exchange rates, while production was down by 3%. The company said that the drop is a ‘consequence of the deteriorated situation of the Valeo Electrical Systems Inc. subsidiary prior to the restructuring which began at the end of 2001’.

In Asia, Valeo sales grew by 9% at constant reporting entity and exchange rates, while automobile production increased by 7%. In South America, while production grew by 2%, Valeo sales increased by 25% at constant reporting entity and exchange rates.

The aftermarket activity’s sales grew by 3% at constant reporting entity and exchange rates, to represent 18% of the group’s total sales.

In terms of production base rationalisation, Valeo said that at 31 December 2003, the Group had 122 production plants, excluding the consolidation of Zexel Valeo Climate Control, compared with 170 at the beginning of 2001. It also said that the proportion of plants in low-cost production areas rose at the same time from 25% to 41%.

Valeo also highlighted key actions in 2003 to strengthen its presence in Asia, including:
   * Valeo signed a letter of intent with Furukawa Electric in Japan to jointly develop automotive wiring harness systems;
   * Valeo acquired an additional 10% of the capital of Zexel Valeo Climate Control, which designs and develops air-conditioning systems for customers in Asia and compressors for the worldwide market.  Valeo’s shareholding is now 50%;
   * Valeo increased its stake in two joint ventures in China: Shanghai Valeo Automotive Electrical Systems, from 30 to 50%, and Valeo Shanghai Automotive Electrical Motors and Wiper Systems, from 50 to 55%;
   * In the area of R&D, Valeo launched the construction of its first technical centre in China which will develop advanced lighting systems for Asian and Western vehicle manufacturers.

Looking ahead, the company said that Valeo will play a significant role in the growth of the Asian market, and in particular in China.  It also intends to ‘benefit from its favourable competitive position in the United States’ and further strengthen its aftermarket business.