Valeo has reported first half net income of 68 million euros against a loss of 185 million euros in the same period of last year. The company said that operating income was up by 34.8% to 240 million euros.

Valeo said that the ‘growth in the gross margin confirms the gradual improvement in profitability due to the actions implemented since the second quarter 2001’.
These actions included:

o Valeo continued to reduce the number of its suppliers (down from 3,600 at end December 2001 to 3,300 at end June 2002), while increasing the number of partnerships with the most efficient suppliers;

o In the course of the first half 2002, Valeo continued to restructure its industrial base. The Group closed four sites (three in Europe and one in Brazil) and opened three (in Eastern Europe, Morocco and Brazil);

o Valeo concluded a partnership with the US company Jabil covering the manufacture of printed circuit boards. In line with Valeo’s strategy of focusing resources, this alliance calls for the transfer of a French manufacturing facility to Jabil and the closure of the Fort Worth entity in the United States;

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o Valeo’s US subsidiary, VESI, has taken ‘decisive steps’ in restructuring negotiations which Valeo says should give it the means to carry on operating its Rochester site in the long term.

Valeo’s sales were down by 5.2% in the first half 2002 compared with the same period in 2001. This fall is due to the disposals carried out since the second quarter 2001 and to the slowdown in automotive output recorded in some markets. The impact of changes in the reporting entity (disposal of Filtrauto, Valeo Transmission U.K. and non-automotive wiring harness activities) amounted to -2.7% while that of variations in exchange rates was negligible. Excluding currency variations and changes in the reporting entity, sales fell by 2.6%.

Net income stood at 68 million euros. This is the first positive half year result recorded by the group since the end of 2000.

Thierry Morin, Chairman of the Management Board, commented, “Over the last five quarters we have made constant progress; the cash generation of this semester strengthens our balance sheet. In market conditions that remain tough, Valeo will continue to improve its results in the second half of 2002.”