PARIS -- Valeo is in a “sound financial position” for 2021 after a strong second half performance in 2020, CEO Jacques Aschenbroich said, and is targeting free cash flow of 550 million euros ($668 million) this year.
Free cash flow in the second half was a record 1.34 billion euros, Valeo said, and 294 million euros for the year.
For the year, Valeo recorded a loss of 1.09 billion euros on 16.4 billion euros in sales, a decline of 16 percent from 2019 sales of 19.5 billion euros. Net income was positive in the second half at 126 million euros.
Aschenbroich credited efficiency and cost-cutting measures in the first half with bolstering second-half performance.
He said in a news release Friday that Valeo’s position in electrification and advanced driver assistance systems (ADAS) would enable it to outperform the market in coming years. Those two business units performed best versus the market in 2020, with Comfort and Driving Assistance System business group six percentage points over the market and powertrain (including 48 volt mild hybrid systems) four percentage points ahead.
The supplier’s goals for 2021 are to increase sales by 12 percent to 18.2 billion euros; and raise earnings before interest, taxes, depreciation, and amortization (EBITDA) by 63 percent to 2.45 billion, or 13.4 percent of sales.
Aschenbroich described this as a “cautious” approach because of continued uncertainty around the semiconductor shortage. Valeo is predicting a production increase of 10 percent this year, four percentage points below IHS Markit’s prediction, a reference for many automakers and suppliers.
Valeo, based in Paris, ranks No. 10 on the Automotive News Europe list of top 100 global suppliers, with automotive sales of $18.05 billion in 2019.
Valeo is preparing for a leadership transition, with Aschenbroich stepping down as CEO in January 2022 after more than 10 years in the post, although he will retain his position as chairman of the board of directors.
Aschenbroich will be succeeded by COO Christophe Perillat, who on Friday was named associate CEO. Perillat is expected to be named deputy CEO at Valeo’s annual shareholders’ meeting in May, the supplier said.