Valeo SE (FR) Earnings Call Transcript & Summary

Ladies and gentlemen, shareholders, good morning. I hereby declare open the combined General Meeting convened by the Board of Directors following the notice of meeting published in the Bulletin des Annonces Légales Obligatoires dated 31st March, 2021, and the notice of meeting published in that same of bulletin on 30th of April, 2021, as well as in the legal gazette [indiscernible] Parisienne on 30th of April, 2021. Given the health reasons and in accordance with current regulations, this General Meeting is exceptionally held in camera without the presence of shareholders and other persons entitled to attend. It will be broadcast live on the company's website. And as every year, a video recording of the meeting will be available on the General Meeting page of Valeo's website. Beside me, to my right, we have Robert Charvier, Chief Financial Officer; and to my left, Eric Antoine Fredette, General Counsel and Secretary General. The statutory auditors are also attending remotely. Let us now turn to the composition of the General Assembly Bureau, which is constituted in accordance with the regulations in force. In this respect, the Board of Directors has appointed as scrutineers BNP Paribas Asset Management, represented by Mrs. Orsolya Gal and Amundi Asset Management represented by Ms. Corinne Ferrière, here present. I suggest that you appoint Mr. Eric Antoine Fredette as Secretary of this assembly. And I will give him the floor so that he can tell you the quorum of the assembly and explain the agenda.

Thank you, Chair. Societe General, the centralizing institution responsible for organizing the meeting, informed the officers of the status of the quorum, the votes cast by correspondence and by VOTACCESS and the number of powers allocated to the Chairman. After examination by the officers of the meeting of the attendance sheet and its certification, it appears that the shareholders who voted hold 170,638,800 of the 240,596,808 shares entitled to both. A quorum of 70.92%, which is excellent and I think it's a record from previous years, I therefore note that the meeting, which includes more than 1/4 of the shares with voting right, is duly constituted and may validly deliberate, whether on an ordinary or extraordinary basis. Your meeting has been convened to decide on the agenda, which is included in the notice of meeting brochure. I suggest that you don't read out the entire agenda. And the subject of each resolution will appear on the screen when the voting results are presented. As for the meeting documents, they are available to the members of the bureau. I would also like to remind you that all information for shareholders is available and can be found on the company's website. Chair, I will give you the floor.

I declare that all the documents and information required by the regulations in force have been communicated or made available to the shareholders in the manner and within the time limits provided by law. Dear shareholders, this is a special general assembly. Firstly, because it's being held, like in 2020, behind closed doors because of the COVID pandemic. But this year, in order to maintain the dialogue that I value, dialogue with the CEO of your company, but also with its Board of Directors. You can ask questions during this general assembly, questions that we will try to answer. The question-and-answer session will take place before the presentation of the voting results. This is also a special general assembly because it is the 13th and last time that I will have the honor of talking to you as Managing Director of your company. As you know, and as Gilles Michel, the Lead Director, will explain to you later, the Board of Directors has chosen Christophe Perillat to take over the responsibility of Chief Executive Officer as of January 2022. I have known Christophe since I joined Valeo in March 2009. His competence, his knowledge of Valeo and the automotive world, of our customers, his charisma and his strategic vision make him undoubtedly the best candidate for this position. As far as I'm concerned, I will support him until the end of my current term of office as Chairman of the Board of Directors with the sole ambition that this succession be exemplary in terms of governance at a time of technological change in the automotive industry, for which Valeo is perfectly prepared. Robert Charvier, the Financial Director of your company, who you know well, will present the financial results for the year 2020. Because of COVID, 2020 was a very special year. The first half of the year saw an almost total halt in activity due to the successive lockdowns. The absolute priority was to protect the health of our employees by implementing a health protocol considered to be the most effective in the industry, a protocol that was confirmed by our social partners and audited. The second priority was, of course, to protect our assets, our cash, so that we could deliver as soon as the market recovered to our customers. The second half of the year saw a rebound in activity from the third quarter onwards, a stronger rebound than expected, which enabled the financial results to return to pre-crisis levels in terms of EBITDA and free cash flow generation. On my behalf and on behalf of all the members of the Board of Directors, I would like to warmly thank all Valeo employees for their unwavering commitment during this complex period of global pandemic. In France, we have signed a collective performance agreement with the trade unions, which will improve the competitiveness of the French site without affecting employment. And I have undertaken not to close any sites until the summer of 2022 or to make any forced departures. I would also like to thank you, our shareholders, who have placed your trust in us during this difficult period and have continued to support us. Despite the difficult situation last year, your Board of Directors has decided to continue paying a dividend which has been reduced to EUR 0.20 per share for the financial year 2019. At this general meeting, you will be asked to vote on a dividend of EUR 0.30 for the year 2020. In this period of uncertainty, your Board of Directors has sought to find the right balance between all of Valeo's stakeholders, our employees, of course, our shareholders and the areas in which we operate. I would like to remind you that last year, we donated FFP2 masks to hospitals and contributed alongside Air Liquide, PSA and Schneider to the manufacturer of 10,000 ventilators. And now, as the epidemic is escalated in India, we have decided to donate and send ventilators to this suffering country. Turning now to the results for the first quarter 2021. Valeo posted a very strong outperformance and growth in all regions of the world, in particular, 21% in China, 12% in Europe and North America. And across all activities, in particular, 21% at CDA driven by ADAS and 15% at PTS driven by electrification compared to 2019. This outperformance will continue in the second quarter. Valeo benefits from its unique positioning as a true leader in electrification and ADAS, with technologies recognized by our customers that ensure our commercial success and reinforce our growth potential. In this context, we have confirmed our objectives for 2021. In addition, in March 2021, your group was included in the new CAC 40 ESG index, which includes 40 companies that have demonstrated the best practices from an environmental, social and governance perspective. Our inclusion in this index rewards our strategy, our performance and our transparency for more than 10 years in environmental, social and governance matters. You may remember, since 2010, we have put CO2 reduction at the center of our strategy. Our turnover, generated by CO2-reduction technologies, has increased 20-fold and will amount to approximately EUR 10 billion in 2021. At the beginning of the year, we communicated a carbon plan validated by the Board of Directors, which includes ambitious targets for carbon neutrality by 2050. We should have achieved almost half of our objective by 2030. And Christophe Perillat will talk to you about this later. In line with the group's commitment to improving diversity and gender balance in its management bodies, the Board has also set targets in 2020 for gender balance in management bodies by 2030, with intermediate targets in 2024 and 2027, an ambitious and realistic target of doubling the number of women on the group's management committees from 16% on 1st of January, 2020 to 32% on the 31st of December 2030. And Catherine Delhaye will talk to you about this later. With regard to the renewal and the composition of the Board, today, we are proposing that you renew the mandates of Maury Devine, Mari-Noëlle Jégo-Laveissière and Véronique Weill as Directors. All 3 are experienced members of your Board and, thanks to their expertise and experience, they provide us with indispensable competence. As I have already mentioned, it is also proposed that you appoint Christophe Perillat as a director. The Board has also strengthened its employee representation with the appointment of Grzegorz Szelag as the director representing employees alongside Éric Chauvirey by the European Works Council on 19th of November, 2020. At the last general meeting, you approved the transformation of Valeo into a European company. This transformation took effect on the 9th of March, 2021. Valeo is a company with French roots, of which we should all be proud. But its base is now European. This new legal status allows us to better represent the European dimension of the group to all our shareholders. In particular, our employees and customers. As you will have noticed, this transformation, like I said last year, does not affect either the place where Valeo is listed on the stock exchange or the way its governance operates. I will now hand over to our Lead Director, Gilles Michel, who will give you the main information on our governance. Thank you for your attention.

[Interpretation] Good morning, ladies and gentlemen, shareholders. This is my pleasure to address you today in my capacity as Lead Director and Chairman of the Remuneration and Governance, Nominations and Corporate Social Responsibility Committees. As is the case each year, the report on my work over the past year is included in the universal registration document of your company. I invite you to consult it and will therefore limit myself to here just speaking about the essential points. I must obviously begin by mentioning the COVID-19 crisis and tell you how much the entire Board of Directors believes that it was managed in an exemplary manner by Valeo's management, both in terms of its responsiveness and for the correct choice of its priorities: integrity of employees; continuity of service to customers; preservation of the industrial tour; listening to and being close to all stakeholders; protection of the balance sheet; and cost reduction. In this unprecedentedly violent crisis, management has shown unfailing rigor, professionalism and transparency, with the constant support and backing of your Board of Directors. If it is in the storm that the quality of the crew is demonstrated and if it is in turmoil that the values of the community are revealed, then I am proud to be associated with Valeo. With regard to governance, the annual evaluation of the functioning of your Board of Directors was carried out this year by a specialized consulting firm. It once again highlighted the quality and balance of Valeo's governance, which the directors all emphasized as working well. This is particularly true of the way in which the preparation of Jacques Aschenbroich's successor plan, the major governance event of 2020, was conducted. To quote the report, "The succession and governance evolution process was conducted with rigor and professionalism and resulted in a solution approved unanimously by the Board members." As Jacques Aschenbroich indicated to you, the work on the plan concerning his succession was indeed initiated by the Board of Directors in the second half of 2019 under the guidance of the Governance, Nominations and Corporate Social Responsibility Committee and with the participation of the entire Board of Directors. It was carried out over a period of 12 months in a very thorough, professional, rigorous and transparent manner. It led to the choice of Christophe Perillat, notably in view of the high quality of his career as Valeo's Chief Operating Officer, his in-depth knowledge of the automotive industry and the Board's confidence in his vision, his potential and his ability to lead the companies into a new chapter in its history. Given the uncertain and turbulent nature of this current period, and the scale of the changes underway in the global automotive market, the Board felt it wise to ensure that the managerial transition would be gradual and that the future Chief Executive Officer would be able to take on his or her responsibilities with the benefit for a time of the experience of the current CEO. Your Board of Directors has, therefore, unanimously adopted a 3-stage transition, whereby Christophe Perillat, appointed Deputy CEO of Valeo on October 27, 2020, will be appointed today as Chief Operating Officer and then when the functions of Chairman and CEO are separated in January 2022, as Chief Executive Officer. From that moment on, Jacques Aschenbroich will remain Chairman of the Board of Directors with specific duties until the end of his term as a director, which is scheduled for the end of the Annual General Meeting in May 2023. As you know, since I took on the role of Lead Director, I have been organizing meetings between independent directors after each Board meeting. These so-called executive sessions offer the possibility of an open and informal exchange without a pre-established agenda on all sorts of subjects relating to your company and thereby, enrich the content of the dialogue that your Board maintains with the company's management. They contribute to the quality of governance of your company. I would remind you, therefore, that all the members of the Board of Directors are independent with the exception of Jacques Aschenbroich, of course, and the directors representing the employees, Éric Chauvirey and Grzegorz Szelag. In the area of corporate social responsibility, CSR, a carbon neutrality plan for 2030 and 2050 on the one hand and ambitious gender diversity objectives for 2030 on the other were adopted this year following an in-depth and continuous dialogue between management and your Board of Directors. They constitute 2 major steps in the company's commitment in these areas, and I would invite you to consult their content in your company's universal registration document. Two decisions were also taken, which demonstrate the importance that Valeo and your Board of Directors attach to CSR issues. First of all, Ms. Ulrike Steinhorst was appointed on 27th October, 2020, the person responsible for leading CSR issues on behalf of the Governance, Nominations and Corporate Social Responsibility Committee. Secondly, the Board of Directors, on the recommendation of the Remuneration Committee, considers it appropriate to include 2 CSR criteria among the so-called performance criteria in the long-term incentive plans for management. These criteria on the one hand, relate to the level of CO2 emissions of the group and, on the other hand, relating to the gender diversity of the 300 most important management positions of the group. They are obviously aligned with the medium-term objectives that I have just stated. Lastly, allow me to provide you with some details on the remuneration of your Chairman and CEO, Jacques Aschenbroich, and on that for the other corporate officers of your company in the context of the succession plan. Given the very exceptional nature of last year's context, the Remuneration Committee initiated at the start of the year reflects on the subjects of remuneration of your company's corporate officers and met several times on the subject. In accordance with the remuneration policy that you approved last year by 93.03% and on the recommendation of the Remuneration Committee, your Board of Directors considers it justified to use the flexibility this policy gives it in the context of the COVID crisis to build its proposal for the remuneration of the 2020 financial year. It did so both with regard to its variable remuneration and to the so-called performance share plans. It has done so in a way that it wanted to be well thought out, balanced and fair with regard to the context of 2020, the financial situation of the group and that of various stakeholders. I would invite you, if you wish, to look at the details in your company's document as well as highlighting 3 elements that seem important to me. As you have been told, 2020 consisted of a first half marked by a concern to protect against the crisis and to prepare for a possible recovery. And the second half was marked by rapid return to activity and by high-quality results above the July and October 2020 guidelines. To decide on the variable components of your CEO's remuneration for 2020, the Board of Directors based itself on the analysis of the year's performance that I have just mentioned. It assessed the achievement of the quantitative criteria, half of the maximum potential, which it reduced by 20%, taking into account the economic situation of the company and that of the various stakeholders to set a final level of 46% for a maximum possible of 115%. Combined with an achievement rate of 53% for a possible maximum of 55% on the qualitative criteria, the variable part of your CEO's remuneration for 2020 amounts to 99% of his annual fixed remuneration for a possible maximum of 170%. In the same spirit, the Board assessed the achievement of the economic performance criteria. ROA and operating margin of Jacques Aschenbroich's 2018, 2019, 2020 3-year performance share plans. The Board abated 50% of the allocation for the year 2020 of the 2019 and 2020 plans, i.e., 1/6 of the shares allocated, and it did not grant any performance shares under the 2018 plan. In the end, the Board of Directors, therefore, noted a reduction of more than 1/3 of the shares allocated under the 2018, 2019 and 2020 plans. I would also like to remind you that the performance share delivered to the Chairman and CEO will be produced on a pro rata basis when the governance is unbundled in January 2022. Finally, as we indicated to you, Jacques Aschenbroich and all the members of the Operating Committee paid 25% of their fixed remuneration during the period of the cessation of activity linked to COVID-19 in favor of solidarity actions in relation to this pandemic. The directors of your company followed them in this initiative. With regard to ex ante remuneration policies, I would invite you to consult the detailed information in your company's document and would like to draw your attention to the following 2 points. In application of the succession plan, several remuneration policies have been drawn up and are being proposed for a vote today. Those of Jacques Aschenbroich for 2021 as Chairman and CEO and in anticipation of the dissociation of functions planned for January 2020 as Chairman of the Board of Directors. Those of Christophe Perillat as Deputy CEO as of today and in anticipation of the dissociation of functions as CEO in January 2022. These remuneration policies are fully consistent with those proposed to the general meeting over the past several years and always widely approved. Finally, and in the same way as in 2020, flexibility is granted to your Board of Directors to take into account, if necessary, the possible impacts of the COVID-19 pandemic and its consequences, in particular, the prices in electronic components, when assessing the degree of attainment of quantifiable objectives. If this were to happen, it would, of course, be done within the framework of the remuneration policy in force and in full transparency. In view of all these elements, as Lead Director and Chairman of the Remuneration Committee, I consider that the 2020 remuneration of the Chairman and CEO as well as the remuneration policies for corporate officers that have been drawn up, are consistent, balanced and reasonable based on ambitious criteria and on the performance of your company. They are, therefore, in line with your interests and have moreover received a favorable opinion from the main voting advisory agencies. Thank you, ladies and gentlemen, shareholders, for your attention.

Thank you, Gilles. I will now give the floor to Thierry Moulonguet, Chairman of the Audit and Risk Committee.

Good morning. At the beginning of the 2020 financial year, the Audit and Risk Committee was composed of the following 6 members: Mari-Noëlle Jégo-Laveissière, Veronique Weill, Stephanie Frachet, Olivier Piou, Bruno Bezard and myself. During the '20 financial year, Julie Avrane-Chopard was appointed to the committee, bringing the number of members to 7 at the end of the financial year. The members of the committee are all independent in terms of the criteria set out in the internal regulations. The company is, therefore, complying with the provisions of the AFEP-MEDEF Code in its November 2016 version, recommending that the proportion of independent directors on the Audit and Risk Committee be at least 2/3. In addition, all the current members of the Audit and Risk Committee have accounting and financial skills through their training and professional experience. The committee met 6 times last year with a 100% attendance rate, with a large amount of interactivity in a demanding and constructive environment. And we also, during each of our meetings, had the presence of Jacques Aschenbroich. The Committee has a very broad remit, which covers, in particular, the monitoring of the accounts, accounting methods, significant risks and off-balance sheet commitments and the accounting and financial treatment of acquisitions and transfers of more than EUR 50 million. This mission also extends to monitoring the effectiveness of risk management and internal control systems including, and we spend a lot of time on this, compliance and to monitoring the work carried out by the internal audit. In order to carry out its mission, the Audit and Risk Committee's main contacts are the general management, the finance department with Robert Charvier, who I meet, as well as having the committees at least once a month in a bilateral way, the legal department and the ethics and compliance department as well as the company's statutory auditors. And I would like to underline the quality of their work and their professionalism. I meet them several times a year bilaterally. In particular, the committee heard, paying particular attention to efforts to adapt to the context of the health crisis, [ Martin Lebrar ], the Finance Director; Anita Leibenguth, Director of Financing and Treasury and the group's financing policy; [ France Quovisse ], the Director of Tax on the tax policy of the group, and [ France ] has retired, so on behalf of the committee, I would like to thank her for all of her work, input and wisdom on the tax policy. [ Christophe Obiet ] the Director of Information Systems; Lionel Monteiller, the Director of Internal Audit, Internal Control and Risk Management, on the results of the internal control self-assessment campaigns, the assessment of internal audit missions and risk mapping as well as [ Stefan Borlanget ], the Director of Insurance on the group's insurance program. The committee has also given great importance to the risk mapping activity as well as the plans for monitoring and the prevention at a part of it, risk mapping. The committee has also deeply discussed cybersecurity issues with [ Laurent Albo ], the group's Head of Information Systems Security. In this respect, it's important to note the growing maturity of the security level of Valeo's information systems and the proper management of the remote connection means that had to be rolled out in record time to meet the homeworking needs during the pandemic. Cybersecurity is, obviously, still a very much sensitive complex issue that your committee will continue to monitor very closely this year. The nonrecurring items that affected the accounts in the first half of 2020, these items are mainly related to the effects of the COVID crisis, which led us to review our medium-term production assumptions for the automotive industry. And these items were the subject of a detailed presentation to the committee. The committee specifically studied the group's financing policy and the levers for generating free cash flow and controlling debt implemented by the group, thereby ensuring the liquidity management was adapted to the context of the health crisis. Many other topics were, of course, discussed within the Audit and Risk Committee. And you will find more details in the universal registration document that you have received. Overall, As Chairman of this committee, I can confirm to you, ladies and gentlemen, and shareholders, that the work of the Audit and Risk Committee has been in line with the objectives entrusted to it during the financial year, that your group has efficient and professional teams and that the general principles of ethics and compliance, site protection and risk management met high standards. Furthermore, at no time did the Audit and Risk Committee have to express reservations on the company and consolidated financial statements nor on the half-yearly documents presented to it. Thank you for your attention.

Thank you, Thierry. Dear shareholders, I would like to remind you that the detailed information on the 2020 accounts as well as the management report of the Board of Directors and the reports of the statutory auditors are included in Valeo's universal registration document, which is available in full on the company's website. I will, therefore, as usual, dispense the Board of Directors and statutory auditors from reading their reports in full. The financial statements for the year 2020 and the results for the first quarter 2021 will now be presented to you by Robert Charvier, Chief Financial Officer.

Thank you, Chair. Ladies and gentlemen, shareholders, the COVID-19 pandemic has massively affected the automotive industry during 2020. And this has, for both our activity and our results, led to 2 contrasted half years. During the first half year, the pandemic started by affecting China in January before spreading to the rest of the world. In this context, our first priority was to protect our colleagues, namely by putting in place a health protocol. The pandemic, during the first half of the year, translated into a drop in -- by 34% of global automotive production. So our second priority was to protect our cash by putting in place an expenditure reduction plan. This was a very ambitious plan, and we believe that the expenditure has been reduced by EUR 570 million during the first half. We have also reduced our investment by EUR 140 million and our inventories were also brought down by EUR 243 million. We have also put forward a significant reduction in dividend, which represented for the group a cash-out savings of EUR 149 million. Furthermore, we have increased the group's liquidity by negotiating new credit lines for EUR 1.1 billion. All of the credit lines, and I will come back to this later, have never been drawn out during 2020, and still are not. During that time, all of our clients had to freeze a significant number of bids, which stopped order taking during the first half of the year for the group because the orders for the first half of 2020 were EUR 5.6 billion. In this kind of context, it should be noted that Valeo continued to outperform the market, and I will come back to that in a moment. And we also recorded exceptional charges for EUR 622 million, a topic that I will also come back to in a few moments. As regards the activity in the first half of 2020, the Valeo Group has shown resilience and was able to outperform in all regions. As you can see, in China, Valeo has outperformed the market by 15 points; Valeo has outperformed the market in Europe by 9 points; 6 points in Asia, excluding China; and 4 points in North America. A total outperformance of 6 points around the world, above what the group had performed in the first half of 2019 and just below the outperformance during the second half of 2019. Despite the health crisis, the first half of 2020 confirmed the car market trend for more mobility and greener mobility. So business groups and the sales in the first half of 2020 were driven, for the different business groups, both by the sales of driver assistance systems by launching new front-camera systems as well as the driver systems which had new contracts in the hybrid vehicles. Therefore, these 2 business groups were able to outperform by 11 points for comfort and driver assistance systems and 8 points for the propulsion systems. Internal compression and visibility systems also outperformed by 2 points and 5 points, respectively. Like you have heard previously, the health crisis due to COVID in the first half led to a drop in automotive production by 34%. And this drop led us to significantly downgrade our growth perspectives for the automotive sector in 5 years and 3 years around all regions in the world. After reviewing these midterm perspectives, we then reassessed all of our assets. And this was translated into accounting for nonrecurring charges in the first half of EUR 622 million. These nonrecurring costs mainly effected to a depreciation of operational assets of EUR 392 million; we also have depreciated for EUR 53 million the assets from the order mechanism, which will be becoming extinct in the coming years. But we have also disengaged from some start-ups and to suffer the consequences by reducing their value to 0 in our accounts, so EUR 31 million. Then the degradation of perspectives led us to decrease by EUR 37 million the values of deferred assets, tax deferred assets. It should also be noted that the vast majority of these nonrecurring costs did not have a cash effect. They reach about 90% linked to the COVID-19 crisis. During the second half of the year, there was a quick restart of all of our factories in safe situations. The growth in production was particularly lively in China. During the second half of 2020, car production in China grew by 8% compared to what it was during the second half of 2019. The recovery in production was slower in Europe. Production was reduced by 3% during that half of the year compared to 2019. The recovery of activity translated into a strong rebound for Valeo's performance in terms of the acceleration of its growth and the significant improvement in EBITDA over the second half of 2020 reached 13.9%, a record level, with generation of free cash flow during the second half of 2020 reached EUR 1.34 billion. The generation of free cash flow allowed us to reduce our debt to less than EUR 3 billion at the end of 2020, a year early, in fact, compared to the objective we had at the end of the first half of the year to reduce this debt to under EUR 3 billion at the end of 2021. With EUR 13.3 billion of orders in the second half of 2020, the order intake was above that pre-crisis. The recovery in sales during the second half was particularly fast, as you can see on this graph. After recording a drop in the activity of 49% in the second quarter, the level of turnover in the group was then only reduced by 5% in the third quarter and was higher by 5.4% during the fourth quarter of 2020. In terms of operations, the recovery of our activities in the third quarter was extremely demanding because over 150 production sites had to be restarted in just a few weeks or in just a few days in some cases as well, whilst adhering to a rigorous health protocol. And of course, by protecting the industrial efficiency of our factories. In this context, the group in the second half of the year, continued to outperform the market in China. As you can see, that outperformance in China is at 8 points above global production. In Europe and in North America, we outperformed our markets by 2 points. In Asia, excluding China, the outperformance was still -- the net performance was still negative because -- minus 6%, because of the conclusion of some production contracts. They ended and new contracts were put in place, but they were put in place at the start of 2021. With EUR 13.3 billion in orders in the second half of 2020, this order intake represented 1.7x the sales in that period. This number is a favorable comparison to the order intake in the first and second half of 2019. You can see in the first half of 2019, order intake with EUR 11.7 billion (sic) [ EUR 11.1 billion ] was 1.3x the sales of the half of the year. And in the second half of 2019 with EUR 10.9 billion of orders, that represented 1.3x the sales over that period. Furthermore, it's also important to say that 56% of order intake related to innovative products. And I would also like to underline that during that half of the year, some orders were for extremely accurate technology linked to cameras for autonomous vehicles, for example, products such as the triple clutch or air con systems with heat pumps to equip electric vehicles or hybrid vehicles. During the introduction, I underlined the particularly contrasted situation in the 2 halves of 2020. And I think that the figures that you have before you do demonstrate that very clearly. You can see that our turnover in the second half of 2020 increased by 33% compared to the first half of 2020. The operational margin in the first half was a negative level, EUR 840 million, which was affected by the nonrecurring costs, over EUR 400 million. And despite the cost reduction during the second half of the year, you can see that the operational margin was 5% of turnover, an equivalent level to the operational margin in 2019. Finally, the operational margin, including the amount in equivalent companies was a loss of EUR 650 million. In terms of the net result, the first half of the year was a loss of EUR 1.2 billion. And in the second half, we had a positive amount EUR 156 million (sic) [ EUR 126 million ], 1.3% of the turnover, which should be compared once again to the net result of 1.6% of turnover in 2019. Lastly, and I have already said this, after having consumed EUR 1.4 billion of cash during the first half of 2020, the group was able to generate in the second half of that year EUR 1.3 billion of free cash flow, which has enabled us to close the year with a net generation of cash of EUR 294 million, which is below what it was in 2019, but it still represents significant progress during the second half of 2020. In this context, you can see that our debt, the net financial debt on the 31st of December, 2020 was EUR 2.9 billion, which is below the EUR 3 billion that we had given ourselves as a goal for the end of 2021. And you can see that in the second half of that year, we were able to reduce our debt by over EUR 1 billion because at the end of the first half of 2020, the net debt of the group was EUR 4.037 billion. At the end of 2020, the leverage ratio, which essentially compares the amount of net financial debt to the EBITDA, it was 1.96x. This level is far lower than the credit line amount, which is 3.5 and our ambition, of course, for 2020 is to put this leverage ratio back to a level comparable to what it was at the end of 2019. As regards our debt, firstly, it should be noted that at the end of 2020, the group had liquidity at EUR 5.3 billion, EUR 2.3 billion was credit lines, nondrawn, and EUR 3 billion was liquidity in the balance sheet. Furthermore, the average length of the debt on the 31st of December was 3 years by -- excluding financing from the BEI. At the start of 2021, we negotiated first funding with the European Investment Bank at EUR 300 million, which hasn't been drawn yet as it stands. If we take into account the current environment and the need to continue lowering the debt of the group, we will be paying a dividend of EUR 0.3 per share compared to the dividend which last year was set at EUR 0.2 for 2020. On the 28th of April, we published the data relating to the group's turnover for the first quarter in a context marked by significant disruption in automotive production because of the shortage in electronic components. Valeo was able to confirm its potential for strong growth compared to the market. Our unique position in the electrification of vehicles and driver assistance systems, which we call ADAS as well, has enabled us to grow by 8% in terms of our turnover with constant charges compared to the first quarter of 2020. And we were also able to outperform compared to the first quarter of 2019 in all regions around the world and in all of our activities. You can see on this graph that our outperformance compared to 2019, corrected with the geographical mix, reached 14 points. And this outperformance reached 26 points in China, 12 in North America and Asia, and 26 points in South America. What's important here is that all of the business groups have contributed to this outperformance and to this growth, once again, thanks to our unique position in the vehicle electrification and driver assistance systems. On the 28th of April, we confirmed our guidance regarding in 2021. This guidance, in terms of the basic scenario, plans for a turnover of EUR 18.2 billion for 2020, EBITDA levels of 13.4% and cash -- free cash flow of EUR 550 million. This scenario is set at production growth in the world at 10%. And it takes into account costs linked to the disruption in the supply and the shortage of electronic components and costs linked to the increase in the price of raw materials at EUR 90 million. We furthermore confirm the acceleration of turnover growth at Valeo Siemens and Automotive as well as the reduction of this joint venture's contribution to the losses recorded in the equivalent company's share for 2021. These are the main points I wanted to underline regarding the highlights of the group's profitability during 2020 and the forecast for 2021. Thank you for listening.

Thank you, Robert. Like I said in my introductory remarks, the management and Board of Directors of Valeo is committed to diversity. And Catherine Delhaye is going to explain what the nature of our commitment is.

The diversity at Valeo is a reality, it's a culture, and it's a commitment. It's a reality because, thanks to its presence in 33 countries, Valeo counts more than 100 nationalities among its employees. It's also a culture. The teams are international, multidisciplinary, naturally inclusive of all diversities without discrimination, whether they relate to origins, religions, orientation, generation, opinion or gender. Diversity at Valeo is finally a commitment. In fact, it is the result of a number of commitments made by the general management and the management team. First of all, in favor of young people. We are very attached to young people's access to training and employment. We participate in many initiatives in this area. Moreover, despite the COVID crisis, we have recruited 350 apprentices in France in 2020. The percentage of work study students in our French teams is currently 5.2%. This is also a commitment to seniors. Experience is valued and recognized at Valeo. Seniors are respected, and we'll continue to recruit them. This is also a commitment to workers with disabilities because Valeo has set up highly effective programs for people with disabilities in France and abroad. Finally, diversity also means particularly strong commitment by the general management and the management teams to women and more specifically to parity. Equal pay for men and women and equal opportunities and career paths. The Chairman and CEO has made equal pay an absolute priority since his arrival at Valeo. The detection, analysis and correction of unjustified wage gaps, all other things equal, are always a priority. In this respect, the equality index or Penico index, introduced in France in 2019, was immediately extended to many countries. Equal opportunities has been the subject of a program for over 10 years, with the ambition of recruiting and helping women to develop their careers. However, 2 years ago at the instigation of the Chairman and CEO, Valeo decided to go further and double the number of women in the group's 350 most senior positions in 10 years. Valeo has therefore committed to increasing the number of women on its management committees and in its executive bodies. And to do this, has drawn up an ambitious program, including a detailed action plan, precise objectives, indicators and a timetable for the next 3, 7 and 10 years. This program was presented to the Board of Directors, which approved it and has since been monitoring its implementation regularly and with particular attention. It has also been endorsed by the entire management team whose involvement is essential in supporting women developing their careers and ensuring their success at Valeo to such an extent that gender diversity objectives have been integrated into the annual variable remuneration objectives and performance share allocation criteria of those eligible. As you can see, Valeo is truly committed to diversity.

Thank you, Catherine. Valeo is committed to diversity and it is also committed to sustainable development and adherence to the Paris Agreement. Christophe?

Hello, and thank you for your support. The subject I'm about to address is important. It's important for the world, it's important for Valeo and all its teams, because everybody understands that mobility is life. So working tirelessly to reconcile mobility and sustainable development and becoming a champion of sustainable mobility development, isn't that a great ambition for your company? This is not a new ambitious for us -- a new ambition for us. For 10 years, Valeo has been working to develop sustainable mobility. In 2020, our sales contributing to sustainable mobility represented 60% of our turnover. They have increased 26-fold in 11 years. The rating agencies validated this transformation by giving us the best available ratings, which made our entry into the CAC 40 ESG possible. Valeo's teams are committed. They are committed to continuing this transformation. And from this year onwards, sustainable development criteria will be part of the variable remuneration of more than 1,500 of our managers. What we have achieved is now in the past. Today, Valeo is going further, and we have unveiled a plan for carbon neutrality in 2050. To make the objectives very concrete, we are committing ourselves to a shorter time frame, 2030. I took a very ambitious objective to reduce our CO2 emissions for Scopes 1, 2 and 3 by 45% from 2030 compared to 2019. This objective is in line with the Paris Agreement and the ambitions of the European Green Deal. This slide is a bit complicated, but it shows the seriousness with which the plan has been developed. For Scopes 1 and 2, i.e., the consumption of carbon-based energy by our production and R&D sites, we will reduce emissions by 75% in 2030 compared to the baseline set in 2019. On the upstream, Scope 3, so our suppliers' emissions, we will involve our suppliers in a program to reduce their emissions by 15%. Finally, on the downstream, Scope 3, so the emissions due to our products during their life cycle, we will reduce these emissions by half thanks to our commitment to products that contribute to the electrification of sustainable mobility. It is this last point that I would like to develop now. On this point, Valeo is really going further, not only by working on electric car technologies. In fact, beyond the electric car, we are electrifying everything that rolls: 2-wheelers, so bicycles, mopeds, motorbikes; 3-wheelers, rickshaws; and 4-wheelers, droids and shuttles. On the electric car, our product range is very broad and well known with the propulsion system, which includes the electric motor, the actuators, the charger, the inverter and the assembly of all these components into an electrified complete axle. This is the raison d'etre of our subsidiary with Siemens. But because an electron that heats up the passenger compartment is lost in order to move the car forward, we are working to have a complete and very efficient thermal system with its heat pump, compressor and battery cooling. In total, Valeo received orders for thermal-run propulsion systems worth over EUR 18 billion. When the car is not all electric but electrified in low-voltage 48 volts, Valeo is the leader with more than EUR 8 billion in orders. And because everything that drives will be electric, we are electrifying all new forms of mobility. Because the solutions that work on a car also work on new forms of mobility. More than EUR 200 million orders have already been received. Sustainable mobility also means safer mobility. And here, again, Valeo is going further. Valeo is working on intelligent systems that make mobility safer. A 5G-connected vehicle, a driver who can stay focused on the road, thanks to an interior cocoon, smart lighting, high-performance driving aids and top-level cleaning systems, all of this is driven by software written and validated by our 5,000 software engineers. One word to remember, Valeo is committed. I am committed on behalf of all of the teams at Valeo to the success of our development towards sustainable, electric and safer mobility. Thank you for your attention.

Thank you, Christophe. Yes, the keyword of the general meeting is "Valeo is committed." And if Valeo can be committed, it's because we are a technological leader. A technological leader for sustainable mobility. And we are also committed because since 2009, we have changed paradigm. We have a unique position, and we are committed to sustainable mobility. We have changed a dimension. A few figures. We've gone from 52,000 associates to 110,000, so 2.1x more. 120 production sites to 187. We were in 27 countries, we're now in 33. And Europe has seen its turnover multiplied by 1.6x, but it's gone from 65% to 47% in terms of the weight that this has, but our turnover in Asia has multiplied by 4.1x, and it's gone from 17% to 32% of our turnover. I would remind you that Asia represents over 50% of the market today. So there is still a lot of work to do to make sure that our regional turnover represents the balance in the automotive sector. But beyond these figures, the content per vehicle has gone from EUR 100 to almost EUR 200 per vehicle, doubled basically, and the price of the share, even if I'm disappointed that it has gone down since the start of the year, the price of the share has gone from EUR 3 to EUR 32 per share between the 6th of March, 2009 and the 31st of December last year. So tenfold increase there. If we can compare, like Robert was saying earlier, the turnover from 2009 or the financial results from 2009 compared to the guidance for 2021, our turnover has gone up 2.4 fold. Our EBITDA, which was 8.9% of the turnover, is now 13.4%, multiplied by 3.7x. And our free cash flow, limited to EUR 155 million in 2009, multiplied by 3.5x for this year, EUR 550 million. In 10 years, Valeo has changed its dimension, which means that it can be committed. And it is committed thanks to our unique position in terms of the car. Like Christophe was saying earlier, the car is still at the heart of our sustainable mobility. But the car is also at the heart of safety and health. Smart mobility that we are accelerating, that we are committed to will enable us to have a new source of growth. Sustainable mobility is a greener, safer and smarter mobility. And if we can be committed, it's because today, we are #1 in electrification. Low voltage and high voltage, #1 in ADAS and #1 in the world in terms of visibility. So you can see that this transformation, the road that we have managed to accomplish. There are some vehicles that ensure our growth. Firstly, with Valeo Siemens, the Volkswagen, the Daimler, the Renault, the Stellantis. But also low-voltage electrification with Stellantis, with Li Auto in China. So across all geographical areas, we have a high presence in these products with high technological content. But beyond electrification, we are also present, like Christophe was saying earlier, in ADAS. Global leaders in LiDAR. And the next vehicle will be the one that we are developing with Daimler. We are the first to have all the L2, L3 features, just L2 with front camera and L3 with front camera, and the software. We also work with Ford, with Audi, with Volkswagen and with the GM Group. Like Christophe said, we are committed to new dimensions, new types of mobility, 2, 3, 4 wheelers that enable us to develop and use our technological platform to address these markets in a viable way. You can see that thanks to the shift in dimension, thanks to our technological development, Valeo can be committed to sustainable development. But sustainable development would be nothing if we weren't also committed, and we've said this before, to corporate social responsibility. Firstly, this commitment in terms of reducing CO2. In 2030, we will get halfway to our 2050 goals. But we need commitments to our colleagues as well. Catherine Delhaye spoke about our commitment in terms of diversity earlier, in terms of the diversity in our teams, transparency, responsibility, accountability, ethics, professionalism and in terms of teamwork. So this is the range of commitments that we have taken for all of our stakeholders, like our customers, like I've said, and our colleagues as well. Valeo is a global company, a global leader, but we have French roots that we are extremely proud of, and we have a European foundation that we are also very proud of. We invest in France in innovative technologies for battery cooling systems, the new electrification activities for bicycles, triple clutching, 48 volts and high-performance lighting systems. The first research center for artificial intelligence is located in Paris, of course. But because we have French roots, we also have a European foundation. Robert earlier spoke about the European Investment Bank funding, EUR 600 million for research projects. The company, like I said in my introduction, since the 9th of March, 2021, is a European company, and we invest in facilities in Germany, the Czech Republic, Poland, Hungary, Romania. With a view to continuing to nourish this European Foundation, a few figures. France represents 14% of our colleagues, but Europe is 48%, which is very close to the weight of Europe in our turnover. In fact, all of the investments that we have done since 2009 represent EUR 1.75 billion in France and EUR 4.9 billion in Europe. And our R&D costs is very much still located in our French base and our European Foundation. We are a leader on these growing markets, thanks to our shift in dimension and our strong technological competence. We also have a position on markets that are growing quickly. Electric will be growing fivefold in the coming years, and it will represent a global turnover of EUR 160 billion on the market. The ADAS market will be growing threefold to represent a EUR 50 billion market. And visibility will double and will represent a global turnover of EUR 40 billion. So you can see that thanks to our shift in dimension, thanks to our investment in technological platforms that give us unparalleled technological prowess, we are able to reach this level on these growing markets. And it's this technological position on automotive sectors and mobility sectors that enable us to ensure growth that is both unequaled, unequally profitable and unequaled development. With this strategic and mobility-based presentation, I would like to ask the statutory auditors now to read out the most important passages of their reports. I will give the floor to Gonzague Senlis from Mazars who will speak on behalf of the auditors.

Ladies and gentlemen, the shareholders, good morning. On behalf of the statutory auditors of Valeo, I would like to present the reports that we have established for you for the ordinary and extraordinary general meetings, both here today. All of our reports were made available to you by the company before this meeting, so I will just be reading out the most important passages of these reports. Firstly, the 2 reports on the accounts for 2020. I would like to start by saying that the fundamental goal of our assignment is to get reasonable insurance in the lack of significant anomalies to certify the regularity, sincerity and the loyal image of consolidated accounts and annual accounts. Our checks took into account the specificities of Valeo in terms of its activities, organization, internal audit and accounting rules. This is in a complex and changing context linked to the COVID-19 pandemic. Our work was regularly shared with the management of the company, the Audit Committee and the Board of Directors. You can find our report on the consolidated accounts for 2020 on Page 393 in the document, the universal registration document. After our work, we have certified unreservedly the consolidated accounts for 2020 of the Valeo Group. We, in our report, have written down the key points of the audit. The 3 key points related to the depreciation tests of acquisition gaps, units generating cash flow, capitalized income and specific assets, the evolution of shares in the VESA company and assets and liabilities for specific quality. For each of these 3 key points, we have assessed the assumptions, the documentation and the calculation methods that were used for these estimates, as well as the financial information which corresponds to the consolidated financial balance sheets. We have also unreservedly certified the annual accounts for 2020 for Valeo SA, established following the French accounting principles. Our report can be found on Page 443 of the universal registration document. The key point of the annual accounts is about assessing the participation, securities and the risk provisions for subsidiaries. I will report on regulatory conventions. Our special report is short. It was -- we received no convention at pursuit was during that year. No convention that was authorized and concluded during the year that needed to be submitted to this meeting. We have informed of the execution of a convention that was already approved by the general meeting on the 25th of June, 2020 with a special report from the statutory auditors. This is a commitment to withdraw for the President effective from the 1st of January, 2020. It has the same ceilings and performance conditions as the previous system. For the extraordinary part of your general meeting, we have issued 4 reports relating to authorizations and delegations to be given to your Board of Directors to issue the shares and with the preferential right of subscription of shareholders proceeding to attributing free shares that exist or to be issued and reducing the capital by canceling shares. We don't have anything to say about these different operations. They are part of the conditions pursuant to the commerce code. Ladies and gentlemen, shareholders, thank you for listening.

Thank you very much, Mr. Senlis. Despite the exceptional circumstances, we wanted the general meeting to remain a fundamental element of shareholder democracy. Therefore, in order to encourage the participation of our shareholders, particularly you who are watching us, a system allowing you to ask questions remotely and live throughout this general meeting has been put in place. Unfortunately, no questions were asked. I spoke -- I hope that next year, when we are finally able to hold a general meeting in person, that you will be able to ask questions then. Since there are no questions, we will move now on to the resolution votes. This year, since the general meeting is being held in camera, there will be no vote during the meeting. We will, therefore, find out the votes cast for each of the resolutions. The full text of which can be found in the Notice of Meeting brochure, which is available on the Valeo website in the General Meeting section. The full text of each resolution will not be read out, as the secretary will indicate the number of each resolution before revealing the result of the vote. Eric Antoine, you have the floor.

Thank you, Chair. First resolution. I'll give you a bit of time just to find the subject of it. You can see on the screen. The result of the vote now. The result, please. This resolution is adopted at 99.99%. Second resolution. This resolution is adopted with 99.99%. Third resolution. This resolution, this is the third resolution. This is adopted with 99.24%. Fourth resolution. This resolution is adopted with 99.98%. Fifth resolution. This resolution is adopted at 92.03%. Sixth resolution. This resolution is adopted with 83.93%. Seventh resolution. This resolution is adopted with 91.8%. Eighth resolution. This resolution is adopted with 99.54%. Ninth resolution. This resolution is adopted with 99.09%. Tenth resolution. This resolution is adopted with 84.61%. 11th resolution. This resolution is adopted with 99.96%. 12th resolution. This resolution is adopted with 96.5%. 13th resolution. This resolution is adopted with 96.13%. 14th resolution. This resolution is adopted with 95.14%. 15th resolution. This resolution is adopted with 98.87%. 16th resolution. This resolution is adopted with 97.63%. 17th resolution. This resolution is adopted with 94.98%. 18th resolution. This resolution is adopted with 94.97%. 19th resolution. This resolution is adopted with 94.42%. 20th resolution. This resolution is adopted with 94.91%. 21st resolution. This resolution is adopted with 91.09%. 22nd resolution. This resolution is adopted with 99.85%. 23rd resolution. This resolution is adopted with 98.02%. 24th resolution. This resolution is adopted with 95.38%. 25th resolution. This resolution is adopted with 97.11%. 26th resolution. This resolution is adopted with 99.61%. 27th resolution. This resolution is adopted with 99.99%. Thank you for listening.

Thank you, Eric Antoine. There being no further business, I declare the meeting closed. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]