Valeo SE (FR) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen, dear shareholders, thank you for being with us for this general meeting of Valeo. This meeting is convened by the Board of Directors following the publication of the notice of the meeting in the Bulletin des Annonces Légales Obligatoires on March 30, 2022, and the notice of the meeting, the same bulletin and in legal gazette, [indiscernible] Parisienne, on April 28, 2022. This assembly will also be broadcast live on the company website. And as every year, it will also be -- recording will also be available on the general meeting page of our side. For better interactivity, we are also recording in order to -- so that you may see the speakers on the on the screen. Anyone who does not wish to be filmed should please indicate so to our hostesses. I am presiding this assembly as Chairman of the Board. Next to me, I have Christophe Perillat, who is CEO; Robert Charvier, CFO; Eric Antoine Fredette who is General Counsel and Secretary General. The members of the Board are also seated with us here in the first row of the room. The principles of statutory auditors are also present. And we also have the pleasure of having a few journalists with us today. I suggest now that we now move toward the composition of the bureau of this general meeting. May I remind you that the tellers are the 2 members of the assembly general with the highest number of votes and who have accepted these functions. And according to the Societe General list, the 2 with shareholders the highest number of votes in their name or by proxy who have indicated that they agree to act as tellers are BNP Paribas Asset Management and Amundi Asset Management. I would like to invite their respective representatives, Orsolya Gal and Olivier Desnos, to please come up and join us on the stage. The bureau thus defined, suggests that we designate Mr. Eric Antoine Fredette, to be Secretary of the Assembly. And I'm going to give him the floor so that he can indicate the quorum of the assembly and that he present the -- our schedule.

The Societe General has, as the centralizing institution in charge of organizing the meeting has informed the members of the bureau of the status of the provisional quorum. After examination of the officers of the meeting of the attendance sheet and certification of by them, it appears that the shareholders present, represented and having voted by correspondent or by vote access hold 160,085,792 shares of the 239,132,686 entitled to vote. The bureau has thus validated and voting methods by ballot that has also been validated. I hereby note according to the attendance sheet, which has been certified as accurate by the officers of the meeting, the meeting is attended by more than 1/4 of the shareholders entitled to vote and is thus duly constituted and made deliberate validly whether on ordinary or extraordinary basis. Your assembly has been called to statute on the agenda, which appears on the screen and which is also -- can also be found in the brochure which you have received. And so I suggest that we not read it out. I will be presenting the subject of each resolution when you are asked to vote upon them. The assembly documents are also available the shareholders on the desk of the meeting. And I'd also like to remind you that they are also available on the company website. And now I declare that all of the documents and information required by the regulations in force have been communicated or made available to shareholders in the matter and within the time limits provided by law.

Ladies and gentlemen, dear shareholders, I'd like to thank you for being with us today at the Valeo General Meeting. I am both very pleased and very moved to be here today. Very pleased because we are able to meet in person after 2 years, where we have been -- we were forced to organize our general meetings digitally because of COVID. And I'm very moved because this is the last general meeting of Valeo, which I will be presiding because I will be leaving this -- my chairmanship as soon as the new Chairman has been appointed and at the very latest, at the end of 2022. As you know, Christophe Perillat became CEO on 26 January 2022, and he will be presenting the group strategy and the move-up plan. And I will be coming back to the subject as will Michel on the succession plan. I am very proud of all we have achieved since March 20, 2009, when I arrived in Valeo. Over these past 13 years, we have worked together to transform Valeo deeply in the framework of a world where mobility is evolving constantly with new challenges to be met. And we have made Valeo stronger, more international, more agile, more innovative and more technological. And we have made Valeo a true leader of tomorrow's mobility. Since 2009, we have changed scales. Our sales have been increased by 2.5x. Our staff has gone from 45,000 to over 100,000 employees. Our market capitalization has multiplied fivefold, even though, of course, I believe that we should not be overly satisfied with that level. We have become much more international, particularly moving towards Asia, which now represents 1/3 of our sales, and China, which is our #1 country. We have diversified our client base, which is now made up of -- for 1/3 German clients and 1/3 Asian clients, including Japanese, Korean and Chinese. We have rationalized organization, which has enabled us to create major synergies, and we have rethought our strategy. Our achievements in the field of innovation have made us the #1 French company in terms of patent applications in the world in the past 3 years. And we're also a world leader in terms of electrification as well as -- which involves our thermal systems as well as our powertrain system as well as ADAS and our visibility systems. We have also built and developed after-sales activity, which works very well. We have made the fight against climate change the -- put it at the heart of our strategy and which aims to design and develop technologies which contribute to cleaner mobility. And everything is being done to meet that challenge. We began by implementing in February 2021 our CAP 50 plan, the goal of which as you know is to reach carbon neutrality by 2050. And we have gone -- we will go half the way by 2030. In the continuation of that strategy, we've also decided in keeping with the best practices to publish this year a climate report. In fact, we are among the top ranking automobile equipment manufacturers to publish that type of document. In March 2021, we integrated the CAC 40 ESG Index, which brings together 40 companies who have demonstrated the best practices the point of view of environmental, social and governance, which shows that we are once again recognized as a reference player in terms of sustainable development. We also are signatories to the business ambition for 1.5 degrees campaign. And we are the first European automobile equipment manufacturer to have issued a bond for EUR 700 million with an index -- with a sustainable development indicator index. In 2021, our extra financial performance was recognized by the main notation agencies as -- and is subject -- it is subject and maintained its noted by MSCI, AAA; CDP A-; Sustainalytics, low-risk; S&P Global Corporate Sustainable Assessment score, 72 of 100. The group is also a leader on the Dow Jones Sustainability Index for the sixth consecutive year. If we come back to the details of the year 2021, the year was characterized by a serious shortage in electronic components throughout the world, which hindered automotive production. And in this very difficult context, which put tremendous pressure on the entire supply chain, we were very resilient and continued to supply all of our customers without interruption while also controlling costs and maintaining solid financial performance and generally aligned with the perspectives which were announced at the beginning of 2021. These excellent results were obtained in -- despite the market circumstances, thanks to mobilization for all of our staff members. And I'd like to thank them once again here in front of you. Within this context, the Board of Directors decided to propose a payment of a dividend of EUR 0.35 for 2021. That resolution, the third resolution, will be subject to your approval during this assembly. In addition, we, of course, firmly condemn the invasion of Ukraine by the Russian army and the atrocities that have been committed. We have set up support and solidary measures for the 1,500 Ukrainians who work in our plants in Poland, Hungary and Romania. And our production -- our OEM production in Russia is suspended de facto. And our thoughts go to all those who have been affected by the dramatic situation in Ukraine. This war, of course, has an additional impact on our industry. The group is following with the greatest attention the development of the situation, and given that context, is doing its best to accompany its clients and staff members within the strict respect of the sanctions, which have been put in place by different governments. Catherine Delhaye, the Chief Ethics and Compliance Officer, will be presenting the organization and -- the group's organization and actions in terms of compliance. Despite this unfavorable macroeconomic environment, our group has shown once again its resilience with results in the first quarter, which are aligned with the 2022 prospectus as published by Valeo in last February. And I'll let Christophe Perillat and Robert Charvier go into more detail on our 2021 results and the results of the first quarter of 2022. And finally, as you know, after 13 years, extraordinary years, which I've spent with the groups, both as CEO and Board member, then Chairman and CEO and now as Chairman of the Board, this, as I said, is the last annual meeting of Valeo which I will be presiding. We launched a succession plan in 2019, and it should be completed by the end of this year. I'd like to underline the fact that this plan is going extremely satisfactorily, and our employees are onboard as are all members of the Board. And I would like to thank all of our staff and express my trust in them. And I also would like to thank Christophe Perillat, who is the natural leader to bring Valeo towards new horizons within the continuity of our strategy and our values by also adapting to tomorrow's mobility. This transition will also be completed by the nomination of a new Chairman. Valeo Board of Directors led by the government appointments and CSR Committee will be pursuing that selection. And I'll let Gilles Michel, Chairman of that committee, present it to you. Within the framework of these changes, the group can count on a Board which is a stable, balanced, gender balanced, made of various profiles which are complementary and bring several and various skills. We now have Bruno -- we'd like to ask you to renew the mandates for Bruno Bézard, Gilles Michel and Bpifrance Participations, one of our reference shareholders. These renewed mandates will enable the Board to continue to take advantage of their great expertise. And to conclude, I would like -- regarding this company governance, I can assure you that it is in very good shape. Within the assessment of the Board function, I can -- the conclusion was that every -- was unanimous. The Board functions satisfactory. Before I give the floor to Gilles Michel, I'd like to once again very sincerely thank all of you and all of the group employees for their commitment over these past 13 years and for you -- to you, dear holders, for your continued support for the Valeo strategy. Thank you very much. And now over to Gilles Michel.

Ladies and gentlemen, dear shareholders, it is as Chair of the Compensation Committee on the one hand and the Chair of the Governance Appointments and CSR Committee that I am here before you today. I am also Senior Director and have held that role in the past year. That role was created by your Board of Directors in order to bring additional guarantees to the good functioning and the governing balance within the schematic organized based on one chair and CEO. Your Board has concluded that role is no longer necessary since the 2 functions have been disbundled. The report of my -- on my diligence is for the year 2021, which figures in your company's universal registration document, include several points which I will answer here. First of all, there's the succession plan for general management, which we announced on 27 October 2020 and was completed 26, '22, with, on the one hand, the disassociation of the functions of Chairman and CEO. Secondly, the implementation -- the setup of Jacques Aschenbroich in the role of Chairman of the Board with specific assignments. And finally, the assignment of Christophe Perillat as CEO, your new CEO. And of course, we can already see the solid, serene and wise judgment at work, has enabled him to take on his functions by basing his work on the experience and the skills, which enables him to lead the transformation of the group, which has enabled to face the deep challenges in the automobile markets and the economic turbulences, which we are facing. Those -- that context represents risk but also great opportunities. Allow me to ensure you that this stage, which is, of course, is essential to the life of the group has gone remarkably well in compliance both with the terms and the spirit of the process which you're Board adopted, and I'm very pleased to announce that. As you know, Jacques Aschenbroich has accepted new commitments and the Orange General Meeting last week adopted resolutions which will enable him to become the Chairman of their Board. According to the commitments that he took, Jacques Aschenbroich will not remain Chairman of the Board for Valeo beyond the end of 2022. And your Board of administrations, led by the Committee for Governance Appointments and CSR has, therefore, accelerated the process -- the selection process. That process is well underway, and in due time, will lead to the conclusion of this final phase of the transition. On behalf of your Board and on behalf of myself, I would like to once again repeat what Jacques Aschenbroich said last January, in order to warmly thank and express our deep gratitude to him for his great work over the past 13 years at the head of this group. During that period, as we just heard, the group doubled in size. We've taken on 65,000 additional employees and market capitalization has been multiplied by 5. Under Jacques leadership, Valeo positioned itself as an innovative and technological group, which is now among the world leaders in the most promising segments of the automobile industry, such as ADAS systems and electrification. And we are thus at the heart of the major mobility revolution. We are very happy to be able to count on Jacques for another few months as the President -- as Chairman of the Board, and we would like to wish him every success in his new professional activities. And I believe that we can -- I can -- I believe, ladies and gentlemen, that this also represents the feelings of you as a general assembly. Thank you. As part of my functions as Senior Director, I participated in leading the government of your company by organizing after each Board meeting, meetings among independent directors, so-called Executive Directors in order to exchange openly with no specific agenda on all subjects related to your company, thereby enriching the content of the dialogue that your Board has held with its company management. I'd also like to remember that all members of the Board are independent, except for Jacques Aschenbroich and Christophe Perillat and the 2 directors representing the employees, Grzegorz Szelag and Eric Poton. I can, therefore, assure you that the governance of your company is well armed to face the challenges of the future. In terms of social responsibility and sustainable development, those fields are now specifically the responsibility of Ulrike Steinhorst, the director in charge of CSR within our Board. And I have been following the actions and complements of your group. The main examples of which will be -- will have already been mentioned by Jacques. And I'd just like to underline the very decided, proactive, exemplary approach of Valeo. And our group has been rewarded several times and we have also had the unquestionable support of your Board of Directors. Now a couple of comments on the compensation of the Board members as Chairman of the Compensation Committee. On the one hand, the variable compensation for the CEO for 2022 will be subject to the same performance criteria as was the case in 2021 for the Chairman and CEO with a single change, but a notable change. Given the importance of CSR issues in the group strategy, your Board of Directors has decided to add an environmental criteria relative to the reduction of CO2 emissions to the quality criteria that have been used up until now. In addition, concerning the performance actions attributed in 2022, the drops and the great tremendous volatility of the Valeo shares has led -- due to the Russian-Ukrainian conflict, has led the Board of Directors to decide to calculate the stock -- use stock exchange price of the 60 last days to calculate the number of performance shares attributed for the CEO rather than the 20 less days. And that results in a reduced number of shares by 26%. Thank you very much. Thank you for your attention.

Thank you, Gilles. Now I'd like to hand the floor over to Thierry Moulonguet, who's the Chairman for the Audit and Risks Committee.

Thank you, Mr. Chairman. Good afternoon, ladies and gentlemen. At the end of the fiscal year 2021, the Audit and Risks Committee was made up of 5 members, all independent with regards to the bylaws of the Board. Therefore, the company meets the provisions of the AFEP-MEDEF Code related to the share of independent directors on the Audit and Risks Committee. And all of the current members of the committee have because of their training and professional experience accounting and financial skills that are far reaching and met 5x last year with an attendance rate close to 100%. This committee is quite a broad remit that covers, in particular, the monitoring of control of accounts, accounting methods, significant off-balance sheet risks and liabilities and the accounting and financial treatment of acquisition and disposal operations over EUR 50 million. This remit also extends to the monitoring of the effectiveness of the risks management and internal control systems, including in terms of compliance as well as the work done by internal audit. In order to carry out its mission, the Audit and Risks Committee is mostly in contact with general management, the financial departments, the legal departments and the ethics and compliance department as well as with the external auditors of the company whom I'd like to greet here. More specifically, in 2021, the committee gave specific attention to efforts to adapt to the health crisis context, the inflationary trend on the market as well as disruptions in global automotive production. We heard, in particular, [ Martin Lebrar ], Head of Accounting; Anita Leibenguth, Head of Financing and Treasury on the group's financing policy; Jean-Louis Barsac, Tax Manager on the group's tax policy; Stéphane Bollinger, Head of Insurance on the group's insurance program; as well as Lionel Monteiller, Head of Internal Audit, Internal Control and Risk Management. In this regard, the group's control environment was covered in 2021 by an external assessment mission by the IFACI, the French Institute for Audit and Internal Control, and the main recommendations of this study were shared and discussed by its General Manager in the committee. On all these matters of internal control and audit, I'd like to say that Jacques Aschenbroich played a major role in giving internal audit and the control set up all necessary resources to carry out their mission. Members of the committee agreed to suggest that the Board reappoints the 2 current statutory auditors for a new term of 6 years, but pointing out that one of the -- that a new auditor will have to be chosen at the end of the next term. The Board also looked at the matters related to the governance of information systems with Christophe Aubey, Head of Information Systems about the governance of Information Systems. This examination was based on the specific audit done by the Accenture firm, which confirms the right level of maturity for Valeo information systems. Cybersecurity was reviewed with Florent Halbot, Chief Information Security Officer for the group, in particular, as regards the recruitment plan for people devoted to this activity, which is now essential as well as the deployment plan for new incident detection tools. The Head of Ethics and Compliance, Catherine Delhaye, and Head of Audit and Internal Control presented to the Board the risk mapping for corruption risk for 2021 and the associated action plans. Moreover, the committees looked at specifically the group's financing policy and the free cash flow generation and debt control levers put in place by the group, making sure that liquidity management is adequate for the pandemic context. More than ever, cash flow monitoring is at the top of the agenda of the Audit and Risks Committee. And lastly, the group paid specific attention to the compliance of the project and R&D processes. The findings of several specific audits were presented by the Head of Internal Audit and action plans that could remedy the shortcomings observed were covered by a detailed presentation made by the CEO and the Head of R&D. Many more topics were, of course, handled by the Audit and Risk Committee. And you'll have more details about them in the universal registration document that was given to you. Overall, as Head of this committee, I can confirm that the work of the Audit and Risk Committee was aligned with the goals that were set for the fiscal year that your company has efficient and professional teams and that the general principles of ethics and compliance of site protection and risk management meet high standards. What's more, never -- at no point was the Audit and Risks Committee led to issue reservations about the statutory and consolidated accounts or on the half interim documents that were presented to it. Thank you for your attention.

Thank you, Thierry. Dear shareholders, I'd like to remind you that detailed items of the accounts for 2021 and the management report by the Board of Directors and the reports by the statutory auditors are in the universal registration document for Valeo, which is available in full on the company's website. I shall, therefore, suggest as usual, to allow the Board and the external auditors not to read their reports in full. The accounts for the fiscal year 2021 and the sales for the first quarter 2022 will now be presented by Robert Charvier, CFO of the company. Over to you, Robert.

Thank you, Mr. Chairman. Ladies and gentlemen, dear shareholders, as Jacques Aschenbroich said in his introductory comments, the fiscal year 2021 was marked for the whole automotive sector by a severe shortage of electronic components. And I think that as part of this environment, Valeo was resilient as regards, in particular, its ability to preserve its profitability. After a year 2020 marked by COVID-19, the year 2021 was strongly impacted by this electronic component shortage. And you can see that the shortage reflected -- resulted in automotive production of EUR 77.2 million, 3% higher than the production for the year 2020. And you can see that compared to the year 2019, which was the last normal year in terms of output before the COVID crisis, you can see that there's a shortfall of roughly 12 million vehicles. What's more, these tensions related to the semiconductor crisis also resulted into strong volatility in our customers' programs with order cancellations, which happened very often at the last minute, in which made it very difficult to adapt our industrial plans, to adapt the cost on our industrial plants to adapt them to the business, which was -- which fluctuated wildly. And as you can see on the second figure, we, as early as the beginning of the year 2021, we started facing a very strong increase in commodity prices. Here, I'm thinking of the increase in steel and aluminum and copper prices, but also for resins, which are so many commodities which are used by all of our business units. One noteworthy thing, the strong increase in the replacement activity, so after sales activity on which Valeo could build, and I'll come back to that in a few minutes. In such an environment, very quickly, the group in 2021 set itself 5 priorities. The first priority was, of course, to secure deliveries for our customers in spite of strong tensions on the supply of electronic components. And as Jacques Aschenbroich said, none of Valeo's customers had to deploy production stoppages because of Valeo because of the fact that Valeo would have been unable to deliver what had been ordered. So I think that when you look at, generally, what the automotive sector had to go through, it is a real achievement which allowed Valeo to stand out. The second priority was to ensure a high level of operating efficiency on all our production sites by adapting as much as we could our cost to the level of activity. And I'll come back to that issue when I'll comment on the results for the year 2021. Then thirdly, we kept our research and investment costs under tight control. And if you look at the accounts, you can see that our research costs declined by 11% compared to the year 2020. And our physical investments, our capital expenditure also declined by 11% compared to 2020. And all of that was absolutely crucial to preserve our free cash flow generation. In spite of inventory increases, we were forced to increase our inventory by roughly EUR 400 million compared to the end of 2020 just to make sure that we could guarantee continuity and deliveries to our customers and the last profitability was to build on our good level of business on the aftermarket and so that we could reap the benefits of the aftermarket growth momentum. In terms of sales, you can see that our like-for-like sales grew by 6% compared to the year 2020. The 6% increase covers, in fact, 2 very different realities. Firstly, a 4% increase in our original equipment sales, still like-for-like and at constant ForEx, which was an overperformance compared to the global automotive output for the year 2021 by 2 percentage points. And you can see that at the same time, our business on the aftermarket grew by 22%, so like-for-like and at constant ForEx to reach a level of EUR 2.068 billion, EUR 2.068 billion. On the order intake basis based on Valeo's scope, excluding Valeo Siemens, our order intake amounted to EUR 21 billion. This is a significant increase compared to the EUR 18.9 billion recorded for 2020. And you can see that when you calculate the ratio in order intake compared to the original equipment sales, you can see that the ratio increased in 2021 and stands at 1.5x the OEM sales. More interestingly, if you look at the characteristics of these orders, you can see that in 2021, the group kept building on significant efforts that were initiated from the years 2016, '17 onwards to develop new technologies, to develop new products. And you can see that 45% of new orders for 2021 were the result of products that did not exist 3 years before. That's what we call the innovation rate. Second very important thing, when it comes to the THS business units, 50% of orders are for electric vehicles, for THS. And lastly, last year, we made a commitment at the level of Valeo Siemens to have EUR 4 billion in order intake for the period 2021, '22. And in 2021, Valeo Siemens was able to record EUR 1.1 billion in order intake for all of these technologies, be they electric motor technologies or power electronics technologies or onboard battery charger technology. And I'll come back to that in a minute, but now we are very confident in the Valeo Group's ability to reach in the high-voltage business, so for powertrain electrification that we can reach EUR 4 billion in orders, the commitment that we made for Valeo Siemens. If you look at key figures in the P&L, you can see that our sales grew nominally. So before controlling for foreign exchange, the growth was 5%. And at the same time, our level of EBITDA grew by 53% to stand at EUR 2.3 billion, 13.4% of sales. Please note that this level of 13.4% is exactly in line with the guidance that the group gave in February 2021. Throughout the year 2021, we were able to keep our guidance. We were not able to -- we were not forced to revise our guidance because of the degradation of the economic environments in which we operated throughout 2021. What's more, the operating margin was 4%. And if you look at the group operating income after the share of Valeo Siemens sales, this is an operating margin of 2.6% of sales, EUR 456 million. In total, the net income was EUR 175 million, 1% of sales. Free cash flow at EUR 292 million benefited on the one hand of extremely rigorous management of CapEx and R&D costs. I told you that compared to the year 2020, our CapEx declined last year by 11% and R&D costs also declined by 11%, thanks to the technological platforms that were put in place in the years 2019 and '20, which allowed us to considerably improve the efficiency of our R&D research. This level of free cash flow was achieved in spite of a very strong increase in our inventory because our inventory, except tooling, increased by over EUR 400 million between 31st December 2021 and 31st December 2020. Once again, it was an absolutely necessary decision in order to allow the group to deliver to its customers. Of course, all of the organization's energy is now focused on reversing that trend and coming back to a level of working capital and a level of inventory, which is a lot more nominal, in line with what the group can usually do when we are dealing with a more normal and more recurring level of business. Now when it comes to our balance sheet structure, you can see that we were able, over the year 2021, to reduce what is called the leverage ratio, which compares the level of debt with that of EBITDA. You can see that at the end of the year 2021, our leverage ratio was 1.34 versus 1.96 at the end of the year 2020. It is, therefore, a quite significant reduction which was necessary in order to strengthen our balance sheet structure. Now if you look at the debt profile, you can see that with average debt, with the maturity and average debt maturity of 3.1 years, we also have a debt profile which is very balanced, because on the years '22 to '26, the level of repayments is fairly homogenous, and it will be between EUR 500 million and EUR 700 million, depending on the vintages. Gilles Michel reminded you of that in his report, as Thierry Moulonguet did as well, in a very uncertain environment, in a very volatile environment, we gave priority to liquidity in the balance sheet. At the end of the year 2021, the group had cash of EUR 2.4 million. And to that, we added undrawn credit lines for EUR 1.7 billion. These credit lines were renegotiated in 2021. And so on average, at the end of the year, they had an average duration of 4.6 years. And add to that EUR 300 million in credit lines negotiated in 2020 with the European Investment Bank, a credit line that was drawn in February 2022. In total, we are proposing via resolution #3 to approve a dividend of EUR 0.35 per share, which is, in fact, a EUR 0.05 increase compared to the dividend paid out in 2020. And this EUR 0.35 have a payout ratio of 48%. Now if you take a very quick look at the developments for the group in the first quarter of 2022. First of all, I'd like to remind you of 2 very important things which happened in February. On the 10th of February, this year, Valeo announced that it signed a deal with Siemens to acquire and take over Siemens' shares in Valeo Siemens. This acquisition will be effective at the beginning of July. And on the 25th of February, we presented the move-up plan as well as the group's financial goals for 2025. Still regarding the first quarter, we were still faced with an economic environment, which was very difficult and which is, in fact, an extension of what we went through throughout the year 2020. I'll remind you that this environment was marked by the continuation of the semiconductor shortage. Although here and there, we are beginning to see improvements, there are still a number of family of electronic components for which the market is still very, very tight. The environment was also marked by the consequences of the Russian-Ukrainian conflict, the consequences of which were a disruption in production for our customers mostly in Europe. The environment was also marked by an increase in lockdowns in China, which also carried over into the month of April. In such an environment, also marked by the increasing commodity prices, Valeo was able to record a 5 percentage point overperformance compared to the market output. Now if you take a very quick look at the consequences of the acquisition of Siemens' shares in our joint venture, Valeo Siemens, the #1 consequence is that the group's financial debt will increase by EUR 741 million from the beginning of July onwards. As I was saying, we are going to take over an entity about which we are very confident that it will be able to deliver EUR 4 billion in order intake for the period 2021, '22. And we'll also take over an entity which accounts for 1,600 R&D engineers. Over the previous years, it invested over EUR 100 million in R&D infrastructure, over EUR 350 million in the creation of an industrial footprint to build e-motors and power electronics, and it has 2,000 patents. And I would like to point out also that Valeo Siemens has a customer portfolio of 21 automotive makers. More importantly, we -- from the moment that we'll take control of Valeo Siemens, we pledge to have EUR 120 million in synergies by 2025, keeping in mind that our ambition is to have over 50% of these synergies from the year 2023 onwards. Now coming back to -- well, very quickly to first quarter sales, you can see that Valeo was able to outperform global output by 5 percentage points with overperformance levels that were quite significant in Europe, with a 10% outperformance. And in China, we outstripped the market by 6 points. When we published our sales figures on 26th April, we confirmed the guidance that we explained on 25 February for the year 2022. And I remind you that this guidance is set on a production level between 79.9 million vehicles and 82.5 million vehicles. And we are confident in our ability to -- well, in spite of all the disruptions in the automotive industry environment, we are confident in our ability to deliver an EBITDA margin between 11.8% and 12.3% and an operating margin ranging from 3.2% to 3.7%. And last but not least, of course, our goal is to have EUR 320 million in free cash flow for the year 2022. And there also, we are confident in our ability to deliver on the guidance. So ladies and gentlemen, dear shareholders, these are the main things that I wanted to highlight regarding the results of your company for the year 2021 and the beginning of 2022. Thank you for your attention.

Thank you very much, Robert. I will now give the floor to Catherine Delhaye, our Head of Ethics and Compliance, who is going to show you the group's organization and actions in terms of compliance. Over to you, Catherine.

Thank you, Mr. Chairman. Ladies and gentlemen, dear shareholders, good afternoon. Allow me to present to you the compliance program for the Valeo Group. So compliance is, in fact, a legal risk management technique based on the identification of prevention and remediation of a number of risks selected by company based on their risk profiles, but also depending on regulation. Coming from the U.S., compliance was initially focused on anticorruption. But over time, it was extended to other types of risks, such as the fight against anticompetitive practices or economic sanctions that we hear a lot about today. It was also extended geographically. Because from the U.S., we've now moved to France, for instance, with the French Anticorruption Provisions, the [ Sapin ] law, forcing us to put in place compliance programs. But it also applies to Brazil, China, Russia and many, many countries which all recognize that this technique or even this risk management methodology pays off. The ethics and compliance program for Valeo is therefore international in nature and it benefits from these provisions based on a Code of Ethics which reflects values of integrity and respect for Valeo values and imposed to all Valeo employees and also based on a good code of conduct for business partners, which extends to the ecosystem, all of these principles and values. Valeo's ethics and compliance policy applies to anticorruption, anticompetitive practices, economic sanctions and export controls as well as protection of personal data. It has global reach. It complies with local legal and regulatory demand. It's based on risk mapping exercise to understand the risks that we're exposed to. And we reply to it with strict policies and procedures to allow for exceptions, audit and control procedures, all that to constantly improve ourselves. With its worldwide reach is also a whistleblowing system in this program, which is open to employees and stakeholders, so that those that have something to say about our policy and the way we manage things can express themselves and see their claims and concerns handled. Of course, this program is monitored by the Board of Directors, general management and the whole of the operating committee. It is also put in place by the Ethics and Compliance Department with support for very granular global deployments with the help of compliance champions or data protection champions, which are so many driving [indiscernible] who spread the word about our program so that everybody can make them their own. This rollout is also based on training and awareness-raising programs, which are very in-depth, very detailed. Generic campaigns so that we can share with our employees about our policies, guidance and instructions. And also more targeted, more detailed training program so that those that have understood the principles can apply them operationally as part of their own concerns in their daily work. By way of example, on average, we train 40,000 people a year with e-learning. And for 2021, we used remote training techniques, but we had 3,000 people trained in-person but remotely for these targeted training sessions so that operational people can understand our risks and make our policies their own. And that's contributed to strengthening a culture of integrity, which is a strong characteristic for Valeo. In 2022, our ethics and compliance policy was very diverse. It is international. And it is characterized by real understanding by our employees of our business assets. All those who were involved in these programs, they understand our ethics and they believe that these rules are explicit and are translated at least in 15 languages, sometimes in 18 languages. They are illustrated and sometimes have instruction manuals so that these rules and concepts are really rooted in daily practice, although they may seem abstract. Methods and processes were adapted to take also on board compliance control points in order to avoid adding levels of bureaucracy to well-established processes. So we try to embed them in the core of the Valeo machine. And these programs, tools and recommendations are regularly updated based on the risk mapping exercise that we carry out, but also with whistle blowing alarms. As I said, it's a continuous improvement process for risk management. And our whistleblower line, which was created in 2014, as you noticed, we didn't wait for European or French regulations to put that in place. And so these alerts are deeply investigated and we protect confidentiality and whistleblower rights. And last but not least, compliance is part and parcel of the assessment of our executives and employees. For some of them, they have specific performance indicators. And for the others, their general integrity and behavior and ethics are assessed. All in all, based on risk analysis, anticipation, prevention, methods, processes and tools, action -- corrective action plans, training and continuous improvement, of course, compliance is part and parcel of Valeo's DNA. Compliance is part of the standard operating mode for Valeo as it is [indiscernible] culture. With this DNA, we're probably able to respond quickly and react agilely when there is new regulation that is put in place and so that when we need to respond to the set of economic sanctions against Russia or imposed by Russia because they had their own sanctions as well. Thank you.

Thank you, Catherine. I will now give the floor to Christophe Perillat, who will tell us more about the group strategy.

Thank you, Mr. Chairman. Dear shareholders, during an investor meeting on the 25th of February 2022, it was my honor to present the strategy and financial goals for Valeo. So here, I will give you a summary today. Valeo's strategy is extremely simple. Cars are becoming electric and cars are becoming safer. In fact, the aim -- well, it's about the deepest transformation of the automotive industry ever since it was born. This transformation is moving towards electric but also autonomous mobility. This transformation creates 2 markets for Valeo, 2 extraordinary markets, 2 very attractive markets, 2 markets that I would call hypergrowth markets. The first market is that of electrification. It's an accelerating market. And this is a market which will grow 6.5-fold over the period 2021-2035. And it will reach over EUR 200 billion. The second market that I'll speak about is that of driver assistance systems, and it will grow eightfold over the same period to reach over EUR 120 billion. This transformation that we can see happening goes hand in hand with another 2 very significant changes for Valeo's business. Since cars are electric, the space freed up at the front of the car with the dilution of cooling grills allows carmaker designers to strengthen the car's signature with more lighting. This is what I called lighting everywhere, lighting around the car and inside the car. And finally, because driver assist free up the driver from this mental load and all this work, life on board can be reinvented. And you'll see that later we have a lot of technologies to reinvent life on board. I was saying that this is the biggest, most dramatic or most extraordinary transformation in our industry ever since its beginning. Everything is changing. Everything is going to change in the next 20 -- next 15 years. Products and technologies are going to change. Value chains as well are going to change. And your company has prepared for that. Your company has been preparing for a very long time for these transformations for over 10 years. And our 4 business units are now ideally positioned to leverage these very strongly growing markets, thanks to a product offering that you can see on the right of the screen, a product offering that is very innovative, a product offering which is high performance and it is also highly competitive. So I'd like to start with electrification, the electrification of mobility. Our CFO said that on 9th February, your company signed an agreement with Siemens, a major agreement meant to take on shares -- Siemens shares as part of our Valeo Siemens joint venture. And that joint venture is specialized on the micro -- the electronic systems. After 1,600 [ patents ], 2,000 engineers and 8 plants have been working on this project, and we now have a company Valeo Siemens eAutomotive, which is a tremendous asset for Valeo. And what this will be the case once it is integrated within Valeo, which would be the case on generally first, and that partnership will become even more innovative. This partnership was signed and developed with STMicroelectronics and Renault for the motors. We want Siemens to be even more competitive, thanks to this partnership. By acquiring shares in Siemens and integrating Valeo Siemens within Valeo, we will be able to seize the potential of a market which is accelerating quickly. But electrification is not just about motors. Electrification is about transforming the thermal systems of vehicle. Let me explain that. A battery must be cooled down. The calories must be evacuated. And the faster you charge your battery, the faster you have to extract those calories. When it's cold outside, for example when it's minus 7 degrees Celsius, you can lose up to 40% of your range by heating the interior of a car and no one wants to lose 40% of the range. So the most efficient solution to that problem consists in equipping the vehicle with a heat pump. And that's what Valeo has developed and is manufacturing. So you can see that the thermal system of an electric vehicle is much more complex than that of a thermal engine vehicle. And the content is multiplied by 2.5 -- the content of the vehicle mechanics is multiplied by 2.5x. So that represents tremendous growth potential for Valeo. So tomorrow's cars are more electric, but also safer, with more driving assistance and more autonomous. In 2030, thanks to regulations, safety-related regulations, and thanks to the NCAP classifications and pushed by innovation, 1/2 of the vehicles on the road will have a Level 2 autonomy level. In other words, much more autonomous than today. And 1/3 of the vehicles will have a Level 3 autonomy. In other words, autonomy, which will enable you to delegate driving in some circumstances. Our technology team is a team that we're very proud of. We have a drive pilot level 3, which is the first Level 3 vehicle to be sold in Europe. This is the new Class S Mercedes and the EQS Mercedes which are now in the market. This is current -- a growing market and we have a very comprehensive offer. Half of our engineers are software engineers, and we're developing sensors, many, many sensors, many types of sensors. Over the past 30 years, we have delivered to the -- 1.5 billion sensors to the market. And in the next 5 years, we will be delivering the same number, 1.5 billion sensors. We have become a reference in terms of validation on ADAS systems. And our competency is recognized by clients and by car manufacturers, and it's based on 2 types of validations, virtual validation with a database of 40 petabytes of data which are registered and used for tests constantly to make sure that -- and we use 25 -- 250 excuse me, 250 test banks, virtual test banks. But of course, we also needed to go through physical validation. And when the world -- throughout the world, we have 9 test tracks that help us to validate our systems physically. When a driver is assisted in certain tasks, then the driver can reinvent life on board. What are the technologies and the products that I'm talking about? Well, I'm talking about heads-up screening, augmented reality on your windshield, talking about intelligent services, interior cameras and connectivity, connected vehicle. These are all new functions, electronic functions that correspond to the group's DNA and will be drivers of our future sales and profitability. And the fourth transformation in our industry concerns lighting. As I said, lighting everywhere, around the outside of the car and within the interior of the car. You may think that lighting is simple. Well, that's because when you see a car's lights, the object may sound like -- may look like a sculpture. Might look a simple design object. But in fact, it's a very -- it's a concentration of technology and it's accessible to very few players in the world and we are one of the leaders. It includes style, simulation, processes, very complex -- complex processes, software, electronics, optics and many other processes. With our plan, we've decided to focus on creating value. As I said, Valeo is in a tremendous position to take the best advantage of this fundamental transformation, this extraordinary transformation in our industry. Within this context, we will be a model of growth, and we have set some very demanding goals for 2025. We want our sales to reach EUR 25.5 billion. And that will prove your company's overperformance 5% above the industry. And that growth will be -- will lead to 14.5% EBITDA and 6.5% EBIT. The cash -- the free cash flow will be between -- positioned between EUR 800 million and EUR 1 billion in 2025. And during that 2020-2025 move-up period, we will be including EUR 500 million of investment. This chart that you see on the screen is a reminder of our main financial goals that we adopted on 25 February 2022. So our goal -- our market will be in a hyper growth period after 2025 and we expect sales in 2030 to represent over EUR 40 billion. This is very ambitious. And on behalf of my -- the Valeo teams, it's my honor to present that. And this development will be sustainable. You know how very demanding our commitments are. And those commitments are well recognized, and we have become a reference in the industry in terms of sustainable development. All of our equipments, all of our action plans will be detailed and described in detail in our first climate report and you can be assured of our absolute determination and the determination of all of our teams to make your company a reference in terms of sustainable development. I'd like to thank you for your attention, and I'd like to thank you for your support.

Thank you, Christophe. Now I'd like Mr. [indiscernible] from Ernst & Young to come up and give us the most important points of the [indiscernible].

Ladies and gentlemen, on behalf of the [indiscernible] to give you a summary of the various reports that we prepared for your attention for the ordinary general meeting taking place today. Indeed, all of our reports were made available by the company prior to this general meeting. We will limit our presentation to the highlights of the reports. Firstly, regarding our 2 reports on the accounts for the fiscal year 2021. We'll remind you that the fundamental goal of our mission is to get reasonable assurances on the absence of significant anomalies and therefore signify that the accounts are true and accurate, both the consolidated and the statutory accounts. Our controls included the specificities of Valeo in its business, its organization, its internal control and accounting rules, any complex context and a changing context due partly because of the pandemic-related global crisis. Our work was regularly presented to the management of the company and its Audit Committee, as Thierry Moulonguet reminded us of its Audit and Risk Committee, but also the Board of Directors. Our report on the consolidated accounts for the fiscal year 2021 for the Valeo Group is captured on Page 409 to 414 of the French version of the URD 2021 after our audit work according to the professional standards applicable in France. We unreservedly certified the consolidated accounts for 2021. In our report, we gave the key audit points which applied to goodwill impairment tests, cash-generating units, capitalized development costs and specific fixed assets. The second audit point was the assessment of the net asset share in the VSeA joint venture and also assets and liabilities related to specific quality risks. For each of these 3 audit points, we looked at the hypothesis, the documentation, the calculation method used for these assessments as well as the financial information in the consolidated financial statements. We also unreservedly certified the statutory accounts for 2021 for Valeo SE based on French accounting standards. Our report on the statutory accounts is on Page 438 to 441 of the French version of the URD. The key audit points for the statutory accounts on the valuation of participatory shares and associated claims and also provisions for risks on subsidiaries. What's more, this year, we also specifically checked that the presentation of financial statements in the annual report complied with the European single template. Finally, for our report on regulated third-party agreements, our special report from Page 442 of the French version of the URD onwards, we say that for the year 2021, we were not made aware of any authorized convention signed during the past fiscal year or in previous fiscal years that would have continued in the year 2021. Ladies and gentlemen, dear shareholders, thank you for your careful attention, and thank you for the trust that you gave us at the end of our current term. Hoping that you will renew this trust for the forthcoming mandates. Thank you very much.

Thank you, Jean-Francois. Dear shareholders, thank you for your attention. [Break]

To vote on resolutions and general meeting, a tablet was given to you. It is strictly personal and can only be used during the current general meeting. When the votes on the resolution is announced, the voting window will display automatically on your tablet even if it's in sleep mode. There's nothing simpler than voting procedure. Press the button for your choice, yes, abstain, no. Press okay to validate your choice before the vote is closed. Once your vote is validated, you can no longer change it. Please return your tablet when you exit the room. Well, I'll inform that the number of shares finally represented on the attendance list on behalf of our shareholders present or represented or who have voted by mail or electronically exceeds 66.95% of shares with voting rights. So we will now move on to a vote on resolutions. First resolution. Approval of the parent company financial statements for the financial year-ended December 31, 2021. The vote is open. [Voting]

The vote is closed. The resolution is approved. Resolution 2. Approval of the consolidated financial statements for the financial year-ended December 31, 2021. The vote is open. [Voting]

The vote is closed. The resolution is approved. Third resolution. Allocation of earnings for the financial year-ended December 31, 2021 and setting of the dividend at EUR 0.35 per share. The vote is open. [Voting]

The vote is closed. The resolution is approved. Resolution 4. Approval of agreements. The vote is open. [Voting]

The vote is closed. The resolution is approved. Resolution 5. Reappointment of Bruno Bezard's term of office as Director for a period of 4 years. The vote is open. [Voting]

The vote is closed. The resolution is approved. Congratulations. Resolution 6. Reappointments of Bpifrance Participations' as Director for a term of 4 years. The vote is open. [Voting]

The vote is closed. The resolution is approved. Congratulations. Resolution 7. Reappointment of Gilles Michel as Director for a duration of 4 years. The vote is open. [Voting]

The vote is closed. The resolution is approved. Congratulations. Resolution 8, approval of the information relating to the compensation paid during, or allocated in respect of the financial year-ended December 31, 2021 to the corporate officers. The vote is open. [Voting]

The vote is closed. The resolution is approved. Resolution 9. Approval of the compensation components paid during, or allocated in respect of the financial year-ended December 31, 2021, to the Chairman and Chief Executive Officer. The vote is open. [Voting]

The vote is closed. The resolution is approved. Resolution 10. Approval of the compensation components paid during, or allocated in respect of the financial year-ended December 31, 2021, to the Deputy Chief Executive Officer for the period from May 26, 2021 to December 31, 2021. The vote is open. [Voting]

The vote is closed. The resolution is approved. Resolution 11. Approval of the compensation policy applicable to the directors in respect of the financial year 2022. The vote is open. [Voting]

The vote is closed. The resolution is adopted. 12th resolution. Approval of the compensation policy applicable to Jacques Aschenbroich as Chairman and Chief Executive for January 1 to January 26, 2022. The vote is open. [Voting]

The vote is closed. The resolution is adopted. Resolution 13. Approval of the compensation policy applicable for Christophe Perillat for the period of 2022. The vote is open. [Voting]

The vote is closed. The resolution is adopted. Resolution 14. Renewal of Ernst & Young as principal statutory auditors. The vote is open. [Voting]

The vote is closed. The resolution is adopted. Resolution 15. Renewal of Mazars' term of office as principal statutory auditors. The vote is open. [Voting]

The vote is closed. The resolution is adopted. Resolution 16, ratification of the transfer of the registered head office. The vote is open. [Voting]

The vote is closed. The resolution is adopted. Resolution 17. Authorization for the Board of Directors to carry out transactions in shares issued by the company non-applicable during a public takeover offer for the 18-month period. The vote is open. [Voting]

The vote is closed. The resolution is adopted. Resolution 18, ratification of the amendment to Article 20 of the articles of association related to rules governing the appointment of alternate statutory auditors. The vote is open. [Voting]

The vote is closed. The resolution is adopted. Resolution 19. Powers to complete formalities for the holding of the general meeting. The vote is open. [Voting]

The vote is closed. The resolution is adopted. So this brings us to the end of the resolutions to be voted. Thank you very much for your attention. The agenda has been completed, and I declare this session to be closed. Thank you.