Evolution of sales

Valeo's consolidated sales totaled 9.8 billion euros in 2002, down by 4.2% over 2001. The impact of disposals was -2.4%, and currency variations -1.4%.

Excluding these effects, Group sales were down by 0.4% versus 2001:

	in Europe, sales decreased by 2%, reflecting a 2% fall in European automotive output;
	in North America, sales grew by 1%, while automotive output increased by 6%. Uncertainties related to the subsidiary, Valeo Electrical Systems Inc. up until September, weighed on Valeo's activity in North America;
	in Asia, Valeo's ongoing commitment generated 17% growth in a market which grew by 10%;
	in South America, sales were down by 2%, while the market fell by 5%, notably due to economic difficulties in Argentina.

Industrial strategy and improvement in results

In 2002, the Group pursued the implementation of programs aimed at improving its industrial cost base and reinforcing its competitive position, notably:

	the rationalization of its industrial base: closure of seven production sites, disposal of one site and the redeployment of capacity to lower production cost areas (five plants opened);
	the optimization of the logistics function: decrease in the number of carriers (over 50% in a year) and the signing of framework contracts with selected suppliers;
	the reinforcement of supplier integration: reduction in the number of suppliers from 3,600 to less than 3,000 in a year and the strengthening of relationships with the best ones. Valeo pursued the development of purchasing on-line with volumes totaling 1 billion euros in 2002.
	the systematic implementation of the standardization of machinery, components and industrial processes.

These actions made a significant contribution to the improvement in margins:

	in a difficult economic environment, 4th quarter 2002 figures confirmed the Group's turnaround with the operating margin reaching 6.0%;
	for the full year, the operating margin stood at 5.0% up by 1.2 points compared with 2001;
	net income is positive again after the losses recorded in 2001.

Improvement in financial structure

Valeo's aforementioned industrial efficiency programs resulted in the significant optimization of the production tool, a reduction in working capital requirements and controlled capital expenditure:

	the capital turnover ratio showed a marked increase with sales representing 3.8 times industrial assets at end 2002 against 3.3 times at end 2001;
	the 45% decrease in working capital requirements over the year is the result of a sharp reduction in inventory (-17%) to a record historic low level.

The Group reduced its net indebtedness to 564 million euros at end 2002 (versus 648 million euros at end 2001), while proceeding with a dividend payment to shareholders (58 million euros) and the cancellation of shares (51 million euros). At December 31st 2002, the debt-to-equity ratio improved by 2% to stand at 27% compared with 29% at end 2001.

Business growth

Valeo's commercial successes, with the introduction of new model ranges by automakers and the successful marketing of numerous high technology content innovative products, led to an increase in order intake to 1.2 times annual sales compared with 1.0 times in 2001.

Several important contracts awarded to Valeo by European and American automakers illustrate this technological effort: combined thermal systems, starter-alternators, park assist systems with park slot measurement, intelligent lighting, Double Xenon headlamps, etc.

Dividend

Noting the recovery in the Group's results the Management and Supervisory Boards will propose to the next Annual General Meeting of Shareholders the payment of a dividend of 1 euro per share, that is an increase of 43% compared with the dividend paid in 2002. The implied yield, including a tax credit of 50%, exceeds 5.5% (on the basis of the share price at beginning of February 2003).

Annual General Meeting of Shareholders

After two years spent integrating acquisitions and turning around operating results, the Management and Supervisory Boards will propose to the next Annual General Meeting of Shareholders a change in the method of administration and management of the Company through the adoption of a structure based on a Board of Directors.

This measure will be supported by the application of new rules of corporate governance. In particular, the decisions of the Board of Directors will be prepared by the work of the three committees responsible for Strategy, Audit, Remuneration and Appointments. The functioning of the Board will be established through rules to be adopted by the future directors.

The appointment of the following members to the Board of Directors will be submitted to the Annual General Meeting of Shareholders:

Mrs Véronique Morali,
Mr. Carlo De Benedetti,
Mr. Noël Goutard,
Mr. François Grappotte,
Mr. Philippe Guédon,
Mr. Yves-André Istel,
Mr. Jean-Bernard Lafonta,
Mr. Alain Minc,
Mr. Thierry Morin,
Mr. Erich Spitz.

The nominees to the Board of Directors to be proposed to the Annual General Meeting of Shareholders have indicated that they wish to appoint Thierry Morin as Chairman of the Board and Chief Executive Officer.

The Annual General Meeting of Shareholders has been called for March 18th 2003 (first notice), and, failing a quorum, for March 31st 2003 on second notice.

Outlook

Despite an unfavorable outlook for 2003, Valeo should continue to benefit from the restructuring actions implemented in the Spring of 2001 and the productivity gains engendered.

Thierry Morin, Chairman of the Management Board commented, "Thanks to the action plans implemented in the Spring of 2001 and pursued in 2002, the year marked Valeo's return to profitability. In 2003, despite an expected downturn in the automotive market, our ambition is to continue to progress: on the strength of our technological know-how and an improved cost base, we will help our customers to differentiate their vehicles through an innovative, competitive product offering."

Valeo is an independent industrial Group fully focused on the design, production and sale of components, integrated systems and modules for cars and trucks. Valeo ranks among the world's top automotive suppliers. The Group has 140 plants, 54 R&D centers, 9 distribution centers and employs 69,100 people in 25 countries worldwide.

Media contacts:
Kate Philipps
Group Communications Director
Tel.: +33 (0)1.40.55.20.65
kate.philipps@valeo.com

Bruno-Roland Bernard
Investor Relations Director
Tel.: +33 (0)1.40.55.37.86
bruno-roland.bernard@valeo.com