PARIS – French supplier Valeo SA (IW1000/248) revs its innovation engine at the Paris auto show, hoping to catch the attention of automakers seeking solutions to tightening global fuel-economy and emissions rules and an affordable fast track to the autonomous age.
The central message: Valeo today is more technical, innovative and profitable than its history of selling relatively low-cost commodity parts such as wiper blades and engine alternators might suggest. The company has spent the past few years aggressively stretching its product portfolio into the most desirable, revenue-rich segments of electrification, connectivity and autonomous-driving technology, says Valeo Chairman and CEO Jacques Aschenbroich.
“We are at the core of these revolutions,” he proclaims from the supplier’s show stand, just a stone’s throw from major customers such as PSA Group and Renault-Nissan.
It’s a bit of a sea change for the 93-year-old supplier. Brakes, thermal systems, lighting and wiring harnesses were the core of its business for most of those decades. But it has pushed into electronics that make engines run cleaner and serve as the backbone for advanced driver-assistance systems.
The company has grown its product portfolio both organically and through targeted acquisitions, such as its turning-point purchase of Johnson Controls’ automotive electronics unit in 2005.
It also took early advantage of China’s automotive boom, establishing a manufacturing footprint there in 2013 and reaping a string of twofold increases in sales. It now operates in 32 countries with 88,800 employees, 148 production sites and a combined 53 R&D facilities.
Revenue has grown from €9.2 billion ($10.2 billion) in 2004 to €14.5 billion ($16.1 billion) in 2015. Through the first six month of this year, consolidated sales are up 11% to €8.1 billion ($9 billion), according to company regulatory filings, putting it on track for another record year. Margins have stretched to 8% from less than 4% a decade ago, and Valeo’s share price nearly has doubled since 2012.
“All of our efforts (are) fruitful,” Aschenbroich says.
The start-small, think-big and scale-fast strategy has thrust Aschenbroich to rock-star status in the business world. He was named to the Best Performing CEOs in the World list by the Harvard Business Review in 2014 and last year was declared Man of the Year by the influential French magazine Journal de l’Automobile.