Valeo SE

Group sales totaled EUR 10.4 billion, up 0.7% like-for-like. Operating margin was 5.0%, up 0.5 points year over year, and gross margin reached 20.7% of sales. Free cash flow after net financial interest was EUR 242 million, more than double H1 '25, and net income was EUR 105 million, essentially in line with last year. Net debt decreased to EUR 3.8 billion from EUR 4.0 billion at the end of '25, with leverage at 1.2x adjusted EBITDA. For the full year, management reaffirmed guidance and said H2 operating margin and free cash flow should be at least in line with H1 if conditions stay stable.

Christophe Perillat-Piratoine framed H1 as proof that Valeo’s Elevate '28 plan is working, with profitability and cash generation described as the first two engines now “fully running.” He emphasized disciplined pricing, cost reduction, and a lower breakeven point, while highlighting that the company achieved a historic H1 debt reduction without asset disposals. He also said Valeo is ready for a return to growth from '27, supported by EUR 12.1 billion of order intake and milestones in North America, China, and India.

Edouard de Pirey focused on the quality of earnings and cash. He cited operating margin of 5.0%, gross margin of 20.7%, SG&A down 3%, and net R&D spending at 11% of sales, with gross R&D spending down 3% and an IFRS impact below 1 percentage point for the full year after an EUR 85 million impairment tied to contract cancellations. He said tangible CapEx dropped 12% to 3.6% of sales, capitalized R&D was down 5%, free cash flow was EUR 242 million, and net debt fell by EUR 194 million to EUR 3.8 billion; he also noted EUR 3.0 billion in cash, EUR 1.6 billion in undrawn credit lines, and the option to early redeem the May '27 bond using proceeds from the EUR 600 million bond issued last June.

Analysts pressed management on China, second-half margin sustainability, POWER’s margin jump, CapEx intensity, and the tax rate. Management clarified that growth in China is being framed specifically around Chinese OEMs, not global OEMs, because of volatility, and said the business is seeing growth in H2 from Chinese customers with over 80% of China orders now from Chinese OEMs. On margins, management said H2 should be at least equal to H1 because customer call-offs look stable, efficiency gains build through the year, and inflation is being managed; on POWER, they said the improvement reflects cost reduction, better orders, and some one-offs that were balanced overall. On tax, de Pirey said the 48% rate is high due to dividend repatriation and restructuring effects and should remain elevated in '26 and '27 before eventually declining.