Valeo: Revenue Down 3.6% but Outperformance Confirms 2026 Guidance

Revenue Analysis

The reported revenue of 5.12 billion euros for the first quarter of 2026 shows a significant gap between raw data and actual operational performance. The apparent 3.6% decrease is primarily due to two external factors: the appreciation of the euro, which has a negative impact of 4.3% due to the strength of the currency against the dollar and Asian currencies, and the divestiture in November 2025 of the POWER Division (automotive sensors for propulsion systems), which accounts for a 0.6% decrease. Removing these distortions, organic growth stands at 1.3% at constant scope and exchange rates. This dynamic places Valeo in a clear outperformance compared to a global automotive market contracted by 3.4% according to S&P Global Mobility. First-fit sales show a slight decline of 0.6% at constant scope, representing a 3-point outperformance. The aftermarket progresses by 1.9%, supported by performance in North America and Asia and the development of new services. 'Other' sales show an increase of 36.5%, driven by a favorable comparison base in the first quarter of 2025.

Divisional Performance

Each of Valeo's three divisions delivered an outperformance in the first quarter, varying according to their geographic and product exposure. The POWER Division, although partially divested, outperformed the market by 2 points, benefiting from a strong start in North America where revenue grew by 7.2% at constant scope and exchange rates. In China, performance remains stable, marked by a transitional period between the completion of an initial wave of electrification programs and the ramp-up of new contracts with Chinese electric vehicle players. The BRAIN Division outperforms the market by 3 points thanks to performance in North America and Asia excluding China. The group announces the start of construction of its McAllen, Texas plant, dedicated to central computing units (CCU) for General Motors, with production set to begin at the end of 2027. The LIGHT Division records the strongest outperformance, 5 points above the market, with a growth of 1.5% at constant scope, driven by China and Europe. In China, successes with local manufacturers allow for robust growth. In Europe, the activity benefits from the ramp-up of lighting programs for premium and mass-market vehicles. In Asia excluding China, Valeo shows a growth of 3% mainly fueled by the BRAIN Division, while the momentum in India continues according to the Elevate roadmap.

2026 Guidance Confirmation

Valeo fully maintains its 2026 guidance, displaying confidence in its ability to navigate an environment marked by multiple challenges. The group targets a revenue of 20 to 21 billion euros, an operating margin between 4.7% and 5.3% of revenue, and a free cash flow exceeding 400 million euros after net interest. Facing observed tensions in the supply chain, particularly in the memory segment, Valeo relies on a proven strategy: securing volumes to ensure business continuity for clients, leveraging procurement expertise to limit cost overruns, and negotiating the transfer of these overruns with clients. To date, the group has secured over 90% of the volumes needed to cover customer requirements for 2026 and has engaged in constructive discussions with them. The direct impact of the conflict in the Middle East remains limited, with no material impact on customer demand observed to date. The group maintains rigorous control over its costs and investment expenditures. With a strong order book and recent commercial successes, particularly in China, Valeo is preparing for a return to growth in 2027 in line with the ambitions of its Elevate plan.