Valeo are abandoning their 2020 financial targets because of the business hit from the coronavirus outbreak, and they’ve secured €1bn in additional credit lines to shore up their finances.
Last December, Valeo said they would outperform the global auto market by more than five percentage points in 2020, with the overall market expected to drop by 2 percent. Now, though, “Given the drop in business activity, which began to impact Valeo’s plants in Europe and North America in the last two weeks of March, and the lack of visibility regarding when the crisis will end, the 2020 financial objectives announced by Valeo in connection with its 2019 full-year results are no longer valid,” Valeo said.
The company said last week that sales in March were 60% of the 2019 level but “should be back to normal in the coming months.” They plan to conserve capital by sharply reducing nonessential investments and costs, and will monitor cash positions daily. They are also variabilising fixed costs across their plants through part-time work.
The steps announced by Valeo are similar to those taken by other suppliers and automakers to counter the effects of coronavirus restrictions. Demand has fallen sharply across Europe, and it is unclear when assembly plants will resume normal operations. Valeo said all 34 of their plants in China have gradually started to restart production since Feb 10. European plants have shut down except for those that are producing for export, Valeo said.