Valeo Aktie

Ladies and gentlemen, dear shareholders, thank you for being with us today for Valeo's Annual General Meeting. This meeting is convened by the Board of Directors following publication of the notice of the meeting of the bulletin [indiscernible] and the notice of the same bulletin and the electronic version of the legal [indiscernible] on April 29, 2026. The meeting is being broadcast live on the company's website. And like every year, it is a subject of video recording which will be available on the general meeting page of our website.

I will be chairing the assembly in my capacity as Chairman of the Executive Board. On my side, we have: Christophe Perillat, Chief Executive Officer; Edouard de Pirey, Chief Financial Officer; Eric Antoine Fredette, General Counsel and Secretary General. The members of the Board of Directors are seated in the front row of the room. The statutory auditors and sustainability auditors are also present.

I suggest now that we move on to the composition of the bureau. I'd like to remind you first that -- with the 2 members of the assembly with the greatest number of votes and who accept the functions of scrutineers are -- those who have accepted are Sitam Belgique with Dassault Group represented by Mr. Guillaume Louis and the Amundi company represented by Madam [ Orsor Yagal ].

The bureau thus constituted, proposes to appoint Mr. Eric Antoine Fredette as Secretary of Assembly, and I'm going to give him the floor to let him indicate the provisional quorum of the assembly and so he can explain the agenda.

Thank you. Societe Generale, the centralized institution responsible for organizing the member has informed the members of the Board of the state of the provisional quorum. After examining the attendance sheet certified by the members of the Board, it appears that the number of shareholders present represented or having voted by mail or by [indiscernible] are 166,149,144, representing the sharing rights, and the office has thus validated the tablet. The shareholders' meeting compromises more than 1/4 of the shares with voting rights is therefore duly constituted and may validly deliberate whether on ordinary extraordinary basis.

Your assembly has been convened for the purposes of deciding on the agenda, which appears on the screen or should and which can be found in the notice of meeting. I suggest that -- you do not need me to read it to you. But here, you have the agenda on the screen.

The meeting documents have been made available to the shareholders on the meeting's desk. And I'd also like to remind you that all the information intended for shareholders is also available on the company's website.

Mr. Chair, I give you the floor.

Thank you. I declare that all documents and information required by the regulations in force have been communicated or made available to shareholders in the manner and within the time limits provided for by law.

Ladies and gentlemen, dear shareholders, it's a great pleasure for me to be with you today to present our 2025 results, our outlook, our strategy, our governance and, of course, our resolutions. The global automotive industry has undergone some profound upheaval during the recent years following major technology breakthroughs in the field of mobility, electric motors, batteries, sensors, computers, connectivity, artificial intelligence, software, et cetera, but also given the increased presence of Chinese players in the sector now representing 26% of the global industry. These upheavals are now occurring in an uncertain and rapidly fluctuating macroeconomic and geopolitical environment.

To meet the challenges and achieve our ambition for growth, profitability and leadership, we have based Valeo's strategy on 3 pillars. First of all, assert of technological choices based on high level of innovation for carbon-free mobility and for safer mobility. Second, presence in all regions of the world with a particular focus on expanding and strengthening our positions in North America and in Asia, with a special focus on India and China. Finally, strong competitiveness through industrial excellence, cost control and supply chain stability and agile and responsive organizational structure, and now on the powerful lever of artificial intelligence.

In 2025, our strategy enabled the group to meet its financial objectives and led to continuous improvement in operating performance and profitability, with free cash generated by operations reaching a record level. These remarkable results are in line with the initiated since 2022 under the leadership of Christophe Perillat for more sustained and profitable growth through strengthened leadership. And in November 2025, based on our strategy and our results, the group presented an even more ambitious vision for the next 3 years with its Elevate 2028 strategic plan developed with full support of the Board. Christophe Perillat will discuss that more in detail in a little while.

Given these results, your Board of Directors has decided to propose the payment of dividends of EUR 0.44 per share, an increase of approximately 5% compared to the 2024 financial year and approximately 10% compared to the 2023 financial year. The increase in dividends has been constant since the 2021 Annual General Meeting.

To achieve the objectives we have set and to enable the group to continue its development in a complex and highly competitive environment, 3 subjects are being monitored with particular attention by your Board of Directors. The accelerated deployment of artificial intelligence, first of all. In light of this disruptive technology, the Board's role is to ensure that the group is to quickly identify and implement the opportunities created by artificial intelligence, and in addition, that we adapt in order to disseminate the implications within the organization and even within our corporate culture.

It is notable that Valeo has already implemented powerful levers to transform its business offering and the performance of its organization, as illustrated by the significant use of new technologies in R&D. However, the speed and frequency of changes in the field require extreme agility, and the issue is expected to be a long-term part of the group's strategic agenda.

Secondly, rebalancing the group's business in China. As new dynamics redefine the Chinese automotive market, Valeo aims to increase its market share with all Chinese manufacturers in order to support or even to exceed growth on the market, which is the world's largest. The Board is confident that Valeo has all the necessary assets to achieve this objective through strong local presence initiated over 30 years ago and a strategy that promotes the autonomy of local teams for greater invention, speed and competitiveness. In 2025, China is already Valeo's largest country for operations with 22 production sites, 10 R&D centers and approximately 17,200 employees, including 3,400 engineers dedicated to innovation and technological development.

Finally, the group is exploring opportunities to develop its activities beyond the automotive sector. Valeo has a well-recognized how to -- know-how, excuse me, and masters many technologies that can provide solutions in other sectors of activity, for example, data centers, agriculture, light electronic -- electric mobility. The Board of Directors encourages these initiatives and monitors their development.

As Chairman of the Board of Directors but also Head of Governance, Appointments and Corporate Social Responsibility Committee and the Compensation Committee, I would like to discuss a number of matters concerning governance and functions of the composition of the Board. In terms of governance, firstly, I'm pleased to report that your Board of Directors continues to function smoothly and efficiently, particularly in regards to rich, open, respectful and frank dialogue between the directors. This is reflected in the evaluation of the functions of the Council, the Board, the results of which are described in our registration document for 2025.

The solidity of our governance is also based on the diversity of the Board in terms of experience, but also skills, independence and diversity, which allows it to accompany, question, support and ultimately to endorse the decisions made by management. Your Board of Directors is currently composed of 15 members, 2 of whom represent employees and 1 represents employee shareholders since the 2024 shareholders' meeting with an overall independence rate of more than 91%. This configuration, combined with the staggered renewal of terms of office of the directors, ensure a healthy balance between independence, diversity of expertise and understanding of the group's strategic challenges and operational realities.

The arrival of Gilles Le Borgne last year on the Board, as appointed by your assembly last year, has made it possible to strengthen the Board's competence in the automotive sector and in technologies adapted to the car of tomorrow. In order to maintain this momentum, we propose that you renew the terms of office for 2 Board members whose terms of office expire at this meeting, that of Bruno Bezard and that of Bpifrance Participations, one of our main shareholders, represented by Alexandre Ossola. Their commitment to the Board has been exemplary. And I would particularly like to thank Bpifrance Participations for their trust and their constant support for the Board and for Valeo.

In addition, Sascha Zahnd has decided to hand over his mandate to the Board at the end of this general meeting for professional meeting. And I'd like to thank him on behalf of the entire Board as well on my own behalf for his valuable contribution to the work of the Board of Directors and the strategic committee based on his rich industrial and international experience.

As a result, we would like to propose the appointment of a new Board member, Madam Fabienne Lecorvaisier, who is here with us in the first row, and who I would like to greet and I'd like to welcome her. If her appointment is approved, she would bring to the Board of Directors her experience acquired through various positions of responsibility both in France and abroad within international industrial groups, [ her ability ], both in France and abroad within international industrial groups, her expertise as CFO as well as for experience and skills in the field of strategy, mergers and acquisitions, financial transactions, information systems, energy transition and sustainable development.

Finally, my own term as member expires at the end of this shareholders' meeting. The Board, on recommendation of the Governance Appointments and CSR Committee, has proposed the renewal of my mandate as Chairman of the Board of Directors at the Board meeting to be held at the end of this meeting. As we have indicated in our public documents, specifically the 2025 Universal Registration Document, the report of the Board of Directors to the general meeting and the press release convening the general meeting, the age limit provided for in the Articles of Association defined at the end of 2027 does not allow me to exercise this role beyond this deadline. Given those elements, a reflection on the chairmanship of the Board of Directors beyond 2027 has been initiated, and an adhoc committee of the Board has been composed the independent members, and it has been set up for this purpose in order to suggest possible solutions to this problematic.

Subject to the approval of the resolutions that will be submitted to you, the Board of Directors will be composed of 15 members at the end of the shareholders' meeting, 91.66% of whom will be independent directors, 50% of whom will be women, excluding employee Board members. And I'm also pleased to announce that the company is complying in advance with the rules resulting from the women on [ boards directive ] as transposed into French law.

Now regarding nonfinancial performance, the government's Nominating and Corporate Social Responsibility Committee closely monitors ESG topics, which are a central component of our Valeos. They are at the heart of the group's culture, and there is a complete alignment between the Board of Directors and general management regarding our ambition to be exemplary. The robust governance put in place at all levels of the organization allows for rigorous and accurate monitoring of the CSR topics which goes beyond the sustainability report. This report is included in Chapter 4 of our 2025 Universal Registration Document and has once again been unreservedly certified by the sustainability auditor. As you know, ESG covers many themes, including climate and diversity.

In regards to climate, we continue to monitor the implementation of the CAP 50 plan, which is an ambitious medium- and long-term CO2 emissions reduction plan as presented to the market on February 4, 2021. As we now do every year, an update on the group's climate strategy will be provided at this meeting. The group is working on these issues, as you know, with great commitment. Valeo has reduced its greenhouse gas emissions from 49.5 million tonnes of CO2 in 2019 to 39.2 million tonnes in 2025.

Beyond the climate, the implementation of diversity and inclusion policy, which is a key element of Valeo's culture, is also being monitored very closely in compliance with applicable legislation, and particularly in the United States, and the group's ambitious objectives, particularly with regard to the presence of female talent in the group's management committees. Finally, Valeo stands out for its commitment to professional equality with once again this year, the improvement of professional equality index between men and women.

The ambitious ESG objectives that the group has set for itself are being met, thanks to the unwavering involvement of all of the group's employees. For several years now, Valeo has enabled its nonfinancial performance to be recognized by the main rating agencies and to maintain its position as one of the best rated automotive suppliers, and we are very grateful for that.

I would now like to discuss some issues regarding the compensation for corporate officers, and I will make 4 comments. First, the compensation policy for the directors and the Chairman of the Board remains unchanged. The 2026 compensation policy for the CEO is in line with the one you approved in 2025 at 91.41%, with ceilings for variable and long-term compensation remaining unchanged.

With regard to fixed compensation, EUR 1.1 million was approved in 2025 for the CEO's compensation policy and has applied since the 1st of January 2026. The annual long-term variable compensation for the CEO for 2026 will be subject to the same performance criteria as that of 2025 with some adjustments, which are described in the compensation policy of the CEO -- for the [ CEO office ] set out in Appendix 6 of the meeting notice, specifically on Page 75. The resolution allows for the allocation of free and performance-linked shares, which we are asking you to renew this year, including a volume that takes into account current market conditions. Please note that the structure of the performance action plan, as described in the Board of Directors report, is perfectly in line with that of previous years.

Now before handing over to Veronique Weill, Chair of the Audit and Risk Committee, I would like to warmly thank on behalf of the Board of Directors, I would like to thank Valeo's teams for the commitment and agility and quality of their work, which have enabled this wonderful performance. Thank you.

Good afternoon, ladies and gentlemen. The Audit and Risk Committee was composed of 7 members for the entire duration of 2025, and 100% of its members are independent according to the definitions in the Board's internal regulations. The directive presenting the employee shareholders is not taken into account in this calculation, in accordance with the applicable rules. The company complies with the provisions of the [ Mid-f ] code relating to the share of independent board members on the Audit and Risk Committee. In addition, all current members of the committee have, through their training and professional experience, accounting, financial and CSR skills. The committee met 5 times during the year with a participation rate of 94%. In addition, the President of the Board participated in 4 committee meetings.

The committee has a very broad mission, covering, in particular, the monitoring of the audits, the accounting methods, significant off balance sheet risks and commitments and the accounting of financial treatment of acquisition and disposal operations of more than EUR 50 million. This mission also extends to the monitoring of effectiveness of risk management and internal control systems, including compliance as well as monitoring the work carried out by the internal audit. In addition to carrying out its mission, the Audit and Risk Committee has as its main interlocutors, the general management, the financial department, the sustainable development department, legal department, the ethics and compliance department and the audit and internal control department, as well as the company's statutory auditors.

More specifically, in 2025, the committee heard from: [ Thibault Lovay ], the CFO and Treasury Officer, on the group's financing policy and cash positions; [ Jean-Louis Barzac ], the Chief Tax Officer, on actions necessary to improve the group's effective tax rate; [ Stefan Boulanger ], the Director of Insurance, on the group's insurance program; as well as [ Leonel Montier ], the Director of Internal Audit, Internal Control and Risk Management on the results of the internal control self-assessment campaigns, fraud prevention actions and the assessment of international audits and risk mapping.

The committee continued its work to monitor the implementation of sustainability reporting. [ Gannat ], the Group's Head of Risk Management, presented to the committee an update of the double materiality analysis adopted by the group and application of the new European regulation related to this CSRD directive. The committee validated the main sustainability issues that deemed material for the group through that analysis. The committee also ensured that the necessary resources for the good proper conduct of this project were mobilized, particularly in terms of internal control. And the committee was regularly informed by [ Mazars' expert ], the sustainability auditor, of the progress made in its verification work. The latter issued an opinion on the unqualified conformity of the information contained in the sustainability report.

And finally, these discussions with the governance appointments and corporate responsibility committee continued. [ Judy Avon ] Head of Corporate Social Responsibility issues, shared with the members of the Audit Committee the results of the works on government by government appointments and social corporate social responsibility committees in terms to CSR. And I did the same by sharing the results of the work on the Audit Committee with -- Audit Committee and the risk with the members of governance nominated and CSR Committee.

The committee also examined issues relating to the governance of information systems and cybersecurity risk with Arnaud Chenu, the group's CIO. The committee specifically studied this group's financing policy and the levers for free cash flow generation and debt control as implemented by the group, thus ensuring that liquidity management is adapted to the context of rising and volatile interest rates. The committee also examined the projects and R&D process, particularly with regard to monitoring the profitability of projects under development and the robustness of the business plans used when doing customer quotations. A summary of the specific audits dedicated to these subjects was shared with the members of the committee by the Director of Audit and Internal Control.

Finally, the Director of [indiscernible] audit and internal control presented to the members of the committee a summary of the specific audits dedicated to the evaluation of performance and efficiency, the shared service centers. The committee focused, in particular, on the quality of management and supplier payment deadlines. Many other subjects, of course, have been dealt with by the committee and risk committee, more details of which can be found in the Universal Registration Document.

Overall, as President of this committee, I can confirm to you, dear shareholders, that the work of the Audit and Risk Committee was in line with the objectives entrusted to it during the financial year, also that your group has high-performance professional teams and that the general principles of ethics and compliance, site protection and risk management met with high standards. In addition, at no time was the Audit Risk Committee required to make reservations on the parent company and the consolidated risk financial statements or on the financial documents as submitted to it.

Before I conclude, I would like to thank everyone in the financial department for the quality of their work, also for Edouard de Pirey for the quality and transparency of the work. Thank you for your attention.

Thank you, Veronique. I now suggest that we move on to the presentations. I will give the floor to the CEO of Valeo, Mr. Christophe Perillat.

Thank you, Mr. Chairman. Ladies and gentlemen, dear shareholders, we are now living at a turning point in the automotive industry history because now our industry is undergoing the biggest transformation in its history. It's a deep-seated structural and lasting transformation. And in these moments, as you know, a company cannot be content with just marginal adjustments. It needs to transform itself deeply, and that is what we are doing at Valeo.

Thanks to the technological and strategic choices that we made these last few years, Valeo is now one of the technological leaders in this transformation. But this positioning is not the be all and end all, it's just a lever. Today, I'm going to show you how by leveraging the transformation of our business model and by relying on our strategic plan, Elevate 2028. Valeo is going to build on this technological positioning to sustainably strengthen our financial performance and accelerate Valeo creation for shareholders.

Very concretely, the automotive industry is facing 3 simultaneous transformations. The first is that of global automotive production, the level of which is stabilizing around the 2017 level after undergoing continuous steady growth for over 30 years. The second one is coming from China. Chinese carmakers have a bigger and bigger position in China, of course, but also in the whole world. And the third one is, of course, the accelerated technological transformation in our sector, which is synonymous with many opportunities for Valeo.

First of all, allow me to come back over the stabilization of the total industry volume in the world and what that means for Valeo. As you can see on this chart, after decades of sustained growth, global automotive production has been in a plateau phase since 2017. And this is a fundamental shift. It means a very simple thing. Market growth is no longer an automatic driver for our business.

Now our growth only should rely on our own performance. It will stem from our technologies, which will help us increase Valeo's content per vehicle in Valeo. It will also stem from our ability to capture geographical growth dynamics in key regions of the global markets, in particular, China, of course, but also India and North America.

And on top of that, we are ready to seize opportunities beyond automotive in sectors where our technologies can apply without extra development costs by investing into Valeo, and we would like to thank you for that. You decided to invest into in automotive equipment manufacturer with a strong technological positioning. But did you know that you also invested into a new light mobility startup, in a defense startup or also in a data center infrastructure startup. These opportunities, which are beyond automotive, are neither included in our Elevate 2028 plan or necessary for its good execution. They are on top. They are additional.

And now I'll come to the second upheaval in our sector, China. China is no longer only the largest market in the world, it is the new epicenter of our industry. This is what I've become used to calling the new automotive fitness center. This is where competition is the most intense and where innovation is now the fastest. China now only has 35% of global automotive production, but Chinese carmakers already have 26% of the global market versus only 14% in 2017.

Valeo's strategy is extremely clear on that item. Being strong in China to be strong in the rest of the world, and we are stronger in China. Our renewed momentum in China is confirmed. In 2025, 63% of our orders were made by Chinese carmakers. This is a ratio of nearly 3x our sales in China. In the first half of the year, we started several new productions, and now our Chinese teams are rivaling the best innovation and speed standards.

This experience in China is making us undoubtedly stronger on the global scale. We are becoming more competitive because when you succeed in China, you can succeed anywhere, thanks to what you learned there. But the competitiveness gap between Europe and China is such that it takes time for Europe to adapt. And this is why, this is only for that reason that we keep advocating for the urgent implementation of a minimum local content threshold in Europe.

And finally, the third shift in our sector, the technological transformation. We cannot tackle that by putting that into context with the societal challenges that we need to address: decarbonization and improved safety on the road, especially at night. Our sector is responsible for 18% of global CO2 emissions. It therefore has an essential role to play in decarbonizing the world and fighting global warming. Moreover, we still deplore the death of 1.2 million people every year on our roads. Technology, our technology, can save lives.

These challenges are core to our mission and to the unprecedented technological transformation in mobility. Cars are more and more electrified, safer, more autonomous and based on more and more software. So we have prepared, we have prepared for the car of tomorrow. This is, of course, very good news for us because this means that there are many opportunities to be seized. As I'll say very clearly, Valeo is ideally positioned at the heart of this transformation, thanks to our 3 divisions: POWER, BRAIN and LIGHT, all of them leaders in their fields and supported by our Valeo service business in aftersales and services.

The accelerated electrification is confirmed. In 2025, the cumulative shares of new battery EVs, plug-in hybrids, range-extended EVs have reached 24% of the global market versus only 13% 4 years ago and this year should reach 43% in 2030. Our Valeo POWER division is ideally positioned to benefit from this acceleration with twofold expertise. This expertise is unique, mixing drivetrains and thermal management systems. We are also leaders in electric engine technologies, but also inverters onboard high-voltage chargers, but also battery cooling and thermal comfort in the cabin. Electrification is synonymous with more and more content per vehicle for Valeo, be it a battery EV, a plug-in hybrid or a range-extended EV.

At the same time, driver assist systems are becoming more mainstream, and centralized software architecture vehicles or software-defined vehicles, SDVs, are spreading massively and quickly. Level 2 or 2 plus autonomy vehicle, which offer advanced driver assistance systems like automatic emergency braking or adaptive cruise control, but also more and more dedicated driving situations with driver supervision now account for over half of global sales in 2025. At the same time, and as you can see on the screen, 10% of new vehicles already have already have centralized software architecture.

And once again, this trend is very good news for Valeo. Our BRAIN -- Valeo BRAIN division is the global ADAS leader, equipping over 1/4 of vehicles in the world with a full comprehensive portfolio of CPUs, software and sensors. We're also a major actor in SDV, especially with our central compute units, which are the brains of the software architecture. The acceleration of these two trends means once again, more Valeo content per car. You can see on screen, the increase in this content based on the different levels of autonomy [ 2, plus 2 ].

And finally, our Valeo LIGHT division's market is also growing, driven by the quest for more style performance, safety and durability. Valeo LIGHT there too is the global leader in lighting, especially adaptive lighting, which is growing quickly. The rise in illuminated front [ pains ] and logos, the [ putter ] lighting around cars or sensor cleaning are so many opportunities where we are ideally positioned.

And finally, a word on our Valeo service business, which is supporting the dynamics of our 3 divisions in the aftersales market. These many new services and its always more fleshed out range of products promote transformation and sustainability for aftersales.

We have built up a road map which will enable us to reap most of this technological positioning and to create more Valeo for Valeo and for you, the shareholders. This road map is our strategic plan, which we've called Elevate 2028. This is where this path, this journey will lead us. In 2028, we're aiming for revenues between EUR 22 billion and EUR 24 billion, an operating margin ranging from 6% to 7%, and we are aiming for cash generation over EUR 500 million after interest with a debt ratio of less than 1x EBITDA. Our ambition is to return to investment-grade rating in 2028, and our goals are based on reasonable assumptions.

In this journey, we will be driven by 3 engines. First of all, the steady growth in our profitability, which started in 2022 and which will continue. Secondly, the generation of a significantly higher level of cash since 2025, thanks to -- and I'll explain it later, the transformation of our business model. And finally -- and I know that you have strong expectations -- return to sales growth from 2027 onwards.

Let's start with the first driver, steady and continuous improvement in our profitability. You can see that on that screen, the engine has been running since 2022, and the improvement will continue. Our operating margin will keep increasing to reach between 6% and 7% in 2028. So that we've got 3 levers: selling our technologies at the right price, and we will be selective in our undertaking; keep increasing our gross margin, I'll come back to that in a second; and keep reducing our breakeven point by reducing our costs even further. And our trajectory is already in line with these goals.

As you can see here, regarding the 2026 operating margin guidance, we shall continue to improve our gross margin, thanks to the continuous industrial performance improvements. We've adjusted the number of our plants. We've adjusted our headcount to take into account the lower volumes. And we will strongly automate our sites and we are mainstreaming the use of artificial intelligence to make them more efficient and more competitive.

The second engine in our trajectory is our business model transformation to generate more cash structurally. Our free cash flow has been improving constantly since 2021, reaching EUR 371 million after net financial interest in 2025. We will generate even higher levels over the period 2026-2028, we're aiming for over EUR 400 million in 2026 and over EUR 500 million in 2028.

How will we achieve that? Thanks to our improved profitability that I talked about earlier; the structural reduction in our capital expenditure, CapEx; and a reduction in our gross research and development expenditures, the peak of which is now behind us. The free cash flow guidance for 2026 is truly in line with our trajectory. Well, rigorous and optimized CapEx and R&D management will bring the biggest contribution to increased cash generation.

Now to structurally reduce our investment expenditures? Well, we have 3 actions in place: maximizing the reuse of our equipment and standardizing our products; densifying even more space in our plants; and using an ever more competitive base of suppliers. But what will really change the deal for Valeo is the reduction in our research and development expenditures. In 2024, we reached a peak. In 2025, we have already reduced our R&D expenditure by EUR 200 million, and we will go even further out well by maximizing standard [ views ] by further optimizing our locations, and finally, by deploying artificial intelligence extremely rigorously in our research and development.

AI -- and I really want you to understand -- AI will really changed the deal in the area of R&D. Artificial intelligence is accelerating our competitiveness, our productivity and our speed. Already now, 100% of our software engineers are equipped and trained to automatic coding. The outcome is that already over 35% of our certified code lines are now generated by artificial intelligence, 35%. And we have very good partnerships with Zuken and Dassault Systemes, helping us use generative AI design to respectively design our printed circuit boards and our mechatronic systems. We also virtualize our electronic product testing with Amazon Web Services, AWS, to cut our validation times by up to 40%. So we are growing much, much faster. And in an ever more competitive market where speed is more and more of the essence, we have considerably reduced our development times, especially in China.

A few examples. In just 7 months, 7 months, mind you, we've developed and started production on the new headlight, cutting our development times by 2/3. And it only took 8 months to develop a turnkey and affordable system for [ 2, 2-plus ] autonomy and only 9 months for a new power electronic module, which is a 5-in-1.

And now I'll come to the third engine in our plan, return to sales growth from 2027 onwards. Let's not be deluded. Return to growth is important and expected, as I said earlier, because in the current context, it is quite possible that in 2027, we will be one of the rare equipment manufacturer to deliver growth. And I believe that investments will be extremely sensitive to that, and we'll clearly see that as a milestone and that they will appreciate it correctly.

This return to growth will be enabled thanks to the major orders that we have registered since 2022 at a high level, which is 1.5x our OEM sales and EUR 26 million per year on average over the period. This order intake is a clear recognition of our technology and competitiveness by our clients. And as you can see, these orders are very well balanced between our 3 divisions. Some of these orders are very large-scale contracts, over dozens of models and millions of cars. And therefore, they need more time to start up, but they will also have and mostly have a longer lifetime.

Our return to growth will also be driven by several starts of production in 2026 with a few examples here on the slide. Especially in China, 4 orders recorded a few months ago in electrification in ADAS and software-defined vehicles. We also received major awards by major customers like Volkswagen, Renault or General Motors or [ Chemotts ], which is a major aftersales distributor.

Regarding General Motors, I know that you follow that very carefully. We published a press release this morning. We are very proud of receiving the Supplier of the Year award for the fourth year running, awards that highlight the recognition and satisfaction of our customers.

We are once more strengthening our positions in North America and India and China to seize any growth opportunities arising there. In North America, given the market acceleration in terms of technological innovation, we're aiming for faster sales growth than the group average. In India, revenues should triple between 2024 and 2028 to reach EUR 700 million. And in China, we're aiming for a return to growth from the second half of 2026 and a return to market overperformance by next year.

We are investing to -- we have started the ground work on our new Texas plant, a $225 million investment. There, we will produce the central compute unit for General Motors. Therefore, a large size of their fleet. This is the brain of the car, of the software-defined vehicle. This is one of the largest ever orders for Valeo, and production will start there at the end of 2027.

In India, we announced EUR 200 million in CapEx in the next few years to strengthen our presence on this market, which is growing strongly and quickly. And in China, we recently opened a new site to produce domain controller and ADAS systems for -- to support market growth in these areas. As you have understood, our Elevate 2028 plan will help us fully reap the benefits of our technological positioning to create more value for shareholders to become a true leader in financial performance.

And this trajectory, as you'll have seen, is already well underway. Well, of course, we are following this trajectory with always the same commitment in terms of sustainability. Sustainable development is an essential part of our strategy and financial performance for the long term at Valeo and not just a compliance exercise. Our commitment in this area is based on 3 pillars: the environment, the social pillar and the societal pillar.

First of all, the environment pillar. First of all, everything we do working towards decarbonization and our technologies or our cat safety plan to reduce our activities, carbon footprint. There's also what we are doing to develop the circular economy.

The social pillar is the work that we are doing for health and safety at work for our employees, our policy for diversity, quality and inclusion at the skills development. And the societal pillar is all the work that we are doing for more sustainability throughout the value chain with support, in particular, for our suppliers and our commitment towards the local communities where we have plants and locations. We are now fully in line with our ambition to contribute to net zero by 2050. By 2030, we will have reduced our emissions related to our operations by 75%, 75% compared to 2019, and 50% less regarding supply chain and final use of our products related emissions.

As you can see on the slide now on screen, these are a few of our major achievements in 2025 and '26. Many, many examples, I'll name only two. In '25, 64% of the energy that we use comes from low-carbon energy sources, and we're aiming for 80% by 2030. And last year, our technologies helped avoid the emission of 6.1 million tonnes of CO2. To give you an idea, these are 8 million passengers on Paris to New York flights. Our commitment to sustainable development is a true commitment.

And because of that, these last few months, we were involved in a few major climate events in the world like COP30 or the climate weeks in New York, London or Zurich. As you have understood, our engagement is now recognized by nonfinancial rating agencies, and we are particularly exemplary. This is very important for us.

We are very proud to announce that we received a AAA rating by MSCI. This is the highest rating possible awarded by the global benchmark. And of course, I could not -- and I will not end this talk with a word for our team. The context is difficult, and our team is very committed. Without their commitment, nothing of what I've shown you would have been possible.

And our team is driven by a company culture which is deep, which is strong and which is a strength for our group. This culture is key to our success. It is summed up in 3 words. We are agile, we act with courage, and we stand in solidarity, particularly valuable behaviors when we need to keep moving forward in an environment as complex as today.

Ladies and gentlemen, dear shareholders, based on its strong technological positioning and the transformation of its business model, your company is ready to transform the challenges of the automotive sector into opportunities and into value creation. Thank you for your trust, and thank you for your support.

Thank you very much, Christophe. Mr. Edouard de Pirey, the Chief Financial Officer, will present the accounts for the fiscal year 2026, the first quarter of 2026 and the outlook for 2026. Well, it's moving to the [ lectern ]. Remind you that the detailed elements of the 2025 accounts and the management's report of the Board of Directors and the statutory auditor's reports are in the Valeo URD available in full on the website. So if you allow us, the Board of Directors and the statutory auditors will not read their reports in full. Over to you, Edouard.

Thank you. Ladies and gentlemen, dear shareholders, good afternoon. As announced previously, it's now my task to present the financial results for Valeo for the fiscal year 2025, the revenues for the first quarter 2026 and the goals for the full year 2026.

So in 2025 in an environment marked against by headwinds, Valeo showed it could act with agility and discipline, which enabled us to deliver on all our commitments and to lay the solid groundwork for the execution of our plan, Elevate 2028. Our revenue stood at EUR 20.9 billion, slightly below -- slightly above the goal of EUR 20.5 billion. Our adjusted EBITDA margin was at 14.7%, above the top of the indicative range. And our operating margin grew by 40 basis points to 4.7%. This is the fourth consecutive year of operating margin improvement.

As Christophe said, the driver for profitability improvements is -- has started. It started in 2028, and will keep running throughout the duration of the Elevate 2028 plan. This performance is directly reflected into our cash generation, which grew by 50% in 2025 to EUR 371 million, beyond the initial goal. I'd draw your attention to the quality of this cash generation, the improvement coming from better profitability on the one hand and better control of capital expenditures on the other hand.

The third engine in our Elevate plan, growth, is well underway to being activated. Our solid order book stands at EUR 24.6 billion in 2025. In cumulative terms, over the period, '22-'25, order intake is 1.5x our original OEM revenues. This level secures our future growth, and more specifically, the return to growth, as Christophe explained, from the year 2027 onwards. Our dynamics in China is also noteworthy. We won contracts, with local carmakers accounting now for 63% of our orders in the region. This proves that our technologies are competitive on a fast-growing market in China, as you know.

Now let's look at the details of the financial results for FY 2025. Revenues, as I said, stood at EUR 20.9 million, up 0.5% like-for-like. And at constant ForEx, that's EUR 400 million more than our goal. The OEM revenues reached EUR 17.3 billion, down by 0.6% like-for-like and at constant ForEx, reflecting the headwinds that I talked about in my introduction. The replacement market was resilient with 0.9% growth like-for-like and at constant ForEx. Various sales grew by 15%, once again, like-for-like and at constant ForEx. These various sales include R&D and tooling sales, and this is proof of the very good momentum in our order book. These various sales also include fair remuneration for contract cancellations, which led to impairment losses that were booked for around EUR 300 million in our P&L.

Now let's move on to performance by geography. On the global scale, we had a performance gap of 5 points compared to automotive output, mostly due to a negative geographic mix for 3 points. In Europe, your company overperformed the market by 2 percentage points. All divisions contributed to this result.

In China, the 2025 year was a year of rebalancing. Although we underperformed the market, the underlying momentum is growing upwards, both in terms of sales and order intake. We generated over half our revenues and 2/3 of our order intake in China with Chinese carmakers that an order intake over OEM revenues ratio of 2.8x. In Asia, Outside China, the performance gap was favorable by 2 percentage points. India, that was identified as a key region in our Capital Market Day, is still growing strongly. The region is perfectly in line with the trajectory in the Elevate 2028 plan with sales of about EUR 200 million, up 43% over 1 year.

Regarding profitability, the POWER divisions stood out strongly, thanks to the successful structural transformation that it underwent with an improvement in 1.3 percentage points in operating margin, thanks to the various restructuring measures. The BRAIN and LIGHT divisions maintained higher profitability levels than the rest of the group. BRAIN's margin is at 5.4% of revenues, whereas LIGHT IS 5%.

Ladies and gentlemen, dear shareholders, the efforts undertaken by your company have a structural impact on its profitability. We kept improving our profitability in 2025 with an operating margin, as I said earlier, that was up by 40 basis points to 4.7% of revenues. This improvement is based on the use of [ receivers ]. First of all, the gross margin, which grew by 1.2 percentage points to 20.2% of revenues, that's the highest level of gross margin for the group since 2017. This level is consistent with our ambition to stay sustainably above 19% of revenues.

These results reflects two factors: on the one hand, maintained price discipline; and on the other hand, industrial excellence, thanks to smooth production launches, operational efficiency, plant automation and the benefits of a streamlined industrial footprint. Breakeven point reduction efforts contributed to the tune of 10 basis points to improving our operating margin. Administrative costs were reduced by 5% in 2025, bringing the cumulative reduction over the last 2 years to 10%.

Efficiency gains in terms of research and development, with gross R&D expenditures down by EUR 200 million in 2024. These gains in the P&L were partially offset by impairment losses on a mobilized R&D because of the cancellation of the contracts that I talked about earlier.

Now let's move on to free cash flow. According to our new definition, which is after net financial expenses, we generated free cash flow of EUR 371 million, which is an increase of 50% over 1 year. Our business model is now more cash generative.

Not only have we improved cash generation in absolute terms, but the quality of cash generation has also improved. This is explained by 3 main levers. First, the improvement of profitability. First, 2025 was the fourth consecutive year in operating margin improvement since 2021. This is a key factor for cash generation. The reduction in our capital intensity with industrial investments that were down by 30%, 30% less CapEx in 2025 compared to 2024 at 3.8% of revenues.

We are purchasing better. We are reusing better, and we are optimizing our industrial footprint. This is a lasting trend. Improved R&D efficiency with an 11% contraction in capitalized R&D at EUR 930 million.

And now a comment on our financial structure. In 2025, our net debt stood at EUR 4 billion, up compared to 2024, but down compared to the first half of 2025. This came from a negative ForEx impact because of a more expensive euro compared to the dollar and Asian currencies, which had an impact on our cash. An action plan was initiated to reduce the ForEx risk by gradually repatriating cash denominated in other currencies than the euro. Gearing is stable at 1.3x. Your company now has a healthy financial structure based on a balanced debt profile and a solid cash position, with EUR 2.5 billion in available cash and EUR 1.6 billion in additional credit lines at the end of 2025.

Based on all these results, this year, we are suggesting to raise the dividend to EUR 0.44 per share, or an increase of nearly 5% compared to the previous year. This proposal is the sixth year running of gradual increases in the dividend. This is evidence of our confidence in how lasting our cash generation will be and our desire to associate you closely to the success of this company.

Let's now move on to 2026 with business figures for the first quarter and our outlook for the full year. As you probably know, we are moving in a particularly uncertain environment. We are tackling current challenges with adaptation and agility in mind by leveraging the experience of past crises and by applying the same proven methods with consistency and discipline. When it comes to the current situation in the Middle East, of course, our thoughts are with the populations affected, and we hope for a quick return to peace.

Now regarding your company, direct consequences are highly limited. We do not have any industrial operations and hardly any sales activity in the region. We only have 1 single supplier for aluminum tubes, which is still fully operational there. Logistical flows between Asia and Europe have been routed through the Cape of Good Hope for many years now.

And so we are not very energy intensive. Direct energy costs account for 1.5% of revenues, and we are using long-term contracts. And finally, we have no significant impact to date. We haven't observed any significant impact on customer demand so far. So of course, we are still very vigilant.

Regarding the supply chain, we are managing memory chip tensions proactively. We've secured over 90% of our memory chip volumes for 2026, and we are confident that we'll be able to address our customer needs for the full year. What's more, we are having constructive discussions to pass on these costs with our customers, and we are managing the technological transition in these RAM chips with a dedicated working group.

In this context, we are still focused on profitability and cash generation. On one hand, we are on track to already reach the cruising speed of EUR 300 million in annual savings, thanks to the restructuring measures initiated in 2024. And on the other hand, we are keeping strict discipline in terms of tangible and intangible investments.

In the first quarter of 2026, our revenues stood at EUR 5.1 billion. The OEM revenues were at EUR 4.2 billion with a slight decline of 0.6% like-for-like and at constant ForEx. Against the backdrop of declining global automotive output by 3.4%, your company is overperforming the market by 3 percentage points.

Now regarding performance by geography, in the first quarter, Valeo underperformed by 2 percentage points in Europe, reflecting a decline in the POWER division, which was partially offset by the good results of LIGHT and the screens and telematics business of BRAIN. In North America, the remarkable overall performance of 9 percentage points was mostly driven by the POWER and BRAIN divisions. In China, our company overperformed the market by 1 percentage point, thanks to the good performance of the LIGHT division.

In the first quarter, all 3 divisions overperformed their markets. POWER posted a 2 percentage point overperformance and used a good start-up in North America. The division is pulling up its technological transformation. The solid performance in electrification technologies is now offsetting the structural slowdown in internal combustion engines.

BRAIN, in turn, overperformed the global automotive output by 3 percentage points and confirmed its role as a technological driver. Its growth was driven by the success of display and telematics systems that were the outcome of the contracts that we won last year. The division also accelerated its industrial presence in India and North America to support the ramp-up of software-defined vehicles.

LIGHT overperformed the market by 5 percentage points and recorded its most robust performance for a quarter, thanks to shorter development cycles. It is the first division to reap the benefits of our China strategy, where it overperformed.

Ladies and gentlemen, dear shareholders, a few words on the outlook to conclude. We are looking at the rest of the year 2026, with determination. Our targets are clear: revenues between EUR 20 billion and EUR 21 billion; operating margin growing between 4.7% and 5.3% of revenues; and free cash flow generation growing again with a goal above EUR 400 million.

We are perfectly in line with the first step in our Elevate 2028 plan, and we are focused on value creation for you, our shareholders. Thank you.

Thank you, Edouard. I would now like to ask Mr. Alexandre Resten from Ernst & Young and others to present the most important passages of the reports on behalf of the board of auditors.

Thank you. Ladies and gentlemen, dear shareholders, on behalf of the Board of Statutory advisers of Valeo, I will present a summary of the various reports for your consideration in connection with the ordinary and extraordinary general meetings. As these reports were made available to -- by the company prior to this meeting, I propose to limit my comments to the key points.

With regard to the ordinary part of this meeting, our report covers the audit of group's consolidated financial statements, the audit by the annual accounts for Valeo SE and regulated agreements. Firstly, in respect to the second resolution, we have issued an unqualified audit opinion on the Valeo Group's 2025 consolidated financial statement. The work carried out took into account the characteristics of your group in terms of organization, accounting balances and internal control as well as the risk that are specific to its business. Our work was regularly presented to the Audit and Risk Committee and the Board of Directors. It was carried out by the team of statutory auditors both in France and abroad.

The key points of the audit of the consolidated financial statements discussed in our report relate to impairment tests on goodwill, cash generating units, capitalized development costs and specific assets and assets and liabilities relating to specific quality risk. For each of these areas, we reviewed the accounting policies applied, and we ascertained the reasonableness of the estimates made by the company.

Compliant with the first resolution, we have also issued an unqualified opinion on the annual financial statement by Valeo SE. We have also issued a special report on regulated agreements. It states that during the financial year, we were not notified of any authorized and concluded agreements to be submitted to your reading, nor any previously approved agreement for whose performance would have continued into 2025.

Finally, in relation to the extraordinary part of your Annual General Meeting in the 16th resolution, we've issued our report on the authorization to be granted to the Board of Directors to [ carry out 3 ] allocations of existing and future shares. We have no comments to make regarding this transaction, which complies with the conditions set out in the commercial code.

Ladies and gentlemen, dear shareholders, thank you for your attention.

Thank you, Mr. Auditor. I'd like now to ask Madam Emmanuelle Bertuzzi from Forvis Mazars, acting as sustainability auditor, to present the most important passages of their report on sustainability.

Thank you. Ladies and gentlemen, as sustainability auditor, Forvis Mazars has issued a sustainability information assurance report, which appears on Pages 358 to 361 of the Universal Registration Document, and I shall now summarize that for you.

Our mission is to provide limited assurance on the group's sustainability status, and this covers 3 areas. First, the compliance of the double material -- the materiality analysis process implemented by your company to determine the information to be disclosed and the compliance with the obligation to consult the social committee. Second, area concerns compliance with the published information with regard to sustainability standards. And finally, the compliance with the information [ disclosure ] requirements set out in the taxonomy regulation. For each of these areas, we detail in our report the nature of the checks that we carried out, the conclusions that we have drawn from them, and in support of those conclusions, the matters to which we have paid particular attention and the associated procedures we carried out.

In summary, based on the procedures that we carried out, we did not identify any material errors, emissions or inconsistencies that would have affected [ the company ]. As reminded by the chair and by the risk committee, the compliance and sustainability process and information and compliance with taxonomy regulation have been certified without reservation. Thank you for your attention.

Thank you, madam statutory auditor. Ladies and gentlemen, I'd like to thank you for your attention and now declare the opening of the debates. We have not received any written questions, and so we are now open to debate. And in order to make the debates more fluid and allow as many of you as possible to express yourselves, I suggest that each speaker limit themselves to a maximum of 2 questions. You have the floor now. I'd like to please ask you to raise your hand, and we have people who will be able to pass around a microphone. Number 3, I believe?

Good afteroon. I am an individual shareholder. I had a question on AI. Can you tell us more about the different types of AI for the use for generative, including generative AI, data analysis and physical AI and give us some examples of its use, including agent AI?

Well, this could take several hours, so I'm going to ask Mr. Perillat to just answer that question in a few seconds.

Maybe to start with, just to answer your question. AI is not something that we just discovered last year. Of course, we have AI integrated in our projects, and that has been true for the past 20 years. The first time we integrated AI in our projects, it was in a rearview camera, and that camera could see the environment. That was 20 years ago. And in 2017, we created in France, a research center on artificial intelligence especially dedicated to the automobile sector. It's called Valeo AI, and we have approximately 100 researchers working there.

So we have always understood that AI would be absolutely essential to our products, to the Valeo products of the future. Today, we use -- we still use AI in our product, but we also use AI in our company processes, and there are 2 types of processes that I'd like to mention. First of all, this [ HDNA ], administration processes. Very often, the examples that companies give, for example, are regarding the automation of processes, looking for data, for example, by different agents in different URPs and different systems within the companies purchasing, for example, industrial systems and making sure that those systems are accelerated and simplifies within the company. We do that. We have developed about 100 different agents that do this type of work within the [ HDNA ] field.

But we also have our specific elements. And that is our desire to apply and deploy in research and AI, in research and development. We believe that there's a lot of technical potential, but we also believe that this can change our economic model.

As you know, Valeo is a company with over 20% gross margin, but our research and development costs are also major -- or important. And our costs are above 10% of our sales revenue. So if we could limit that first and then reduce additional associated costs, we would mechanically increase our cash flow. And this would increase the cost of our shares.

So using AI is truly a priority for the group. We decided to do this to use AI in all of the R&D activities. Let me give you a few examples. So for example, software, that's our first -- our #1 activity. 35% of our coding is generated automatically by AI. We have several agents working on this. There's one that writes the code, one that validates the code, one that tests the code. And all of these different agents communicate together in order to write, certify and validate this code.

Second example, the design of electronic cards. We work with a Japanese company. We have a partnership to design in a generative manner, our electronic [ cards ] based on design codes that are defined by Valeo and that has been accumulated for several years. Third example, the mechanical design, more of an old-fashioned terms. And here, we have some very powerful partnerships, how can we better master injection molding and the mechanical aspects of designing a part almost automatically. And there again, there are agents that work together that generates the automatic design of a certain number of mechanical parts.

And finally, we're accelerating development and the validation process by making it more automatic, thanks to AI. Let me give you an example of that. An example in driving assistance. When driving assistance software is put on the market, it's tested in an impressive number of different driving situations. And those driving situations were -- have been filmed with cameras, and they are played over and over again to make sure that this software corresponds to all of the different cases that we've filled. And that can be multiplied by a million cases that have been filled by adding to those themes, additional pedestrians or additional red lights or balls coming across the road, children playing, no nighttime situations, rain, all of this can change.

And so we've moved from a physical world to a 100% virtual world which multiplies the number of situations that we can test. And so of course, if we did this by hand, it would take a tremendous amount of time. And we work with Amazon. We have a partnership with Amazon which not only reduces the time, but also, it increases the number of tests that we can do and the speed at which we can do that test.

So it's very -- this is a very complex subject. We are examining all aspects of R&D, and we are convinced that AI will be competitive element in Valeo's automotive sector, which, as you know, is very competitive. And we are absolutely certain that AI will be one of Valeo's competitive advantages.

Thank you, Christophe. As I said, this revolution is extremely deeply rooted. And I think that you can understand how fascinating the subject is. So thank you very much for that answer. There was a question up here at the front of the room?

Thank you for all of these presentations. All of them have been very interesting. And also for the little snacks that we had before we came in. I have a question regarding how we can remain competitive in China and at the same time, maintain our know-how in China. Development in China in the past 1 year has been very interesting, and it's been done thanks to everyone's knowledge, and China has adopted our knowledge. And so how can we remain competitive when we're going to have 300,000 products a year, and the Chinese are going to copy everything?

And I have a suggestion, actually, to make. I've retired 10 years ago, and I bought Valeo shares for EUR 60. And I would like to suggest that given the change since then, that compensation be variable for everyone. This would bring a long-term perspective and not just a 6-month perspective, and it would lead to less turnover in shares.

Regarding China, I'm going to allow Mr. Pirey to answer.

This is a very deep-rooted question. First, I'd like to share the fact that the Board of Directors of your company went 2 years ago -- excuse me, 2 months ago and held a meeting in China. We visited a certain number of industrial operations, a research center as well for our operation as well as a customer situation.

I just wanted to say that in China, it's not just a country of copiers. We met with -- I met with some of our colleagues. We were struck with the fact that we were there, we spent 4 days in a country which is an industrial and technical technological and human power. That's what we observed.

And so the question that you've asked is a very valid one. How can we remain a competitive player and a relevant player on market and in that region of the world, which is now the epicenter of the world. Thank you for this question. This is a central question because China is a central player. So how can remain competitive in China?

There's just one answer to that. We are Chinese. In China, we are Chinese. We have 22 factories, 17,000 employees, 4,000 people working in R&D, and we are a local company in China. We design, we produce, we purchase in China for China. And of the 17,000 employees, we have fewer than 5 expats. There were 200 10 years ago. So we have become a Chinese company, and we are confronted every day with the Chinese competitiveness, Chinese innovation. And we are in this center, the fitness center that I described earlier. And because we are working there and we are working in the fitness center, we keep -- we're running, we're running along with the Chinese, and we participate in that competitiveness.

Now how do we remain competitive in China? We keep running just like everyone else with the same players, the same suppliers, the same teams, the same R&D, which are all Chinese. So why would be less competitive than the Chinese? There would be only one reason for that, and that the corporate layer could hold back the Chinese teams. But we've made a lot of efforts to reform our process and to create decision-making capacity for our Chinese colleagues so they can keep running on that treadmill as fast as their Chinese -- other colleagues.

And the innovation rate in an -- innovation in a company costs money. So we amortize our debt, cost of innovation in Chinese innovation on a worldwide scale. So we have a source that could enable us to be even more competitive. So this is just a lot of words. But in reality, the question is whether reality confirms what I've just explained. And it does because the number of orders, which are, in fact, the only way that we can validate our competitive position in our technology. And the number of orders in China in 2025 are equivalent to 3x our sales.

So we are -- we keep running on that treadmill, and we are winning. And it's very important that we win because as I said earlier, when we win in China, we learn. We learn how to optimize our products and we learn how to optimize the design and the cost of our products thanks to the Chinese ecosystem, which we are then able to export. We are able to export that capacity to optimize and reduce costs outside of China and to make Valeo more competitive throughout the world. That's what I explained in my presentation. By being stronger in China, we are stronger throughout the world.

So yes, we are convinced that the battle is taking place in China, and we have to win in China and that all of the Western companies that leave China will be -- will lose the battle and that they are making mistakes. We have to stay in China. And we believe that it's essential that we win in China in order to succeed in the rest of the world, and that's what the 2025 figures show us, that they show that we are competitive because we are increasing our business in China. We increased a lot in 2025 and in the beginning of 2026 on the same trajectory.

Regarding your question on the share price and remuneration, the share price is -- EUR 12 is better than a few years ago, but compared to EUR 60 years ago, well, of course, that's a matter of high attention by the Board and the management. And it's, of course, for great frustration because we think that this does not reflect the potential intrinsic value of our company. So there are any number of reasons due to that, the external perception, the changes in perception by investors of the automotive sector, more of the European automotive sector, more specifically and equipment manufacturers within the European automotive sector even more specifically.

But there are also, first and foremost, reasons related to the company itself and the fact that it was not convincing enough in previous years about its ability to deliver in enough results to match the EUR 60 valuation, but we are strongly convinced that the upgrade potential for the shares' valuation is considerable. And this is our belief with the Board and the management. At some point, we believe that investors and the markets will take into account the deep seated transformation at work in your company for the last few years. That was shown, that was told them. It's not just an improvement. It's a transformation that started 4 years ago for Valeo, which reflected in a reflection -- in a transformation of our business model.

And as you saw, what is underway? And what is presented as a pathway for the next 3 years is a strong improvement in the profitability levels that started already in 2022. This is now a cash-generating ability, a free cash flow generating ability for us, which is critical. And that happened in 2025, and it was announced as being now a continuous and steady outlook from 2025 onwards. And finally, we think that we are able to grow our sales again. We said that this return was credible and now underway, and that will be visible already in China in the second half of this year. This is the deep seated change at work in your company, which we think should lead us at some point to an upgrade in the shares' valuation or at least in line with the underlying inherent value of the company.

Regarding remuneration, just one word to tell you that on the one hand, all top managers and high executives in the company received what we call long-term incentives performance shares, which are paid in shares. And so the amount is quite significant in the remuneration of corporate officers and also for the whole management team of the company, and it's also significant for top employees. And this is a very strong incentive for them to improve the share price valuation.

And so there is full alignment between -- well, that's the question you were asking -- between their personal interest in terms of remuneration for all the sub executives and the improvement in the group's valuation. Let me add also that in the long-term incentive plans' mechanics, there is a performance condition which connects the final awards with the relative performance of the Valeo stock and the overall market and other equipment manufacturers, which means that maybe not all shares are granted and the quantum of shares may be significantly cut if Valeo underperforms the other equipment manufacturers.

And that happened already in recent years. This is a central element. And of course, I'm not taking that very lightly in front of the General Meeting of Shareholders. We are betting on the company's ability to restore and to move to a universe which is more in line with what this company deserves. And all our corporate officers, top managers and top employees have a non-negligible share of the remuneration which is tied to the fortunes of the company.

Yes, and we must have been a shareholder since the times of Mr. [ Guda ], so a long-standing shareholder. The reason I wanted to ask your question is that, well, the real issue is capitalization, EUR 2.5 billion in market cap. It reached EUR 3 billion this week, but that's undignified for a company like yours.

The [ Society Banner ] in Monte Carlo has a bigger market cap than your company. And this is just a casino change. So something is not right here. And when I read your press releases every week, every week, there's more good news. Is -- doesn't the market get anything about what you're doing or what?

I'm also an Essilor shareholder. But when you look at your BRAIN and LIGHT divisions, in fact, you're putting what EssilorLuxottica are doing on both cars. And so if you say that what you're putting in cars is similar to what EssilorLuxottica are doing, it's 20x profit rather than 4x profit. [ What ] are you fully subscribed to your analysis, to be quite honest? So the Chairman, and please share it with others to convince investors and other shareholders because this is really how an upgrade will happen.

And I'm not -- I'm saying that extremely sincerely and seriously. I think that's the market perception of the company by investors as such that they are not yet convinced about our potential, the one that we believe in and which is evidenced by its technological content, its success. Maybe not avalanche, but a series of good news that we have had recently. And I think that at some point, well, such things are slow to happen, but at some point, market perception will change when they realize that this is an actual and lasting shift that has happened.

Maybe my colleagues would like to add something, maybe one thing to add because we meet with many investors, as you can imagine. What do they tell us? We think that there are 3 things that could be triggers for such a significant revaluation of the stock. And I think that the market is not expecting all 3 at the same time, but at least 1 of these 3 conditions.

First of all, a return to sales growth. The second one is more cash, more cash generation. And the third one, well, because the automotive sector is now highly penalized in multiple valuation multiples, so we need to grow our nonautomotive businesses. And for all 3 areas, we've got plans, and we've got commitments in terms of growth. We've got commitments regarding free cash flow generation, which should increase, and we proved that as early as 2025, and we have many activities on beyond auto.

So these 3 elements are well understood and analyzed. They've been modeled and they are covered by commitments that we've taken vis-a-vis the market, and I'm convinced that when one of these elements will materialize in a very tangible way for investors, the upgrade potential for the stock's valuation is considerable. Any more questions?

Sir, [ Joseph Mariani ], I'm an individual French shareholder. Since were amongst people a good company, we can be iconoclast of sorts. That's not critical. Well, you should be, Mr. Chairman. Well, it's true that there have been ups and downs for Valeo, but we need to look at the long term because quite frankly, it's better to be a Valeo shareholder than an [ Atos ] shareholder. The [ Atos ] stock lost 95% of its value.

And this is not just the share price except for -- for short-term speculators, but what we need is a dividend that increases over the long term, like Air Liquide. And regarding executive compensation, you should stop opposing managers and shareholders. So I hope that there will be more individual French shareholders and foreign pension funds that will put management under negative pressure. But we need personal commitments if then, the team is not incentivized. The headcount, the employees will provide success.

And so also, you talked about China, we know that the Chinese are confusions -- [ Confiuciunists ], but they have gone beyond Confucius now and follow U.S. methods. A question about AI. It's not a trick question, but you talked about opportunities, Mr. Perillat, Mr. Michel, but you didn't talk about risks. So we all know that with a lot of data to process in more or less -- more and more limited time, AI is a lever. However, we need to be aware of the risks, and the risks are several.

In an engineering company, the risks are cognitive. If you don't control AI and if you are not critical vis-a-vis AI -- I'm not saying that you shouldn't do it, but you might have a cognitive risk, and you need to handle it. And there are other risks. And there's a dependency risk, especially if we don't have a sovereign AI. I don't know whether you've got sovereignty guarantees regarding AI. And then there are more traditional risks related to the potential data leaks and leaks of confidential information. And that's it for me.

Well, thank you very much for your comments and for your question. Of course, there are risks. It is our duty to handle those risks correctly. Regarding the cognitive aspect that you discussed, when we implement agents that generatively creates mechanical parts or software in the key steps for these processes, we have humans in the loop. There's always an engineer looking at the console to approve the suggestion or suggestions or select out of the panel of generative suggestions, the best suited.

We are going step by step. I'm not saying we'll still do that in 10 years' time, but at the step that we're at in the deployment of AI, we still have, especially in product development processes, we have human engineer in the loop, steps to validate, prove and confirm what the AI is suggesting.

You talked about data leak risks. Well, I think that one of the considerable advantages for Valeo is that we are very unified. We have the same information systems. We have the same ERP, we have the same software in the whole company so that an AI can work on all of the group's data without any difficulties. And we're in a closed environment.

Well, in the last 20 or 30 years, we put it down in writing. It was -- we did not forecast AI, but all our design rules are put down in writing. All the quality issues that we can have in plants were all covered by documents, by feedback and post mortem documents. We learn from everything we do.

What does that mean for the next development cycle? Well, it's all in somewhere in pricing. We have a unified and considerable database. Valeo's AI for design of printed circuit boards or mechatronic systems or validation processes, this AI is closed. I'm not saying that it's not in the cloud. It is in the cloud, but it's in a closed environment, which is Valeo's. This means that our knowledge, our experience, a 100-year-old experience as an equipment manufacturer is experience that will not benefit anyone else. All our models are running on our models, and they are not feeding models for competing companies. So this is a very important element. And you're absolutely right in identifying, and so this is something that we have also identified and that we handled in a very strong and firm manner.

Edouard, amongst the risk factors for the company, you saw that we clearly identified the cybersecurity risk, which is real. You're never totally safe from such a risk, but I think that now, and it's been recognized by industry experts, the fact that we've got good security. And I'm just looking at the insurance premiums that we pay for cybersecurity. I could see them going down year after year, and insurers are telling us, yes, you've got a good level of risk, a good level of protection -- I'm sorry, since the speaker compared to your risk. But then, of course, the risks still exists.

Thank you. Are there any final questions before we move on to the resolutions?

Yes. Good afternoon, ladies and gentlemen. I'm an individual shareholder out of [ Belief ]. I have got a question. The Elevate plan is now talking about growth opportunities beyond automotive, especially in defense, you talked about it very succinctly, whereas military budgets in Europe are increasing strongly and require high technology for drones, night division or heat management. Could you clarify Valeo's road map when it comes to weapons and defense? Are you going to have direct partnerships with major players in the sector? And what share of revenues will be generated?

Thank you for your question. Well, we are, of course, deeply convinced about how important the defense industry is and what potential -- the positive potential it has for our revenues. We tried to find an alignment between defense industry requirements and Valeo's know-how to see where we could have any added value.

So we have high potential, and then what is our know-how. We know how to produce, design, source products, potentially complex ones, with the caveat that they are produced in a few thousands. Valeo's not configured to produce 1 part a month or 1 a week. We are not able to do that. We don't have prototyping workshops. We have plants that can turn out 1,000 parts a day that are very good at that.

So when you connect the defense industry's needs with Valeo's know-how, of course, you can find drones. So we looked at and we're still looking at producing drones. We were first involved in the drone compact of the J4 to understand the products and today's and tomorrow's technologies and who the players are and what the needs are.

And I think we've understood a number of things. We can do two things. First, we can work on essential drone components, and then we can assemble drones. We won't be drone designers, but we can assemble them for drone manufacturers with the best standards of the automotive industry in terms of quality and speed.

And then what can we do? Well, we can produce motors. Most drone motors are Chinese. We need a sovereign European motor, and we produce electric motors. You know that we do that for the automotive industry. So we can build a drone motor. And we started working on these aspects.

I don't have any specific announcements to make today, but you should be aware that we've got a strategy for drone components and potentially drone assembly to benefit the European drone industry so that this drone industry can become sovereign. Are there elements of this plan in Elevate 2028? No. We prefer to have a 3-year plan for 2026, 2027, 2028 without any revenues or opportunities related to beyond auto, as we call it, beyond automotive. But we are determined and resolute to grow in adjacent ancillary industries to the automotive industry, especially for defense and drones to be involved in assembly, but also the manufacturing of essential drone components.

Thank you.

I suggest that we take one last question. That's a comment. All right. All right. Comments off mic? Do you have a question? And that will be the last. Interpretation needs a microphone for the questions. The question continues off mic. .

Thank you for that suggestion. I've taken note of it. We have -- we're studying the cost of -- the rising price of shares, and this will continue to follow the dividend structure as well.

So I suggest that we close the debate and put to the vote, the resolutions that were submitted to your assembly. Unless requested by a shareholder, the full text to be each resolution will not be read, it being specified that the subject of each resolution will be circulated at the time of the vote. Before the resolution is put to a vote, we're going to watch a little video on how the voting tablet works so we can just...

[Presentation]

One last very important point. I would like to inform you that the number of shares finally entered -- entering the name of shareholders present represented or having voted by mail represents approximately 68% of the shares with voting rights.

Thank you, Mr. Chair. We're going to start with the ordinary. So first, [indiscernible] assembly. So first, to resemble on [ approvation ] of the accounts -- annual accounts for 2025. The vote is open.

[Voting]

The vote is closed. Resolution has been approved.

Second resolution, approval of the consolidated financial statements for the year ending December 31, 2025. The vote is open.

[Voting]

The resolution has been approved. Third resolution, appropriation of the profit for the year ending December 31, 2025, and setting of dividend at EUR 0.44 per share. The vote is open.

[Voting]

The vote is closed. The resolution has been approved. Fourth resolution, regulated agreements and the related statutory auditor's report. The vote is open.

[Voting]

The resolution has been approved. Fifth resolution, appointment of Fabienne Lecorvaisier as a Board member for a period of 4 years. The vote is open.

[Voting]

The vote is closed. The resolution has been approved. Sixth resolution, the renewal of the term of office of Gilles Michel as Board member for a period of 4 years. So the vote is open.

[Voting]

The vote is closed. The resolution has been approved. Seventh resolution, renewal of the term of office of Bruno Bezard as a Board member for a period of 4 years. The vote is open.

[Voting]

The resolution has been approved. Eighth resolution, renewal of the office of Bpifrance Participations represented by Alexandre Ossola, as a Board member for a period of 4 years. The vote is open.

[Voting]

The vote is closed. The vote has been approved. Ninth resolution, approval of information relating to the remuneration of corporate officers for 2025. The vote is open.

[Voting]

The resolution has been approved. Tenth resolution, approval of the compensation for Gilles Michel as Chairman of the Board of Directors for 2025. The vote is open.

[Voting]

The vote is closed. The resolution has been approved. Eleventh resolution, approval of the compensation for Christophe Perillat, Chief Executive Officer, in 2025. The vote is open.

[Voting]

The resolution has been approved. Twelfth resolution, approval of the remuneration policy applicable for Board members for 2026. The vote is open.

[Voting]

The resolution is approved. Thirteenth resolution, approval of the remuneration policy applicable to the Chairman of the Board of Directors for 2026. The vote is open.

[Voting]

The vote is closed. The resolution has been approved. Fourteenth resolution, approval of the remuneration policy applicable for the Chief Executive Officer for 2026. The vote is open.

[Voting]

The vote is closed. The resolution has been approved. Fifteenth resolution, renewal of the authorization of the Board of Directors regarding the share buyback for a period of 18 months. The vote is open.

[Voting]

The resolution has been approved. Now let's move on to the only resolution under the purview of the Extraordinary General Meeting, the 16th resolution, renewal of the authorization to be given to the Board of Directors to proceed with free allocations of existing shares or shares to be issued to members of the group's employees and corporate officers for a period of 26 months. The vote is open.

[Voting]

The vote is closed. The resolution has been approved. Now a final resolution, for which the responsibility of the General Assembly is [ delivered ] as an ordinary general assembly, 16th resolution powers to carry out the formalities required by the law, [ following ] to the holding of the general meeting. The vote is open.

[Voting]

The vote is closed. The resolution has been approved. Thank you for your attention. Mr. Chair, I give the floor back to you.

Ladies and gentlemen, the agenda is thus exhausted, and I declare that this meeting is adjourned, and I thank you for your attendance.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Good evening. This is the conference operator. Welcome, and thank you for joining the Valeo First Quarter 2026 Sales Conference Call and Webcast. [Operator Instructions] At this time, I would like to turn the conference over to Ms. Marisa Baldo, VP, Financial Communication and Investor Relations of Valeo. Please go ahead, madam.

Good evening, everyone, and welcome to Valeo's first quarter sales conference call. I'm Marisa Baldo and joining me is our CFO, Edouard de Pirey. The format for today will be a presentation for 10 to 15 minutes, followed by a Q&A session for sell-side analysts.

For your reference, the press release and slides are already available on our website at www.valeo.com. A replay of the call will also be available on our website. Before Edouard begins, I want to quickly directly -- direct you, sorry, direct your attention to the disclaimer on Slide 19, which I invite everyone to read. Thank you again for joining us. Edouard, the floor is now yours.

Thank you. Thank you very much, Marisa, and good evening to all, and thank you for joining Valeo's First Quarter 2026 sales presentation. So let's start with the key takeaways for the quarter on Slide 2. In a global environment that remains volatile, we delivered a solid performance. Total sales were up 1.3% on a like-for-like basis, consistent with our full year objective. OEM sales decreased slightly like-for-like in a market down by 3% resulting in a 3-point outperformance. All 3 divisions outperformed. The execution of our Elevate 2028 plan remains on track. Specifically, regarding the growth engine, we confirm our anticipation of a return to growth in China in the second half of the year and we are laying the groundwork for broader growth resumption in 2027. On this basis, we are reiterating our '26 guidance across all indicators. We look for sales between EUR 20 billion and EUR 21 billion with flattish OEM sales. We target operating margin between 4.7% and 5.3% and free cash flow in excess of EUR 400 million. These objectives take into account S&P Global Mobility estimates published in April and assume no significant changes in macroeconomic projections or significant supply chain disruptions.

Moving on to Slide 3. We are operating in a challenging environment. This is a situation that has persisted for several years, so I guess it now seems to be the new normal for our industry. On a positive note, we have become accustomed to this. We have successfully adapted and demonstrated our agility. We will approach the current challenges exactly the same way drawing on the experience of the past crisis and applying the same proven method with consistency and discipline. Regarding the Middle East conflict, our first thoughts obviously are for the people affected, and we hope for a swift return to peace. As far as value is concerned, there are very limited direct industrial consequences. We have no industrial operations and negligible revenue exposure in the region. We have only one supplier there, a supplier of aluminum tubes that remains fully operational. Logistics flows between Asia and Europe are routed via the Cape of Good Hope. It has been the case for a couple of years now.

We are not energy intensive. Direct energy cost represents 1.5% of sales, 1% for electricity and 0.5% for gas. So in total, 1.5% of sales, and we rely on long-term contracts. Finally, we have not observed any material impact on customer demand so far. Nevertheless, we remain vigilant and closely monitor the situation. That was for the Middle East. Now on the supply chain side, we are proactively addressing tensions in the memory market. Since we released full year results last February, we have made significant progress in terms of coverage. We now have secured more than 90% of our memory volumes for 2026, and we are confident that we will be able to serve customer requirements over the full year. Furthermore, we are in constructive pass-through discussions with our customers, and we are managing the technology transition with a dedicated task force. Lastly, obviously, in such an environment, we stay focused on delivering profitability and cash. On the one hand, we are on track to achieve the annual run rate of EUR 300 million in savings from our self-help measures as of this year. And on the other hand, we maintain strict discipline on CapEx and R&D, keeping our investment spending under tight control to support our cash generation target.

Now on Slide 4, a focus on the third engine of Elevate '28, which is growth to show that we are executing our road map as planned, with key milestones unfolding in 2 of our growth regions. In North America, we have started to build a new site in McAllen in Texas, to deliver one of the largest orders in Valeo's history, the Central Compute unit for General Motors. This is an illustration of the conversion of our portfolio of order intakes with production set to start in 2027. Note that the investment of $225 million over 5 years is well taken into account in our Elevate plan. In India now, we announced 2 new manufacturing lines to support the ongoing rapid development, a new line in Pune for power dedicated to electric powertrain systems designed to support the Mahindra new-born electric platform. And a new line in Sanand for BRAIN to manufacture vision cameras for several major OEMs in India.

Moving now to China on Slide 5. With the Beijing Auto Show opening tomorrow, we want to illustrate the momentum we are building in the region by highlighting a non-exhaustive list of recent start of productions. We have several key start of production in March, April '26, including the 5-in-1 Deep Integration Power Electronics module for a major Chinese automaker, the Dual-Layer HVAC which has entered in production in March '26 for several Chinese partners, including Chery, a Domain Controller for JV OEM first of the longest of businesses in this domain for both JVs and Chinese OEMs and the Fascia & Logo Light for the XPENG P7. This dynamism confirms that we are on track for a return to growth in China in H2 this year.

Looking now at the numbers on Slide 6. As I said in the introductory remarks, group sales reached EUR 5.1 billion, up 1.3% like-for-like. Perimeter impact was 0.6 percentage points negative essentially due to the sale of the powertrain automotive sensor business. ForEx had a negative impact of 4.3 percentage points, reflecting the appreciation of the euro versus the U.S. dollar and the Asian currencies. OEM sales stood at EUR 4.2 billion, slightly down by 0.6% like-for-like in a global automotive production down by 3.4% according to S&P, meaning an outperformance of around 3 percentage points. Aftermarket remains a steady pillar, growing 1.9% like-for-like, supported by the performance in North America and Asia as well as the development of new services with distributors. Miscellaneous sales grew by 37% like-for-like, thanks to tooling and R&D contributions from our customers and helped by a favorable comparison basis.

Turning to Slide 7 now with the performance by region. The 3 points outperformance in OEM sales was supported by a favorable geographic mix impact of 1.5 points. Europe underperformed by 2 points, reflecting a decline at Power, partly offset by the good performance of light and displays and telematics in BRAIN. North America was a standout of the quarter, growing 7% like-for-like and outperforming by 9 points, driven by Power and BRAIN. Asia, excluding China, also grew like-for-like and outperformed during the quarter, essentially driven by BRAIN. Note that the momentum in India continued at a brisk pace in accordance with the Elevate roadmap. In China, we outperformed the market by 1 point, supported by Light. The progress to reposition our customers' portfolio continues and as I mentioned earlier, we are on track for a return to growth in China in H2 2026.

By division now, starting with Power on Slide 8. In the first quarter, the division outperformed the automotive production by 2 points, bolstered by a strong start in North America. In China, the performance was in line with the market, reflecting a transition phase between the first wave of electrification and the upcoming scale-up with Chinese EV players. Overall, the good performance in e-technologies offset the slowdown in ICE technologies.

On Slide 9, the BRAIN division posted an outperformance of 3 points, reflecting the continued good performance of displays and telematics, thanks to the ramp-up of last year's wins. Momentum in software-defined vehicles continues to develop as demonstrated by the new site in Texas, a point that I commented on earlier. We are also scaling up in India at our Sanand plant to support local OEMs.

Last but not the least, on Slide 10, Light posted a robust performance in the quarter recording like-for-like growth of 2% and outperforming the market by 5 points. This is primarily driven by China and Europe. In China, the division continues to gain traction, driven by successes achieved with Chinese OEMs. This has led to robust growth and strong outperformance in the quarter. This is consistent with our earlier statement, which is that Light with its faster cycles from order intake to sales, would be the first division to experience a return to growth in China. In Europe, the ramp-up of lighting program for mainstream and premium customers remains a key driver.

As a conclusion, on Slide 11. Q1 performance is in line with our full year objective. We are operating in a challenging environment, and we have the experience, a proven methodology and the agility to manage the situation effectively. On this basis, we reiterate our guidance for the full year '26. And last, we are executing the Elevate 2028 plan as planned. Thank you very much for your attention. I'm now happy to take your questions with Marisa.

[Operator Instructions] The first question comes from José Asumendi of JPMorgan.

Just maybe just a couple of questions. I think, one, if you can comment a bit more within BRAIN, when do you expect the revenue acceleration to pick up a bit more? Is it kind of a second quarter event? Or do we expect that to follow through maybe second half of the year? And you mentioned in the comments the new U.S. footprint. And I believe also you have a strong order backlog in this division. So any additional light into the growth of BRAIN?

And then second, when it comes to raw materials and inflation costs, is there a risk that as a result of rising raw materials, across the supply chain and not just for Valeo, but just in general, for the supply industry, we might end up with this larger headwinds than expected on the back of the recent volatility we're seeing in raw materials, which may contract margins a bit more than expected in the second half versus the first half. And which mechanisms do you have to pass on price increases, please?

Thank you. Thank you very much, José, and good evening. Thank you for your question. So as far as BRAIN growth is concerned, so you have in mind that we have not guided for exactly when this would pick up. We said that we would grow in China in H2 '26. We said that we would outperform the market in China in '27 and that we would have growth in '27. Nevertheless, you are fully right that the underlying growth of BRAIN will come and will support this growth. I hinted that I would be disappointed if BRAIN would not grow in H2 this year. Clearly, this is part of what we have in mind. Nevertheless, it is not part clearly of the guidance that we offered to the market.

As far as the raw materials are concerned. So it is true that there is clearly an increase of raw materials these days, aluminum, copper, steel, resin, oil, everything. You also have in mind that for most of the raw materials, we are well indexed with our customers. For what is not indexed or what is not automatically passed through we have, I think, a strong track record to be able to pass it through our customers. We have done it in the last few years. We have learned how to do that. Naturally, sometimes there is a bit of lag between the actual price increase of the raw material and what we get from the customer, but at the end of the day, we have been able up to now to pass everything through, and I am confident that we will continue to pass through in the future.

The next question comes from Christoph Laskawi of Deutsche Bank.

The first one will be on DRAM and thank you for providing the comment that you secured more than 90% of the volumes. Could you remind us what percentage share you had when you presented the full year numbers? And also how securing the 90% potentially impacted pricing of that? And if you can, any comment on '27 and how it looks for that period would be appreciated.

And then the second question would be just on OEM compensation payments. If you've seen any of those or bigger payments in Q1 or what to expect also heading into Q2? And it seems like you don't want to report High Voltage in other like divisional breakdown revenues anymore. Any specific reason for that? Or did I just miss that across to release?

Yes. Thank you much, Christoph. Thank you for your questions. So as far as DRAMs are concerned, so you have in mind that we said that our normal amount of purchasing for DRAM is $150 million a year. Now talking about overpricing or price increase of DRAM, if I was telling you how much it would be, this would be a challenge for our teams then because of negotiations. And this is naturally a competitive topic that I cannot make public here. But clearly, our objective is to get it compensated by the customers and the discussions we have with them are good understanding on where we are, and we are confident that at the end of the day, the net impact would be limited.

As far as the volumes are concerned the supply chain, I don't have in mind exactly how much it was in February. We did not disclose it. But I'll tell you, it was not at all 90% and we are now not safe yet, but we are convinced that we are able to deliver all the volumes requested by the customers for this year. It has been a very strong job done by our purchasing teams and logistics teams, and I really appreciate all the efforts they have put there. Now seeing what they have been able to do in 2026. I'm sure they will do the same for '27. I don't say it's done. It's not done yet, but we still have 8 months to go to secure the full year '27, and I'm convinced we will be able to do it by the end of the year.

Your second question was about compensations by the customers. As far as the raw material price increase that José was mentioning earlier, this has no impact on Q1. You have in mind the Iran war started at the very end of February and the impact of raw materials was rather limited in the month of March. And all our job actually is to report this increase of prices for the latest possible. So in Q1, no impact. You also mentioned that we did not break down the High Voltage. You have in mind that we have gone from the Move Up plan '22-'25 to the Elevate '28 plan. So during the Move Up, we committed to a certain number of set of KPIs that we changed. And I understand that globally, investors and analysts appreciated the change we had in the KPIs at that moment.

And we explained at the CMD that we would change the KPIs, including changing also the way we report. You have in mind that what we were reporting as High-Voltage sales were the former Valeo Siemens JV sales, which are only motors and power electronic sales for EVs and are not all the e-technologies that we are selling. On top of that, in the meantime, we have changed our organizations, and we are not following and we're not able actually to have in all our reporting on a daily basis what we sell for ICE or e-technologies. We told you what we were aiming at by the end of '28, but we said that we would stop reporting and splitting within the division.

The next question comes from Thomas Besson with Kepler Cheveraux.

Two questions as well, please. First one, the main driver of your revenue growth, a bit like last year is your miscellaneous revenues. Can you remind us what this is and why they are higher than a few years ago when you had higher revenues, why that proportion is growing? Maybe there's an element of accounting change.

The second question, can you comment on the local content outcome, even if it's not voted by the parliament, I'm sure it's going to be even weaker after than now. But do you believe that it effectively answers what Christophe was referring to champion in terms of reducing the need for European suppliers to shut down manufacturing output in Europe?

Thank you very much, Thomas, for your questions. As far as the miscellaneous sales are concerned, yes, it grew 37%, but you have in mind maybe that it is compared to last year, where it was minus 15%, the first quarter of '25 compared to '24. So these miscellaneous sales, you remember, this is customer contributions to R&D. And this is basically a good mark of the future growth because the more you have sales of prototypes of R&D, the more you prepare the future for the growth to come. So there is a strong basis effect from Q1 '24 to 2025 and then from Q1 '25 to Q1 '26. On the...

Yes, sorry, if I can follow-up -- sorry, just a follow-up on that.

Yes.

If I look at rolling 12 months for that line, I mean it's never been at that level ever even when you had the higher revenues. So has there been any change over the last 2, 3 years on what you are putting in miscellaneous revenues, please?

No, there has not been any change in the definition of miscellaneous sales in the last years, but there is more R&D revenues. There is more prototypes because there are more projects and because there are more things to prepare for the future growth. And I do confirm there's absolutely no change in the definition.

As far as local content is concerned, you have in mind that Christophe had set 4 main requests. The first request was about the actual number for local content. We said 75%. It is actually 70% in the European Commission proposal. Basically, it's a question how you compute it. We consider this is a good result, and this is acceptable, and this is the right direction. Then the second request we had was it is about old vehicles. And the proposal of the European Commission is about PHEVs and EVs. So you might think that it is not what we requested. But actually, in the mind of the European Commission, in 2035, all cars sold in Europe will be either PHEV or EV or range extender. Therefore, we have no issue with this point, and this meets the requirements that we have.

The third one -- the third request we had was about excluding the battery and the battery is excluded in the computation. There is a specific clause for battery in the product of the European Commission. Last but not least, it was the question of which countries are acceptable, which are part of Europe in the definition. There is a kind of unclear situation here. Is -- are the countries part of a relationship of a trade relationship with Europe included in the fair trade, let's say, agreement and included, this means that Europe would be from Ushuaia to Tokyo. Or is it just about Europe '27. And this is where we have still a question and where we ask the European Commission to be clear about and we ask for Europe to be Europe. That is -- those are the 4 points that we mentioned and this is how Christophe reads it afterwards.

The next question comes from Vanessa Jeffriess of Jefferies.

I know there was no kind of compensation effect in the first quarter. But wondering if there was anything more one-off in nature to be aware of that influenced that strength in Power in North America in the first quarter? And if we see that level of outperformance continuing throughout the year?

Thank you, Vanessa. Actually, no, there is no specific one-off to be considered in this outperformance in North America in the first quarter of this year. You have in mind that last year, we had quite weak operations in North America, especially with one customer that we faced a lot of postponement of start of production of with even very low volumes. We are now back. We are back with these customers also with the others. You have seen that we also get continuous awards, continuous recognition from our customers.

So clearly, the North American market was before more, I would say, old type of cars market with not a lot of technology, actually not of electrification, but also not a lot of ADAS technologies and software-defined vehicle technologies and it is coming, actually. It is coming. So it is the time -- we said it is the time of Valeo in India, but it's also the time of Valeo actually in North America because the market is moving towards much more electronics, much more software, and this is where we are strong at, and this is where we can get businesses from. So this is where this performance in North America comes from.

And secondly, on a more general basis, I know you said you haven't seen any material change in demand. But I guess do you think -- do you envision there will be any pull forward in demand happening in the second quarter?

That's a tough question, Vanessa. Actually, what we are following on a weekly basis is securing, we don't see any change in the delivery instructions from our customers. Are they pulling in parts today? Are they increasing the inventories before the second half? I cannot tell. What I can tell you is that I'm following S&P Global Mobility's forecast. I'm following the delivery instructions. We receive. We have not seen any sharp increase like pull in or decrease because of lack of something today, we see just delivery structures as we planned, and the semester is really going as we planned from the January 1.

The next question comes from Stephen Benhamou with Bank of America.

I have 3 questions actually, if I may. The first one is to come back on Thomas' question regarding the miscellaneous line. If I'm not mistaken, you've benefited from client compensation last year for EUR 300 million, which shouldn't occur in 2026. So I'm struggling to reconcile this headwind in 2026 and the strong performance that you delivered in Q1.

The second question is regarding your indexation clauses. So can you please remind us what's the percentage of the raw mat, which are under indexation clauses? And finally, a quick one on the guidance. So you've confirmed your guidance despite no lower assumptions in terms of light vehicle production. So to what extent are you able to compensate for a lower volume environment? And should we see the lower end of the guidance as a more credible scenario from now?

Thank you very much, Stephen. So as far as the claims for '25 are concerned, you remember that these claims are mostly in Q4 last year. So as we are only talking here about Q1, I don't really understand how we could compare. So yes, you're right, there was the EUR 300 million claims that we mentioned for the full year, but this was absolutely not in Q1 '25, and this is why it is not comparable.

As far as the indexation clauses are concerned, I would say this is a competitive question. And I don't want to make, as Christophe always says, I'm not here to make the job of our commercial teams even more complicated. So I will not comment too much on that. What I can tell you is that as far as the LME raw materials are concerned, we are very well indexed with our customers. Now for the guidance, if I may, can you rephrase your question because I have not in mind at all that S&P has a view of lower volumes for the full year. So I do not see why we would have to change here.

Well, the thing is that, if I'm not mistaken, your initial guidance was based on S&P's assumption in Feb, which was minus 0.4%. Now S&P is anticipating minus 1.8% GDP decline in 2026 given the fact that your guidance is based on those new assumptions. I was wondering to what extent you're able to mitigate this lower volume environment? And if we should now see the lower end of the guidance as a more credible scenario given this lower volume environment?

I did not pay attention exactly to this exact number. Thank you for making them very clear here. I do not see a strong impact today on my forecast. I -- when I review my forecast for the months and quarters to come, I clearly confirm the guidance globally, and I would not guide you through the lower end or the higher end of the guidance.

There are no more questions registered at this time. Mr. de Pirey, back to you for the conclusion.

Thank you. Thank you very much, and thank you all for your attentive listening. Thank you for your questions. So you have understood this was a solid first quarter that allows us to reiterate our full year guidance. Next event is our AGM on May 21 and half year results on July 22. We hope to see you there. Thank you very much and have a good evening.

Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.

Good evening to all, and thank you for joining the presentation of our ' 25 annual results, which I will do together with Edouard de Pirey, Valeo's CFO. As you will see, our results in '25 are solid. Our guidance for '26 is in line with our plan, and we are confident about the successful execution of our Elevate '28 strategic plan.

I would like to highlight 3 important points. Our profitability, it continues to improve. The first engine of our plan is on. We set a historic record for Valeo in terms of free cash flow from our operations before restructuring costs and before interest. This reflects the transformation of our business model to generate more cash structurally.

The second engine of our plan is on. And we recorded a solid order intake in '25, and we are preparing in '26 numerous production launches, which will contribute directly to the return to growth in '27. The third engine of our plan will be on in '27. I will naturally start with '25 highlights and '26 guidance, then Edouard will walk you through our '25 performance. This 25 minutes presentation will be followed by a 35 minutes Q&A session that we will handle together, Edouard and I.

So let's start. Let's start with '25 highlights. In '25, we delivered on profit and cash, and we did so in a demanding environment. The environment has been marked again by volatility in volumes, by program postponements and by an unfavorable customer and geographic mix and also by many headwinds such as trade tariffs, ForEx variations and shortages of civil components.

To overcome this demanding environment, we relied on our operational excellence. We have been proactive in taking the necessary actions to mitigate its effects on Valeo. On top of it, let me highlight a few topics. We continue to apply strict discipline to our pricing. We have further lowered our breakeven point, and we improved the efficiency of our R&D, and we strictly controlled our industrial CapEx, as you will see.

Lastly, we continued our work to rebalance our commercial position. Two evidences. One, we are regaining momentum in China with a solid order book, particularly with Chinese OEMs. And the second evidence I picked is Beyond Auto. We won in North America, our first business for battery energy storage systems, $225 million order that will go into production as soon as next August.

This proactive management fuels the 3 engines of our trajectory, improved profitability, structurally increased cash generation and a return to growth in '27. Now moving to Slide 5. We have achieved all the financial objectives we set for '25, whether in sales, in EBITDA, in operating margin or in free cash flow.

Our total sales reached EUR 20.9 billion. Our operating margin reached 4.7%, an improvement of 0.4 points versus '24. And as mentioned, the group achieved a record level of free cash flow before restructuring and interest of EUR 756 million, a level never before achieved by Valeo.

According to our new definition of free cash flow, that is to say after net financial expenses, free cash flow reached EUR 371 million. This is comfortably above the '25 guidance and significantly higher than in '24.

Slide 6. You can clearly see the continuous improvement in our profitability since '21 and which has been confirmed again for '25. This continuous improvement is based on 3 levers: first, the right pricing of our technology with high margin orders, rigorous and systematic compensation from our customers for tariffs for reduction in program volumes and productivity from our supplier base.

Second, improving our gross margin. It reached 20.2% in '25, up 1.2 points compared to '24 and the cumulative increase since '23 is 2.3 points. As you know, we are committed to keeping our gross margin high through solid operational execution, improved industrial performance and widespread use of AI.

Third, reducing our breakeven point. We further reduced our SG&A expenses by 6% in '25 compared to '24. This represents a cumulative decrease of 10% since '23. Slide 7. You can see the improvement in our cash generation, which has been ongoing since '21. Free cash flow according to the new definition, reached EUR 371 million, and we achieved this, thanks to higher profit, our EBITDA reaching 14.7%. Industrial CapEx reduced by 30% at 3.8% of sales, which represents a decrease of EUR 348 million compared to '24. And the target remains as announced between 4.5% and 5% during Elevate, but we are not ruling out the possibility of doing better as soon as '26.

And finally, we reduced our gross R&D expenditure by close to EUR 200 million, a decrease of 7% compared to '24. As announced, the peak in R&D spending is now behind us. Slide 8. We recorded solid order intake in '25, reaching EUR 24.6 billion with a slight acceleration in H2. These orders concern all 3 divisions and all regions of the world, particularly China, and I will come back to this in a moment.

Over the period '22 to '25, the average annual order intake is approximately EUR 26 billion, a level that makes us confident about the expected growth level in our trajectory. As I mentioned, we are regaining momentum in China. We have won major and strategic contracts there in '25. For example, we won 6 businesses in domain controllers. In electrification, we recorded multiple contracts for our new generation dual inverter, our 5-in-1 deep integration power electronics module and our innovative dual-layer HVAC. These orders are mainly with Chinese OEMs and will be SOP as soon as in '26.

Our order intake with Chinese OEMs represented 2.8x our sales and Chinese OEMs represented 63% of our order intake in China. So we are rebalancing our business there, and we do this with a focus on the OEMs experiencing strong growth. In '25, 54% of our sales in the country already come from Chinese OEMs. Of course, and we know it very well, we still have a long way to go, but real progress has been made. And I confirm what we said in November during the CMD, we are targeting a return to growth in China in H2 '26 and a return to outperformance next year.

We continue to operate and do business with the utmost care and commitment to ESG. We're perfectly on track with our road map, and we're very proud to have obtained a AA rating from the CDP for both climate and water at the beginning of the year. We continue to be recognized as an ESG leader by rating agencies.

Slide 11. You can see our '26 guidance and '26 is the first milestone in our Elevate '28 plan, and we are confident that by the end of the year, we will be firmly on track. We aim for further improvement in profitability and cash generation in an environment that will remain uncertain. Concretely, in '26, we're aiming for sales between EUR 20 billion and EUR 21 billion. Our guidance represents a flat organic growth in OEM sales versus last year, given the EUR 400 million impact of ForEx and perimeter versus last year.

Operating margin between 4.7% and 5.3%. And to do so, we will maintain our strict price discipline, benefit from our self-help measures and keep a strong focus on cost reduction. And we target a free cash flow of above EUR 400 million by capping gross R&D below '25 levels, thanks to further R&D efficiency gains and by keeping strict control on our industrial CapEx.

And as already mentioned, in '26, we will have numerous starts of production throughout the year for all our activities in all regions of the world. I will now hand over to Edouard, who will detail our performance for '25.

Thank you very much, Christophe, and good evening, everyone, and thank you for being with us today. Let's now dive deeper into the financial performance for full year '25. As usual, you can refer to the backup slides for H2 and Q4 figures.

I will start with the top line on Slide 13. Total sales landed at EUR 20.9 billion, up 0.5% like-for-like, EUR 400 million above our guidance. OEM sales came in at EUR 17.3 billion, down 0.6% like-for-like, reflecting the market headwinds Christophe mentioned in his industry remarks.

Aftermarket showed resilience with a like-for-like growth of 0.9%. And miscellaneous sales grew by 15% like-for-like. More specifically, in '25, it includes fair compensation for contract cancellations for which around EUR 300 million impairments were booked as well as R&D and tooling sales, testifying to the good momentum of our order book.

Looking at the OEM sales performance by region on Slide 14. Globally, we had a 5 points performance gap, largely driven by negative geo mix of 3 points. In Europe, we outperformed by 2 points with all divisions contributing to the outperformance. In China, which is a key focus area, as you know, we are still in a rebalancing phase.

Globally, we underperformed 17 points with an underlying momentum pointing in the right direction, both in terms of sales as well as in terms of order intake. In Asia, excluding China, the performance gap stands at 2 points. Within that space, especially India, which we emphasize as a key region for us at the CMD, continues to grow strongly. The region is well on track with the Elevate trajectory with consolidated sales of around EUR 300 million, up 43% year-on-year.

Let's now have a look at our divisions. First, Power on Slide 15. The division is executing successfully on its cost structure transformation. The increase in operating margin of 1.3 points is evidence to this. This is the result of a deep transformation.

We rationalized the footprint. We improved R&D efficiency, and we reduced SG&A. In terms of sales, it is worth mentioning the momentum rebounding in China with local OEMs, more than 38 SOPs with Chinese OEMs over the 24, 25 years and good order intake ratio with them. Moving to BRAIN on Slide 16. 2025 was a year of consolidation for BRAIN, marked by the end of several projects in ADAS as well as SOP delays in North America.

On the positive side, there was a good momentum in displays and telematics and a solid order book, notably in software-defined vehicles, which reflects the attractiveness of our product portfolio and provides a solid foundation for future growth. In this context, the operating margin was down 40 basis points, but remains above group average at 5.4%.

Finally, Light on Slide 17. The division posted flat sales on a like-for-like basis with contrasting trends. H1 was affected by postponements in North America, and this was offset by a good performance in Europe throughout the year, supported by multiple product launches and a solid momentum in China, especially in H2 with numerous SOPs with Chinese OEMs. Notably, our Light division slightly outperformed the Chinese market in Q4. The division posted a 5% operating margin above group average. It is 0.5 point below last year due to the SOP postponements in North America.

Moving to Slide 18. Let's now focus on the group operating margin. As highlighted by Christophe earlier, we continued to deliver an improvement in profitability in '25 with an operating margin up 40 basis points to 4.7%. Four key highlights here. First, gross margin progressed by 1.2 percentage points year-on-year, making it the key contributor to the profitability improvement.

Gross margin reached its highest level since 2017 at 20.2% in 2025. This level is consistent with our ambition to sustainably above 19%. It is the result of 2 factors: On the one hand, maintaining strong discipline, pricing discipline, as reminded by Christophe earlier. On the other hand, industrial excellence with smooth launches, operational efficiency and automation in all our plants as well as naturally the benefits from a streamlined industrial footprint. So after gross margin, continued tight cost control brought an additional 10 basis points to the operating margin. SG&A were down again in '25 by 6%, bringing the cumulative reduction over the last 2 years to 10%.

Third, in contrast to these trends, net R&D expenses went up by 1 percentage point, reflecting the combined effect of 2 opposing forces, the benefits of efficiency gains on the one side, which was largely outweighed by amortization and impairments of capitalized R&D on the other side. Let me provide more details about this. The reduction by EUR 193 million in gross R&D expenses demonstrate the R&D efficiency gains achieved during the year.

This is in line with the ambition communicated at the Capital Markets Day. It enabled a decrease of 11% of the capitalized R&D to EUR 930 million. On the other hand, the depreciation of R&D was flat year-on-year at EUR 623 million.

Finally, we booked EUR 234 million for impairment of capitalized R&D, essentially as a consequence of contract cancellations. So finally, the IFRS impact was plus 0.4 points in '25, 1, 2 points less than in '24. We expect this impact to be around 1.5 points in '26. Fourth and last point regarding operating margin. The net reversal of provisions for unfavorable and loss-making contracts amounted to EUR 50 million for the full year, 0 for the second half, well below the EUR 181 million recorded last year.

Turning now to Slide 19 on the net income, 2 main points to highlight here. The charge of EUR 168 million for other income and expenses essentially composed of restructuring costs of EUR 156 million, including EUR 110 million related to the one-off self-help measures launched in '24. The effective tax rate of 43%, it bears the impact of the cash repatriation program initiated in H2 for an amount of EUR 41 million recorded in the P&L, in line with what we had indicated. All in all, the net attributable income stands at EUR 200 million, up 23% year-on-year.

On Slide 20, you have an overview of the restructuring program. This is a recap of the P&L and cash implications of the programs underway. In green, we isolated the amounts related to the one-off self-help measures of EUR 400 million announced last year. You see that most of the cost has already been recorded in the P&L with a small amount of around EUR 20 million left to be recorded in '26.

From a cash standpoint, after the EUR 167 million cash out in '25, we expect an amount of around EUR 150 million in '26. From this program, we do confirm our expectation of annual savings of EUR 300 million as of '26 after what we've seen in '25, EUR 200 million already.

On top of this, in blue, you have the restructuring charges that we foresee for '26 and beyond. We confirm that we foresee an annual charge of EUR 100 million starting '26. Keep in mind that there is a slight delay between the recording in the P&L and the cash impact, which is why you see a EUR 100 million cash out in '27.

Turning now to the free cash flow on Slide 21. Under our new definition, which is after net financial expenses, we generated free cash flow of EUR 371 million, a 50% increase year-on-year. We have improved cash generation, not just in absolute terms, but also its quality has improved, which demonstrates our ability to structurally generate more cash. Three main levers behind this improvement. First, naturally, profitability. We have largely commented on this. '25 is the fourth consecutive year of operating margin improvement since '21, a key to cash generation. Second, CapEx intensity with CapEx down 30% in '25. CapEx intensity was reduced to 3.8% of sales compared to 5.3% in '24. We buy better. We reuse, we optimize our footprint, and this is sustainable.

As Christophe said earlier, we do confirm what we stated at the Capital Markets Day. CapEx will be kept structurally within a 4.5% to 5.0% range. Third lever, R&D efficiency. I already touched on it earlier by mentioning with capitalized R&D down 11% to EUR 930 million. Note that we achieved the improvement in free cash flow generation despite an unfavorable change in working capital requirements, negative EUR 301 million and the cash impact of withholding taxes for EUR 41 million.

A comment now on the financial structure on Slide 22. The same factors as in the first half are at play, namely the adverse currency effect impacting the net debt. Hence, at the end of '25, net financial debt stands at EUR 4.0 billion, higher than at the end of '24, but lower compared to H1. And gross debt is down by EUR 476 million compared to '24. The leverage ratio is stable year-on-year at 1.3x. It is down sequentially from the 1.4x reached at the end of June.

Overall, our financial structure remains sound with a balanced debt profile and a solid liquidity situation. Finally, you remember that following the repayment of our bond maturing in March '26 last December, we have no major refinancing needs until '27.

To conclude, based on these results, we'll propose a dividend of EUR 0.44 per share at the next shareholder meeting in May. This is a progressive increase, consistent with our Elevate '28 plan. Thank you for your attention. I now hand back over to Christophe for the conclusion.

Well, thank you very much, Edouard. In '26, as a reminder of our guidance, we aim to further improve our profitability and cash generation despite an uncertain environment. Once again, our '25 results lay a solid foundation for the successful execution of our Elevate '28 plan presented last November, and our expectations for '26 are perfectly in line with our plan. The 3 engines of our road map are on or about to start on for the increased profit and increased cash generation and about to start in '27 when it comes to renewing with growth.

With Elevate '28, we aim at making Valeo a stronger company and global leader even fitter for success. Well, thank you very much for your attention. Edouard and I are now available to answer your questions.

[Operator Instructions] The first question is from Jose Asumendi at JPMorgan.

It's Jose from JPMorgan. A couple of questions, please. I would love to understand a bit better the -- when it comes to the guidance and the margin profile for 2026, if you could maybe provide some details with regards to the growth expected for the company in terms of outperformance to the local production, and a little bit the opportunities you have to monetize your strong footprint in China and capture additional growth in China. And also, the second question, if you could comment around the efficiency gains, cost savings expected for '26? And related to that, what you've been doing to reduce your fixed cost base in Europe as production over in Europe is still well below peak level for all suppliers?

Well, thank you very much, Jose. We will take the first question. Edouard, you take the second one. When it comes to growth, we've been very clear already at the CMD in November 20s, there will be no growth expected in '26.

The return of growth is planned and has been announced as of '27. I know it's very much expected, but it's coming in '27. So we have a flat organic growth in '26 as per the guidance that we issued today because we're expecting sales between EUR 20 billion and EUR 21 billion. The equivalent of our 2025 sales at same perimeter and at same ForEx is EUR 20.5 billion, which is the midpoint of our guidance for '26.

When it comes to China, I'm very happy with the achievement of our Chinese teams in '25, how important it is for Valeo and for me that we regain momentum in China, and we rebalance our customer footprint. I'm very happy with the order intake with Chinese OEMs in '25.

The order intake is 2.8x the sales, the OEM sales with the Chinese OEMs, which I think is really a fantastic performance, demonstrating the competitiveness we have in China as well as the technology, the appealing technologies that we have. Having this in mind, we are guiding for returning to growth in China earlier than for the rest of the group and as soon as H2 '26, and this is part of the guidance that we issued. Edouard?

Yes. Thank you, Christophe. Jose, thank you for your question. So as far as the restructuring programs are concerned and all the cost savings program is concerned, you have in mind that during the CMD, we bridged '24 to '28 with 0.9 points coming from growth and new programs coming in, 1.1 points coming from restructuring self-help measures and 0.2 points coming from R&D.

Basically, the more we go and the more it will go through growth impacts. And at the beginning of the period, bidding '25 as well as 26, the main impact is thanks to the restructuring. So as I said earlier during the call, the impact of self-help measures is already EUR 200 million in '25, and it represents most of the improvement between '24 and '25.

As far as the bridge '25 to '26 is concerned, you can consider that the further improvement of restructuring and self-help measures and cost control will be something that half of the operating margin improvement, the other half being more about pricing activities.

Next question is from Ross MacDonald at Citi.

Yes, it's Ross MacDonald at Citi. Two questions from me. First one on DRAM. Obviously, a lot of discussion in the market around implications from DRAM price inflation, availability of those components in 2026.

Just be interested, a, if you have full coverage of those components for this year? And then maybe more in focus on 2027, how should we think about the inflation and how quickly you can pass that through to your customers? So just maybe an overall update on that situation, how confident you are in the DRAM availability for Valeo?

Second one, obviously, the first half sounds like it's a down semester. Given that you only report twice per year, it's going to potentially take 12 months until we see the evidence of these self-help measures in the margin. But can you give us some steer on where you see the first half trading in terms of operating margin for Valeo, how close will be to the full year guidance corridor on the margin side and maybe linked to that, the cash generation, how second half loaded we should expect that to be?

And then maybe just a final question. I know you asked for 2, but just looking at your free cash flow reconciliation, there is a considerable benefit from the other bucket, EUR 175 million for 2025. Maybe if you could just remind us what's in there and how we should model that for 2026? Any details would be appreciated there.

Thank you, Ross. I will take the first question on the DRAM. Edouard, you take the H1, H2 and the last question on the free cash flow. Well, for sure, the DRAM situation is quite critical. In our view, there's no way to protect the industry through inventory. This is not the way to go. And it's not the way to go because it's a structural problem that will continue way beyond '26.

That's going to be a problem for '27 as well. So what are we hearing from our memory suppliers? We are hearing that they're willing to protect the automotive industry. That's what we're hearing. And what is the rationale for them to protect the automotive industry, I see 2 reasons.

One is the automotive industry has good forecast and has been able to predict and to forecast its needs for the years to come quite well. And probably the second reason is the ratio between the price and the memory and the impact it will have on cars if the car would be missed.

So we're hearing that these suppliers are willing to give some protection to the automotive industry. Nevertheless, the situation is quite complex as the situation has been complex in the past on some other products and commodities, and we are working extremely hard with our customers and with our suppliers to manage this complex situation.

Maybe a question on cost because I think you asked a question on the cost impact. We see that our customers are open for discussing the impact of the cost. This is the lessons from the first discussions we had with all our customers. Edouard?

Yes. Ross, and thank you for your questions, actually, 2 and 3. So first, about the trading of the first half. We do confirm today that the market is quite weak globally, especially in China. And this is what we forecasted actually when we met at the Capital Markets Day on November last year. This was already on top of our head. And we are trading actually as we planned.

And therefore, there is no big question on our side. As far as the balance between H1 and H2 is concerned, as usual, I would say you can count on an H2, which is stronger than H1. This has been the case in the last 2 and 3 years. You can count on it again for 2026.

As far as the free cash flow reconciliation is concerned and the question is specifically on orders that went from minus EUR 218 million to plus EUR 175 million in 2025 from '24 to '25. Actually, the main change behind is about provisions impacts where we reversed quite much more provisions in '24 compared to '25, as I explained earlier, in particular, related to these onerous contracts.

Maybe I can complement your answer #2. We've explained already quite a few times why in the model of automotive suppliers H2 is better than H1. It's not really about the market. It's more than our prices, the prices we have with our customers are kind of flat throughout the year. But every day, every week, our plants are improving every day. We are finding ways to reduce the cost.

So the costs are decreasing week after week and months after months when the prices are set and flat since the beginning of the year. And that creates structurally a higher profitability for suppliers in H2 than H1, and that's true for Valeo as well.

Understood. Can I maybe just push you a little harder on that in terms of the, let's say, the percentage of EBIT contribution in the first half, just to help model what kind of margin we're talking about in the first half? How should we think about 1H versus 2H from an EBIT contribution perspective?

Well, I think it's too early to say. We did not guide H2 versus H1, but I think you have a good understanding of what we did in the last years. So I invite you to look at what we did, and I'm convinced that we will deliver, as we said, as a minimum for the full year.

The next question is from Thomas Besson, Kepler Cheuvreux.

Two topics, please, I'd like to cover. First, order intake and revenue growth. If I look at your Slide 8, you remind us that you had more than EUR 25 billion of average order intake over the last 4 years, but you're still guiding for growth to only really pick up in '27 and not reach that level at all in the foreseeable future of EUR 25 billion.

So can you first confirm that when you talk about order intake, it's -- it only relates to the OE business and doesn't include aftermarket and others. And second, explain why we never seem to see the color of orders because I was looking at my model for Valeo and I realize that your revenues for OE and aftermarket in 2025 are only 4% and 6% above 2018, while we've had in between orders that have gone up massively. And we have missing in us that are revenues that are 50% higher, but margins 150 bps lower. So can you please address that topic? That's the first question.

And the second would be about free cash flow and debt and the cost of the debt. So clearly, I think we all like your new definition of free cash flow a lot better. But this time again, you do a bit better on free cash flow, but your debt is a bit higher than what the market was anticipating.

Can you talk about that, explain why the currency effect has not been neutralized? What happened exactly to your gross cash with the cash repatriation you've made? What we should expect in terms of both P&L and cash impact for the net financial expense in '26?

Well, thank you, Thomas. Two excellent questions. I'll take the first one, Edouard, you take the second one. Well, we know how sensitive, we know how important returning to growth is for our investors. We know this very well. And they are right. They are right because the operating leverage that we will get from additional sales is going to be a tremendous boost, both for our profitability and for our cash generation.

So we know that it's extremely important to return to growth. And I think we've been extremely clear during the CMD when and why this is going to come in '27. So first, some clarifications that you requested. The order intake that we book is since '22, purely based on OEM business. There is no consideration for aftermarket. Aftermarket comes on top. It's based on the S&P volumes forecasted at the time of the booking of the order.

It might change later on, but it's done at the time of the booking of the order. Point number two, and that's a pretty important one. And point number three, if there are some cancellation of orders on a given year, this is deducted from the awards that we receive on the given year. So what we publish as an order intake for the year is a net order intake between the wins and potentially some cancellations that happened.

Now I have explained as clearly as possible during the CMD that the nature of a significant part of the order intake awarded since '22 has dramatically changed. I explained that these are multi-model platform-based orders, extremely large orders where typically, the way it's SOP-ed is much more gradual than before. Took the example of, I think, 4, I picked 4 examples during the CMD.

These 4 had the characteristics of being multi-models. It means that when these orders are concerning up to 50 different cars. And the 50 different cars are not SOP-ed on the same day. You first have one model and then the second one and then the third one. And then 2 or 3 years later, you have the last car of the same platform that's typically SOP. And that creates a profile of growth that's very different from the one that we had before.

Now the good news is, and we looked at it in many details to prepare for the CMD because we know how important it is for the investors, and we know how important it is to give a boost to our profitability and cash generation. The return to growth is back in '27.

I think it was actually totally missed during the CMD. The CMD, this is what I said. And most people understood, well, there's no growth in '26, which is true. There's no growth in '26. And by the way, pretty much everybody since explained that there will not be any growth in '26. But the important and the interesting part of what I said was the return to growth in '27.

And the return to growth of Valeo in '27, I think, is something big in the sense that it will not be the common behavior of all the suppliers I think that a lot of suppliers will continue to show flat sales in '27. And some, by the way, have already shared it. We will have a different behavior, thanks to this order book. So I know you can trust or not trust, but I'm telling you from the data we have, there's a return to growth of Valeo in '27.

This is going to happen, and this is going to help us, thanks to operating leverage to boost both the profit and the free cash flow generation. Edouard, you take the second question.

Yes. Thank you, Christophe. Thomas, thank you for your question. Even more, thank you for your comments on the new definition of free cash flow. As far as the debt is concerned, what are the main moving parts? It is exactly the same than at the end of H1 because the exchange rate changes were violent in H1. You remember these big changes. And actually, in H2, the impact is limited. You remember, we said in H1, the impact of the net debt -- or sorry, of the ForEx on the net debt was EUR 260 million.

And now we say EUR 263 million. So exactly the same at the end of June compared to at the end of the year. Basically, we have our gross debt leveled in euro and our cash mostly in China and in North America, so in RMB and in dollars. We have repatriated already a big part of it, let's say, 1/3 of what we had, in particular in China.

This has cost us, as we said, the withholding taxes of EUR 41 million, but we still have some more to repatriate. That's the first point. But the second point is that even you repatriate, even it becomes euros, it's still euros at the exchange rate of H2. Therefore, the impact on the net debt is still the same at the end of H2, as it was at the end of H1.

As far as the cost of debt is concerned, so we decreased the gross debt, as I said, of around EUR 500 million, EUR 466 million to be precise. And we do consider that this year, the P&L and cash impact of the cost of debt would be in the range of EUR 250 million to EUR 260 million.

Can I just follow up asking how long do you think it's going to take to repatriate the rest if you plan to repatriate the rest? Or are you done with your cash repatriation?

Yes, Thomas. We plan to repatriate somehow everything. The bad news is that our Chinese teams are so good that every year, they generate even more. So it will be repatriation step by step. I said we repatriate something more than 1/3, but they increased back the cash generation in RMB. And we have to balance also depending on local context, in particular, to secure that we remain a high-tech status company in China. This is a specific tax impact there. And we need to keep some cash in the country for a few more months and years, and the repatriation program will continue in the future.

The next question is from Vanessa Jeffriess from Jefferies.

[indiscernible] on the results. Just wondering if you could talk more about your expectations for Power in North America, in particular, in 2026 and how you expect the electrification backdrop there to impact sales and profitability when you net off the mix impacts on both? And then just on the cash customer compensation for canceled programs, are we expecting any more of that?

Thank you very much for your question. Well, when it comes to power electrification, there's not going to be much electrification in North America with the current North American administration. We know that. And as you know, some of the programs, some of the awards that we got in the last years has been canceled.

And I think it was in 2024 that we've been very clear on that, and we gave you an order of magnitude of these orders that have been canceled, that have been renegotiated with our customers. Are we going to see in the next months and years, some further cancellation of orders? It's always possible. If any, there will be even more compensation discussion with our customers to make sure that we receive fair compensation from our efforts.

I think that the product plan from our customers seem to stabilize all around the world, which I think is very good news. They definitely stabilized in North America. I think they are stabilizing as well in Europe, given the last communication from the European Commission relative to what's going to happen in 2035.

So let's see in the months to come, if there will be some further cancellations. We will use the same tools that we have been using to get fair compensation from our customers. Anyway, again, the order intake that we are publishing is net of cancellation. So it gives you a view of what's going to come in terms of sales for the years to come.

Maybe if I may, Christophe, to add on this compensation topics, Vanessa, thank you for your question. I would like to highlight again what I said during the Capital Markets Day. We don't like compensation. We mostly -- we much, much prefer to have production, to have sales, to have growth to run our plants at the end of the day.

But naturally, we fight for fair compensation when it is needed. I want to highlight here that in '25, the compensations for cancellations had basically 0 impact on the EBIT. It has impact on the sales. It has impact on the EBITDA, but it has no impact on EBIT. Even it's dilutive at the end of the day because you increase the sales and you increase the EBIT basically at the same -- sorry, you don't increase the EBIT at the same time.

You also have noted that we had limited cash in, in '25 because of these cancellations. And you have seen one of our customers communicating in the last days about this impact on compensation to suppliers with cash out in the years to come.

This is one of the reasons why you have a negative working capital impact much, I would say, more than maybe what you expected in '25. And this will be cashed in, in '26 and beyond. So at the end of the day, compensation will come if needed, but what we would prefer is that it stabilizes and we can produce and deliver the growth.

And then just one more on that point. As well as cash compensation, I've heard some of your peers talk about taking new program orders in lieu of cash compensation. I was wondering if you've done any of that because obviously, your order growth has to be looked at in the context of tough 2024, but still very positive to see second half orders higher than the first half.

As far as the compensations are concerned, naturally during the conversation with customers, you can bargain a bit with new developments, new programs. But the orders of magnitude are so high. I said EUR 300 million impairments for contracts cancellation. This is not at all the level of money you are ready to give to customers to get an additional program and to continue to spend R&D and CapEx for this program.

So there might be some small agreement with customers compensating slight cancellations or slight postponement with new orders. But here, we are talking about real programs that are really canceled with a lot of money put on the table, invested by Valeo for the customers, and it's just fair to be fully fairly compensated in cash for these programs.

I'm sorry, if I could just sneak one last one in. Just on the battery energy storage system contract, what else do you expect in that space?

Sorry, what is your question on the BESS. Yes. But what is your question on BESS?

And just what else do you expect in that space, positive to see that contract?

What else do we expect...

As a business?

You mean what else do we expect on top of this contract, right?

Yes.

Well, let's first celebrate this contract. Well, I think it's a demonstration that we have a lot of technologies for Beyond Auto. You know that I'm quite enthusiastic about the potential of Valeo on Beyond Auto. Beyond Auto is multiple seeds that we have planted here or there. Definitely, BESS is one of it. It's a massive market. It's a major market.

It's a market where cooling technologies are being needed, and we are an extremely well-positioned leader in cooling technologies. So hopefully, there will be more and there will be more announcements relative to Beyond Auto, but we're quite happy with this first one, which is significant, which is starting in production as soon as August because this is as well what we discover with this kind of Beyond Auto, it's usually markets that are developing faster.

You don't have 3 years to wait between the award and the SOP and the margins are usually nonauto margins, if I may say it this way.

And if I can add, Christophe, Vanessa, I think this is also a good demonstration that the automotive technologies of Valeo can be used outside of the automotive in BESS, but also in data centers. You have seen that we announced a few programs, agreements, proof of concept here and there. And it shows that we have promising opportunities here. And let's be reminded, this is not included in our Elevate '28 plan. There is barely no beyond automotive sales in the plan.

The next question is from Christoph Laskawi at Deutsche Bank.

The first one would be a follow-up on Ross' question on DRAM. Could you comment a bit on the sourcing quantity or the size of the build that you have with DRAM? Is an estimate around EUR 250 million, EUR 300 million a fair estimate on that? And others in the space have stated to see low double-digit increases on the '26 contracts. Do you have a statement on that, too? Or would you confirm roughly that ballpark in price increases for this year?

And linked to that, is there any working capital effect we expected from the higher prices? Do you see another working capital headwind in the free cash guide on the basis of that? Or if you could just comment on the working capital assumption in the cash flow guide?

And then lastly, if I may, just a divisional question. You guide to flat organic for the group. Is this roughly the same across the divisions? And in particular, for BRAIN, should we expect the underperformance versus the market to improve or narrow significantly in '26?

Thank you, Christoph. I will take the first question and hand over to Edouard for the last one. We buy approximately for memories, it's not just DRAM that's impacted. There are other kind of memories that are impacted. But the critical memories that we are buying, it's worth around $150 million. So I think you mentioned $250 million. So it's, in fact, around $150 million.

I'm talking about the value of it before any price increase that we might agree on. When it comes to do I confirm or not the percentage of increase, you can understand that for competitive reason, I will not disclose here any confirmation or not of your number.

This is considered as a confidential information. We have working capital effect. Well, when you look at our working cap and you look at the $150 million, I mean, I don't expect any working capital effect at the level of the group. Edouard?

Thank you, Christophe. Christoph, thank you for your question. So regarding the working capital, so let me first highlight, in fact, the good results in terms of what we call the Level 1, which is basically EBITDA minus investment flows.

And this is the focus of our teams, our operational teams to secure, on the one hand, they increase the profit. And on the other hand, they reduce the investments in both tangible, especially R&D capitalized as well as in industrial CapEx.

And this improvement in '25 for me is really the evidence that we structurally -- we are structurally changing Valeo, we are structurally changing the company into a cash-generating business model. As far as the '26 and beyond is concerned, you have in mind that during the Capital Markets Day, I said that we do not count on the working capital to deliver the free cash flow.

This is still the case. This is clearly what we see. Nevertheless, naturally, as we commented on the customers' compensations, there will be a specific working cap impact, and you could not count on, again, minus EUR 300 million of working capital in '26. We should have a positive working capital in '26 again.

Now maybe your last question on BRAIN. We do see BRAIN coming back to growth, let's say, in H2. This is the case for every single division fighting to get back to growth, especially China, all in all, will grow in H2 and the group will go back in '27.

I think we have just one question left and 1 minute left. So let's see if we can find a way to answer it.

The next question is from Stephen Reitman, Bernstein.

I'm sorry, this is might take a longer answer. But looking at the BRAIN operations, you pointed out the end of several projects for ADAS and delays in production. Could you comment on the state of sort of like LiDAR in particular? We've seen some of the German manufacturers, which I don't think are necessarily supplying the LiDAR for them, but basically sort of gone back to Level 2++. Whereas in China, clearly, we've seen more LiDAR uptake and particularly we've seen, I think, with Xiaomi with the new Facelift on SU7. Could you comment on the order intake? You said 2.8x your normal -- your China sales. Is that -- does that include also LiDAR sales as well to local Chinese carmakers as well?

Thank you, Stephen. We still believe very much in LiDAR technology. We have developed Valeo LiDAR to cope with Level 3 requirements. It doesn't meet -- it's not needed or this kind of LiDAR that we have developed is not needed for Level 2, 2+ or 2++. I mean you can always put one more sensor in the car, but you can do a Level 2, Level 2+, Level 2++ without a LiDAR. We have developed a specific technology, LiDAR technology for Level 3 applications.

It's true that some Level 3 cars have been postponed because a lot of customers are rushing and are focusing on Level 2, Level 2+, Level 2++, but Level 3 will come. We are here as well to prepare the future and the future is going to be Level 3. And for that, there will be a need for a Valeo LiDAR.

We have quite a lot of Western companies doing LiDAR that do not exist anymore. I think we are more or less the only Western supplier of LiDAR. And as you know, there's a ban at this point of time for Chinese LiDAR in the U.S. So I think the circumstances are still pretty good for us. And to your last question on do we have LiDAR business in China? At this point of time, we don't because the market in China is not a Level 3 market. It's a Level 2, 2+ or 2++.

Well, I think we are time out. It has been a long day for you, given the fact that probably most of you have been working on the release from Stellantis this morning. So I will not make it longer. Thank you very much for attending this call, and I expect that we'll be together on April 23 for the publication of the Q1 sales. Thank you for your attention. Goodbye.

Good morning, and welcome to Valeo's Capital Market Day. Thank you for being here with us today, either in person or remotely. Today, we're going to share with you Valeo's trajectory till 2028. We're calling this next step of our evolution, Elevate 2028 and will be powered by 3 engines. I will come back to it in a minute. It's a journey that we have already begun. The first engine is about steadily increasing our profit. We have been delivering increases in profit since 2022, and we are committed to continuing on this path steadily.

The second engine is about consistently generating higher levels of cash. And for us, 2025 has been a turning point in generating cash. The outturn this year is simply the highest Valeo has ever achieved. And this is not a one-off. This is not the one-off. We know that we have the ability to continue structurally generating higher cash because and I will show it later on, because we have transformed our business model to do so. We're spending less on CapEx. We're spending less on R&D, and we are increasing our profit. The third engine, and this is very much expected, is about returning to growth, and we will return to growth starting in 2027. And we have, as you know, a full order book.

This order book is increasingly made up of large orders with longer lead times, but with also longer duration. Many of these orders will kick in shortly with visible impact in 2027. This is why our sales will grow again from 2027, and they will continue to grow in the subsequent years. Delivering superior growth, it will become clear to all that we have become a global leader, very well positioned for success. Valeo is increasingly recognized in the industry as the preferred technology partner in a major transformation currently undergoing in our sector. Our technologies are absolutely suited, perfectly suited to the needs of our customers. Perfectly suited to the car of tomorrow, which, as you know, is increasingly electrified, which is safer and which is defined by software. We're also very well positioned to seize the opportunities in the key producing geographies.

This is where the trajectory will take us. In 2028, we're aiming to achieve total sales between EUR 22 billion and EUR 24 billion and operating margin between 6% and 7% and a cash generation of over EUR 500 million after interest in the new definition that Edouard will introduce later. And of course, a leverage ratio that will be lower than 1x our EBITDA. Our ambition is that our financial KPIs will qualify us to be rated investment grade in 2028.

Of course, we're basing these targets on some assumptions, and you will see these assumptions here displayed on the screen. These assumptions are, in our mind, reasonable. They are based on the latest S&P Global Mobility forecast. First, for Global modules, we have assumed a 3% decrease as compared to S&P assumptions. So this morning will be 2.5 hours together, including an hour of Q&A session.

Before presenting our Elevate 2028 plan in detail, let me first give a first quick recap of our previous move-up plan that remember, we launched in early '22. As you are very much aware of, the environment that we faced turned out totally different from the one that we had envisioned at its launch, a very unfavorable global market and powertrain mix, especially in Europe. A very unfavorable customer mix as well as Chinese OEMs grabbed a much larger market share. And of course, many, many, many headwinds. It has been an unbelievably challenging 4 years for the industry and for Valeo.

And for these reasons, it's, I believe, no surprise to anyone in this room that 2025 sales have come at a level below what we had expected at the time. The 3 factors that I've just shared with you, together with foreign exchange variations explain almost 100% of the missing sales. The volume explained for a negative EUR 1.9 billion. The customer mix had a negative impact of EUR 2.1 billion. The powertrain mix had a negative impact of EUR 2.1 billion, mainly due to high voltage, but as well to the 48-volt technology that did not develop as planned. And foreign exchange rate and others represent EUR 900 million of gap, mainly coming from Asian currencies.

But in spite of this extremely challenging environment, we have been steadily improving our profit and our cash flow since 2022. Our operating margin has tripled in value since '21, and our free cash flow has more than doubled since 2022. We are also revising up our free cash flow guidance for 2025 to slightly above guidance, so more than EUR 550 million in the current definition. We'll come back to it later on. It took a great deal of proactive management and discipline in the execution. And I would like to thank all the Valeo teams for their achievements.

We've managed to reduce the cost across the board while preserving the capacity to innovate. And I would like to run you through the actions that we have taken. First, we have maintained a very strict price discipline at all times. We have systematically obtained good levels of compensation from our customers for the impact of inflation, for the tariffs, for the reduction of volumes in their programs. And at the same time, we have always only accept good orders with good margins. And we have secured improved productivity from our supply base.

In total, we have allocated EUR 400 million to fund our so-called self-help measures. We have adapted to the new volumes, and we have reduced our headcount by 10,000 FTEs, and we have cut our industrial footprint by 34 industrial sites over the period, 34 industrial sites. We have as well adapted to the new customer mix by repositioning in China. 65% of our orders in the country in H1 came from Chinese OEMs versus 50% of our revenue in China for the same period.

Our order intake ratio in H1 '25 with the Chinese OEMs will be 3x OE sales, 3x OE sales. And finally, we've created power. We've created the power division to be flexible, to be ready to adapt to a diverse energy mix to offer a unique portfolio of products and a very full system. And this is so important to be able to smoothly manage inside power the transition from ICE to [indiscernible].

Let us now turn to the future to elevate 2028. And I will start with the first engine. The first engine that's pouring us on this trajectory, steadily increasing profit. And you saw a moment ago how our profit has improved since 2022. I'm confident that our profit will continue to increase each year step by step, reaching between 6% and 7% in 2028. And we'll achieve this through the same exact levers, right pricing of our technologies, further improving our gross margin and reducing further our breakeven point.

First, right pricing our technology. Of course, I'm not very vocal on this topic outside of Valeo, as you can imagine, for obvious competitive reasons. But this is a very important point in our policy. First, we do not go for business that does not meet our margin expectation. We're very disciplined. And it has been a real change of mindset in the company since 2022. There's no good reason to accept a bad business, calling it a strategic win, filling up a plant, counting on a later price adjustment. All these are just bad reasons. Since 2022, we have proven again and again that we can win business that has a higher margin. And by doing so, we have managed step by step to increase the profitability of our order book.

Second, we have been rigorous in securing compensation from our customers for tariffs as well as for reduction in program volumes. Our customers understand they've been willing to negotiate with us just because this is a fair business practice. And third, we have secured increases in productivity from our supplier base. And the rule we have is very simple. The rule has been not to concede any price reduction that has not been fully funded either by our own cost improvement or successfully passed on to our supplier base.

We ensure that the impact of price pressure is fully shared across the supply chain. Improving gross margin now. We're committed to maintain our gross margin sustainably above 19%, and we will achieve this by further improving the industrial performance of our sites and by the widespread use of our AI technology in our plants. Some factories are starting to turn entire production areas into so-called light of zones, which means no human is needed to support the production process. AI is widely deployed, for instance, for big data approach for predictive maintenance or for quality control.

Next, reducing our breakeven point. In 2024, we have announced a series of one-off self-help measures. This plan is almost done. EUR 400 million were allocated to cover its costs, and it will generate EUR 300 million per year of savings as of 2026. Going forward, we plan to allocate EUR 100 million per year for self-help measures. Combined, these self-help measures are expected to add 1.1 points of operating margin improvement.

The second engine we are counting on in Elevate '28 is higher level of cash generation. And we see 2025, as I said, as a real turning point for the group in terms of our structural ability to generate cash consistently and structurally. For 2025, according to our current revised guidance, our operations will have generated EUR 700 million to EUR 800 million before one-off restructuring and before interest. After one-off restructuring and before interest, we will have generated slightly more than the EUR 550 million. And we are aligning our definition of cash flow with current market practice, which means that we'll be reporting free cash flow after interest. Under this new definition, we will have generated more than EUR 300 million this year.

Let's come back just a minute on the figure of EUR 700 million plus before one-off and before interest. This is the free cash flow generated by our operations. And that figure is nothing short of a record for the group, which we have never achieved previously in our history. This ability to generate historically high levels of cash is now the norm for the group. We expect to generate even higher level of cash over the period '26, '28. And why? Because we're transforming the business to generate more cash structurally. We're delivering higher profit. We talked about that.

CapEx spend will be structurally reduced to between 4.5% and 5% and reduction of our gross R&D spend compared with 2024, which I see as being the peak of the R&D cycle. We're managing to reduce permanently our CapEx spend. Firstly, we maintain, of course, the policy of reusing equipment. It means product standardization. It means reusable workstations by design. But secondly, by increasing the intensity of our production facility by 20%. In other words, fuller factories and by making sure that our supply base is best-in-class in terms of pricing and in terms of cost.

R&D. Our R&D has been too high. Over the past 10 years, it has gone up twice as fast as our sales. This had to stop. Our gross R&D spend has already been reduced by EUR 200 million in '25 and will not increase anymore. We will do so without impairing our ability to innovate and to win new orders. And how do we do that? Greater use of standard products, further rationalization of our footprint as part of our self-help measures. But by going full speed ahead in applying AI to our R&D, AI is the game changer for R&D. And as part of our partnership with Google Cloud, 100% of our software engineers today are already trained and equipped for AI-assisted coding.

Already today, 25% of our certified codes are generated by AI. On top, we have a collaboration with AWS, which allows us to reduce our ECU development times by more than 40% because we have getalized hardware lab. And when you reduce cycle time, you reduce cost. And we are working with partners as well for the next steps for generative designs with Dassault Systèmes on mechanical parts and for generative design on PCBs, on electronic PCB with companies [indiscernible]. Finally, through our AI for -- all program, we have developed already 84 AI agents to boost the R&D efficiency.

Thanks to the actions I've just set out, in 2028, we aim to return to investment-grade rating. We expect to be able to reduce our leverage to less than 1x EBITDA. This, while still being able to maintain a progressive increase in dividend per share and our financial trajectory does not assume any acquisitions or disposals. But of course, any potential opportunity would be strictly reviewed on the value creation and balance sheet criteria.

Last but not least, the third engine, the one that you expect as well. The third engine in our trajectory, the return of growth from 2027. Having seen a strong order inflow from '22 to '25, we are expecting several of these large contracts to go in production and now convert into sales as of 2027. While we expect '26 to be more or less flat in terms of sales, we are confident of seeing a return to growth in '27 with further growth in the subsequent years. We now expect revenue between EUR 22 billion and EUR 24 billion in 2028.

As you know, between '22 and H1 '25, our customers gave us a very large cumulated amount of orders, representing 1.4x our OE sales. This is a very clear demonstration of customer recognition, recognition of our technologies, recognition of our competitiveness. With the strong order books, we will return to growth. And this growth will generate a change in the group because we have 40% of the orders that are with the [indiscernible] divisions, which currently represents 25% of our sales and is as well the most profitable division, Power representing 35% of the order book and light 25% of the order book.

Well, I have been thinking about what examples I could give you to justify our confidence about future growth prospects. And I've chosen 4 examples from the largest businesses Valeo has won since 2022 to justify this confidence about our future growth prospects. Of course, I cannot give you the name of the customers. I cannot give you the programs, but these are concrete examples showing how valuable these contracts are. I'm going to show you 4 contracts, and they share the same characteristics. They are large with a value of more than EUR 1 billion each. They are multi-models, and multi-models means longer ramp-up and also longer duration.

The first example you have on the screen just went to SOP. It's an order with more than 30 models and 8 million [indiscernible]. The volumes that we have assumed for the purposes of our projections are S&P minus 3%. And this is represented on the green bar on the screen, where the customer volumes are the gray bar. And this shows very clearly the impact in both '27 and '28.

The second example now, again, we're talking about more than 40 models and 8 million units. And then you understand why it takes time. Now the third example on the screen. And now the fourth one and the last one, supporting continuous growth in '28 and beyond. This is happening, thanks to the leadership we have on the key technologies and the technological edge that we have. The [indiscernible] tomorrow will be electrified. It will be safer. It will be software-driven. It's the only way to meet the decarbonization of our sector and the improvement of road safety, especially at night. These are the major challenges of our industry, and each of our 3 divisions is perfectly positioned to respond to these challenges.

You will be hearing later this morning from each of the 3 division CEOs in more detail. Supporting the 3 divisions is as well, I want to talk about it, our very important service activity, more than just a business dedicated to serving the aftermarket, Value Service has gradually transformed into a true service company. Value Service has launched new services such as Value Tech Academy with a training program, providing maintenance. We have launched as well reman and repair solutions for electrification and ADAS technologies.

We're also looking to apply our technology to a broader range of related applications, both in the field of mobility and more widely. Examples include 2-wheelers, 3-wheelers, charging stations, data center cooling systems, agriculture off-road trucks and some defense applications. These applications require only minimal additional R&D as they are easily derived from our existing automotive technology. One of the key drivers I want to talk about of the future growth is as well our growth in key geographies. And I'm thinking particularly of China, India and North America.

Of course, there are interesting growth opportunities in many other regions, but these 3 each merit a deep dive. And let me start with China. We've paid particular attention to the Chinese market. As a result, we are regaining momentum. We see a return to growth in that market as of early H2 '26 and return to outperformance from 2027. our positioning, our repositioning efforts with Chinese OEMs are showing results. The Chinese OEMs are, as you know, representing 68% of the market in China, and they account the Chinese OEM for around 50% of our sales in the country in H1 '25. But as you know, 65% of our orders in the same period.

We have achieved significant commercial successes in the recent months. And these successes also include key wins in electrification, which is so important as 2/3 of the global electrification volumes are in China. I often say that China is the fitness center of the industry, the highest level of innovation, the highest level of speed, the highest level of competitiveness are there. And our teams over there are doing a fantastic job there in line with the standards there, they are empowered for innovation. They're empowered for speed. They're empowered for competitiveness. Just a few examples.

We developed a new headlamp in just 7 months from kickoff to SOP. We know how to do that. And all the best practices that we learn and we develop in China benefit the group across the board. What we learn there enable us to offer, for instance, in OBC and onboard charger that's much better in terms of packaging and cost. So our experience in China makes us stronger globally. If you can succeed in China, you can succeed anywhere, thanks to what you learn in China.

A word about India. The Indian automotive market is set to experience significant growth in the coming years, and we are ready to take full advantage of that. We see ourselves tripling by 2028 to approximately EUR 700 million. This market is undergoing a profound change. It's growing by 5% per year. Cars are increasingly technological, increasingly electrified and equipped with ADAS. And a good example is the Mahindra Born EV for which we are the trusted powertrain partner. Regulation is also pushing the Indian market in the direction of more ADAS, and we are ready. [indiscernible] has opened a new production site in Sanan that is ramping up very quickly.

Word on North America. It remains one of the largest of the most profitable and the most dynamic market in the world. And it will be for us a more and more important market for our future growth. We expect to grow faster than the group average in North America. It's a market more and more driven by technology, which is our core strength. We are a technology leader in that market, and that market is becoming a high-tech market. We capitalize on a solid position in traditional technologies. We're #1 in torque converters, #1 in 48 volts, #1 in lighting, #1 in wipers. And we're also leading this transformation in ADAS and SDV. We are the clear leader in sensing technology and in high-performing computers over there. Our customers recognize that. We have been and we are the GM ADAS Supplier of the Year for the third year in a row, and we are deeply connected to the U.S. tech ecosystem.

Usually, in this kind of meeting, we talk mainly about financial performance. We talk about technology, we talk about geographies and not so much about people, not so much about culture, yet this is probably the most important point to talk about. I would, of course, like to pay tribute to our teams. I'm very fortunate as a CEO to be able to rely on them. But ultimately, the key to success is culture, and we're working very hard to create a strong culture within the Valeo Group, a culture that's suited to the rapidly changing environment that we have. This is what I call the way we are. We're agile. We act with courage and we stand as one. And these are not just words. I believe that living up to those behaviors is what makes us different, what gives us an advantage, especially in this extremely complex environment like the one we're facing.

And if you have any doubt about that, just ask our customers what they think. They will confirm. We continue to operate with the same commitment in sustainability. It's very much fundamental to our business model. And you can see it in the way we have integrated the environment into our thinking, the way we relate to our people, the way we contribute to society and the world. At Valeo, we are driving change together. And this is our new signature.

Well, thank you for your attention. I will now hand over to the CEOs of our 3 divisions for a deep dive into our business. First up is Xavier DuPont. Xavier is CEO of Valeo Power and Group Executive Vice President.

Thank you, Christoph. Power. Power has been at the forefront of the electrification revolution. And joining our thermal and solutions is a major break in terms of Valeo approach for the market demands. So good morning, everyone. We are continuing to focus on 2 core pillars. First is achieving our structural profitability. Second is executing ambitious market capture. The evolution of the electrification market is not entirely a smooth path. In 2021, 13% of the global car production was NEV, new energy vehicle, meaning that 13% of the cars were plugging range extender equipped or fully electrified.

In 2024, we were already at 20%. Of course, this is not the expected speed of penetration, but the momentum is there. And for the Power division, this evolution represent a real opportunity for 2 main reasons. First, as you can see on the graph, the value we can propose with our NEV solution is increasing significantly. Second, the resilience of the combustion engine market. ICE still represent close to 70%, of the production in 2028. Indeed, even plug-in hybrid retain a combustion engine.

This allow us to benefit from our very strong market share with a good cash generation. Valeo Power can more or less triple its content per car between combustion engine and NEV ones. Clearly, the current market is a real opportunity for Valeo, namely as a result of the change in our organization. Our new organization is fully aligned with the megatrends of the relevant market since it is fully regional centric to respond to the specific requirements of our clients in each key regions and agile and flexible with a strong reduction of our cost as a result of the merge of the former powertrain and thermal business groups.

This has meant reducing our footprint starting in 2023 with 14% reduction of our headcount across our R&D and production centers. Power has now a leaner and more responsive organization. And operational since mid-2024, this new organization has already demonstrated its capacity to win new strategic business, thanks to first, the reduction of our cost. Second, the rationalization of our product portfolio; and third, the increase of our competencies and workforce in China.

The positive impacts of the past 2 years of reimagining our organization and approach are being felt today in our operation. We did an amazing job, really amazing job in the reorganization. It was done quickly and without any supply chain disruption. We have now 60% of our headcount in low-cost countries versus only 48% in 2023. Our gross R&D expenses has been reduced by 22%. It is now organized in the regional approach and is increasing the use of the AI.

And last but not least, we reduced our SG&A cost by 20%. Our teams are also working with a great enthusiasm, a great energy to adapt our product offer to respond to the specificities of each region and especially for the Chinese market. But before touching specifically on China, let's have a quick look at our extraordinary product offer at Power. Don't forget, only a very few Tier 1s are able to propose both thermal and drive system solution. And as the electrification market evolves, it is becoming more and more obvious that these 2 domains are totally complementary.

We focus on delivering integrated, efficient and low carbon solution for the future. This means solutions like the dual layer HVAC for the cabin comfort, our compact and silent electric axle with efficient inverter and motor or our solution for safe and light battery packs. Our integrated system approach supported by our intelligent global heat and energy management with at its core, our smart heat pump truly differentiates Valeo Power. These synergies between [indiscernible] and thermal solution present an incredible advantage to improve the performance of the NEVs while at the same time, permitting a more competitive offer to our clients. And it is exactly what we are able to propose to our clients, and we are hearing their feedback, which is very positive.

So [indiscernible] are working to match its product offering to Chinese market -- sorry, to Chinese market constraints. Which constraint are this. First is price. Second is time to market. And these 2 constraints are, of course, linked. Developing a product in 12 months in China means lower development cost in Europe and in the U.S. The OEMs continue to develop over periods of 13 to 14 months. The priorities I gave to our sales and R&D teams are now showing tangible results.

Our Chinese customers recognize our effort, 38 Chinese SOP in the last 18 months. order ratio on sales above 3 in China, time to market below 18 months. and projected sales growth in China for Power is above 14% between 2024 and 2028. These successes push Power to be more ambitious. And thanks to a very short time to market, we are ready to move quickly to propose to our U.S. and European customer what we have learned in China with our Chinese OEM. And it is crystal clear that all our OEMs are interested with what we have learned. This will help us to rebalance our sales both in the regions and in relation to IC technology versus e-technology. And as you can see on the slide, Power will advance from 25% to 40% of our sales in e-technology between 2024 and 2028.

The [indiscernible] division is more diverse and resilient than ever, adapting perfectly to market demand to meet the specificities of each part of the world. The electrification journey is exciting, but of course, with a lot of twist. In these conditions, it is good time to take to be sure that our strategy we have developed during the last 2 years is the right one. On this slide, you can see our evolution. 2024, a new organization now agile with a reduction of our hierarchical levels. It was a year of the low-hanging fruit benefits.

2025, empowerment is given to the region, strong reduction of our central R&D cost, all litigation customer situation closed, return of the order intake and of the profitability. It is a year of the deep transformation. Next year, 2026 will be a pivotal year towards sales profitability coming from our reorganization and allowing us to have a sustainable baseline for our future.

2027 and beyond, growth is back, and we will fuel our new ambition in terms of sales, EBIT and cash. So I am strongly and personally convinced that my team is doing the necessary job to remain a leader in the dry and thermal businesses for the years to come.

Now let's conclude with our power financial path as nothing speaks better than numbers. In terms of growth between 2024 and 2028, you see the controlled chosen growth, bringing a new step of profitability. If we are cautious in terms of sales evolution, we have strong business ambition, but we know from experience that the market is quite unstable. Nevertheless, we have now the right organization to be able to commit today to doubling our operating margin between 2024 and 2028. So thanks for your attention. Now I will hand over to Marc Vrecko for another exciting [indiscernible] journey. Thank you.

Thank you, Xavier. Good morning, everyone, both here in Paris and connected remotely. I am glad to have the opportunity to present the Brand division positioning and prospects. And in a world industry moving rapidly, you will see our role is changing. So our journey is also about reinventing who we are and how we contribute to this industry.

To start with a few facts and figures. Brand division is a multi-regional leading player. We are present in all regions with R&D site and test tracks to develop our products next to our customers, with manufacturing site to ship our products within the region or within the country. And because of a crucial position held by the Chinese market and industry, it is important for us to have a strong footprint in China.

For over 2 decades now, we have had full coverage, development, testing, manufacturing in an autonomous way. 100% Chinese team, no [indiscernible]. Of which 1,800 R&D engineers are fighting in this highly competitive market day after day. If China is a fitness center of the automotive world, we are really in the gym day after day, ready.

Now coming back to the global picture. Over the last 3 decades, we have built what we believe is the broadest products and solutions portfolio in the ADAS and interior experience domains. To do so, we have invested heavily and continuously while making choices and ensured we would bet on the right technologies and the products which will respond to future market needs.

As a result, we see order after order talking to our customers and partners, but we have succeeded in positioning BRAIN at the really heart of our customers' interest. Here, you see on this slide the outcome of official yearly polls conducted at each edition of the CES in Las Vegas. In 2025, the result is striking. The 5 most mentioned areas of interest and focus are directly related to our business and connected with what BRAIN is about. This alignment, which, by the way, doesn't come by chance, is key since it drives our relevance in the markets versus our customers and partners.

Now in an automotive world with overall volumes tend to be flattish or with marginal growth at best. Our ability to grow is absolutely directly linked to our ability to increase our value contribution per car, the content per car. This is what is happening in the ADAS space and which you see on this slide, where penetration of driving assistance systems in incremental levels from L2 to L2+ and ++ is growing very fast. Each level allows us to increase our content per car in a very significant way. It triples from L1 to L2, tripling again from L2 to L2 plus. And this is not the end. This is further reinforced by the progressive introduction of centralized architectures in our customers' lines, be it domain controller-based architectures or central compute and zonal controller based ones.

By 2030, over 43% of global vehicle output will be fitted with one of these central architecture solutions. And in the last 3 years, we have taken key positions in this market for customers across the globe, leveraging our deep understanding of complex and large electronic boards, our expertise in cooling inherited from our thermal solutions expertise within the group and our deep understanding of the electronic components ecosystem as one of the top buyers in the automotive industry.

To concretely illustrate the core importance of this evolution for us, SDV-related contracts represent 1/3, I say 1/3 of our global customers' orders backlog. Now contrary to everything you might have heard about OEMs doing much by themselves or SoC players able to act as Tier 1s, the opposite is actually happening to us. Our industry is becoming more and more complex, and our OEMs feel the need to get supported on a one-stop shop basis for a growing part of their lineup.

We are actually acting as a simplifier, an aggregator, an integrator, the ultimate trusted partner coordinating for them the entire cycle of development from writing detailed specifications to managing the whole ecosystem of vendors and partners involved in this journey right up to the pre-homologation and certification of cars before SOP. This is called turnkey programs. And only a few Tier 1s are able to offer this kind of service in a credible way.

The ultimate ability to orchestrate global multi-models, multi-SOP program is an absolutely key requirement for a flawless execution. We are definitely credible in this new role. And to concretely illustrate this, over half of our global brand orders intake this year is being awarded on a turnkey setup. And here, you could argue and ask me, so what? That's a good question. What does it change for us? Surely, a lot in terms of customer intimacy, as you can guess, ability to better understand from the inside what our customers want and need.

Installing ourselves together in a long-term relationship, in other words, into a partnership and probably a lot in helping us to be in position to better present, adapt and introduce our products, our global products to these customers.

Credibility here also comes down to our ability to integrate strong ecosystem tech players with whom we have over the years built dense and deep strategic partnerships. Just to name a few, Mobileye, with which through a decade-long partnership, we have brought to life 23 joint customer programs, encompassing hundreds of models. This leads us to become their biggest Tier 1 partner today. Qualcomm, with which our historical partnership in telematics has expanded into ADAS and infotainment, leading us to propose ready-to-use solutions to our customers such as the [indiscernible] Qualcomm pre-integrated ADAS and advanced driving reference platform.

And of course, in our Chinese ecosystem, our strategic partnership with Momenta, combining our strengths to serve key automakers in China and abroad with agility. I could go on with many other examples, either from our traditional global ecosystem on the top right or from a Chinese ecosystem on the bottom right, which we are building and developing with determination.

To wrap up with sales and profitability outlook. We foresee for 2028, thanks to incremental start of the large programs awarded globally, sales ranging between EUR 6 billion to EUR 7 billion. Profit-wise, thanks to disciplined execution and the better margins of these new programs, we foresee an operating margin ranging between 7% to 8%.

By reinventing our role as a Tier 1, we aim to deliver superior value to our shareholders. Thank you for your attention, and I will leave the floor now to Maurizio for LIGHT division. Thank you.

Good morning, everybody. I'm happy to share with you the road map of LIGHT Division. LIGHT division. Light division has a bright future as we have very innovative product, creating perspective to grow. And we have also a solid and attractive business.

2025 has been a quite intense year for us with a lot of launches. And to give you a flavor of what we did, let me share a short video showing some of the latest products we have launched in the market during the year. Video, please.

[Presentation]

Nice isn't it? This is the visible part of our business. The one you don't see is the know-how to bring to the market this sophisticated product on time, on cost and with the right quality. All this for the success of our customers. And we are a very respected partner by our customers. We are very proud of it.

LIGHT, in a few words, [ 2 ] activity, lighting system and wiper systems. In lighting, we design, manufacture front [indiscernible], central panel, rear lamp, stop lamps, illuminated logos and finally, interior lighting and near field projection. In wipers, we design and manufacture wiper motors, arms, blades for front and rear and sensor cleaning system.

In 2024, our total sales have been EUR 5.6 billion. And with 31,900 employees, 42 production sites and 20 R&D center, we are a true global player, well established in all the regions worldwide. You can see the detail and the distribution of our site on the screen. We are constantly adapting our production capacity to our customer footprint with a local-for-local approach. We are as well adjusting our R&D footprint with massification of our innovation and development team in Asia.

Our business is truly fed by innovation. That's why during 2024, we have registered 404 new patents, 404. At LIGHT, we are looking at a growing market with a projected CAGR of 4% between '24 and 2030. Starting at EUR 28 billion in 2024, reaching EUR 31 billion in 2028, and further to EUR 35 billion by 2030.

The growth of the market is the combination of two factors. First, our traditional core business remain very, very solid with a growth of 2.2% in the period with content increase. Second, new technologies with rapid content and take rate increase supported by our growth engine. For instance, sensor cleaning linked to the acceleration of the ADAS is seeing a remarkable 97% CAGR. As well, front central [indiscernible], near-field projection are experiencing strong growth at 23% and 43% of CAGR, respectively. Even smaller segments like logo and interior lighting are contributing significantly with a CAGR of 28% and 13%, respectively.

But what does it mean for us? A substantial increase of the average content per [ car ]. We anticipate this to grow from EUR 320 over EUR 400, representing 1.3x increase. This data certainly demonstrates the promising future of the LIGHT market, driven by innovation and evolving consumer demand. LIGHT division is mostly agnostic to the automotive trends such as electrification and autonomous drive. But for sure, they represent additional opportunity for us. Our main drivers are reflected by customer expectation, looking for more style, more performance, more safety and sustainability.

Let's see style at first. Style is obviously very important for the carmakers. Our innovation are designed to strengthen car design, brand image and signature. Also, as electrical car tends to look very similar, this creates the need to differentiate and reinforce the brand identity. And lighting is also adding value. It is the new chrome of the car, highlighting the design, highlighting the brand with illuminated logo. On top of the style, thanks to our digital lighting, we are giving the opportunity of personalization to the final user. For instance, it's possible to choose welcome scenarios or other options.

Think about the illuminated central area, or near field projection and dynamic ambient lighting. These are not just functional. They are integral to the vehicle's identity and the overall user experience and the car design.

Then there is the performance. This is the backbone of our activity. Since [indiscernible], we have improved the performance of lighting and wipers, reaching an unprecedented visibility at night or in bad weather condition. Now it turns to advanced functionality. For instance, our interior experience, communication and interactive system are tailored for smart and connected cars, thanks to our electronic and software know-how. Feature like smart defrost or miniLED displays are not just about advanced technology. They are about providing a seamless, intuitive and high-performing experience that meets the evolving demands of the modern drivers.

And let's talk about safety. That's always been in our DNA, C and be seen. Our advanced product like advanced driving beam or high-definition lighting system, combined with sensor cleaning and [ AquabBlade ] technology ensure perfect visibility for both the driver and the ADAS sensor. We are not just illuminating the road. We are actively enhancing the safety of every journey, making the driving safer for everyone on the road.

Finally, sustainability. We are dedicated to reduce our environmental impact. Our focus on low consumption and lightweight solution, along with the use of green material, directly contribute to reduce CO2 emission. Innovation like the sustainable thin lead module and the 3D printed wipers arm are showing our commitment to eco-friendly practices, ensuring that our products are not only advanced but also sustainable.

In conclusion, our product strategy and our innovation, they are perfectly aligned with the market expectation. LIGHT is a world leader in lighting, wipers and sensor cleaning system, and we are growing fast in China. To give you some figures, we have an order intake sales ratio of 2 with Chinese OEMs, reflecting our future growth with them. We have also a track record of 69 cumulated launches in 2025, 69 cumulated launches, 35% more than previous year. And finally, addressing China means being at the right speed. And we have adapted our development time. Today, we are able to develop projects in 6 to 9 months in China, from business award to start of production. And as you can see in the picture, some recent launches for lighting and wiper system in China.

Referring to the financial statement and the perspective of LIGHT division, the figures show our performance and the future potential. On the sales, we target to grow and to outperform the market. On profitability, we have a target to reach a minimum of 6% to 7% operating margin in 2028. This is consistent with our present track record, consistent with our growth trajectory and with our commitment to continue to deliver strong financial results. We are very confident in our ability to deliver the plan.

Thank you very much for your attention, and I hand over to Edouard de Pirey.

Thank you, Maurizio. Good morning to all of you here in the room and to those who are logged in remotely. Thank you very much for being with us today. Over the next few minutes, I'm going to take you through our Elevate 2028 financial trajectory. This will be the last presentation before Christophe's concluding remarks, after which we'll be opening up for Q&A.

I start by giving you an update to our guidance for 2025. As you have already seen from Christophe's presentation earlier, we are confirming our 2025 guidance for sales, EBITDA as well as operating margin. We're also raising our guidance for free cash flow.

For sales, we are looking for a level at around EUR 20.5 billion for the full year. As you remember, when we announced our Q3 sales last month, we said that we expect Q4 to be the same order of magnitude of Q3, in other words, around EUR 5 billion. For adjusted EBITDA, we are still expecting to come in, in the range of 13.5% to 14.5% of sales. For operating margin, we are also sticking with our guidance range of 4.5% to 5.5% of sales. We do expect operating margin to be better than H1, and for the record, H1 operating margin stood at 4.5% of sales. Lastly, for free cash flow, we are revising our guidance for free cash flow after one-off restructuring cost to slightly above EUR 550 million, so slightly above the upper range of the guided range.

Three factors are mainly at work. On the one hand, strict discipline on both EBITDA and investment spend. Second, a higher-than-expected tax impact. You remember, following our decision to repatriate additional cash from the non-euro regions since H1. So EBITDA and less investments, more tax. And third, lower-than-expected one-off restructuring costs this year, thanks to cash out over time being more spread out than what we initially planned. We are also maintaining our guidance for free cash flow before one-off restructuring costs in the range of EUR 700 million to EUR 800 million.

So moving to the next slide and going forward in terms of providing guidance to the market, we will, from now on, focus on 3 main indicators. As in the past, we'll be continuing to guide on sales and operating margin, which I remind to all of us, it corresponds to the operating income before other income and expenses and before net earnings of equity accounted companies, so before JVs. We will also continue to disclose adjusted EBITDA, though we will no longer be guiding on this indicator. Most importantly, with regard to the free cash flow, we'll now be using a more standard definition for guidance purposes, which is free cash flow after interest. You can see here a more detailed breakdown of our full year '24 numbers showing this new definition of free cash flow.

As you can see, there is essentially nothing new. The numbers are already fully disclosed in our financial statements. That said, I would nevertheless like to highlight one thing specifically, which is the amount paid for leases at EUR 135 million in 2024. You will note that we record the amount in the investment flows and hence, within the free cash flow, contrary to a number of our peers who record this within the financing flows. Other than that, you will recognize the same figures of EUR 550 million and EUR 481 million for free cash flow before and after restructuring costs that we previously used as a basis for our guidance. Under the new definition, the key figure for guidance purposes becomes EUR 247 million, once we take into account net financial expenses of EUR 234 million.

So turning to the next slide. Our divisional reporting is also going to evolve. Starting from full year 2025, we now report the operating margin per segment on top of the adjusted EBITDA. To help you in your modeling, we have provided you in the appendix with the breakdown by division and by half year for '24, as well as for H1 '25.

Based on full year 2024 figures, you will note that the difference between operating margin and adjusted EBITDA as a percentage of sales is relatively similar between POWER and LIGHT. That difference is more pronounced for Bahrain, reflecting the higher R&D and CapEx spend and hence, the resulting higher [ D&E ] intensity, which is necessary to support the growth prospects of the division.

Moving on now to the [ Elevate ] 2028 financial trajectory. We are naturally setting our objectives for '28 for the 3 main indicators that we will be guiding on in the future, namely sales, operating margin as well as free cash flow under the new definition, meaning after interest.

For 2028, we are targeting sales between EUR 22 billion and EUR 24 billion, compared to EUR 21.5 billion in 2024. Operating margin between 6% and 7%, compared to 4.3% in '24. And free cash flow after interest greater than EUR 500 million, effective more than double the level recorded in 2024. I want to take now a deep dive into each of these KPIs, starting with sales.

As I said, we are aiming to achieve total sales in '28 between EUR 22 billion and EUR 24 billion. We have shown the assumptions on which this is based at the bottom of the slide, and Christophe commented on it a bit earlier. We believe those assumptions are reasonable. We have taken the assumptions on market growth from the last October '25 S&P Global Mobility Report. For our own planning reports, we have applied a conservative margin of minus 3% to those global production volume forecasts. We have used the following exchange rates as of October this year for all conversions into euros, the U.S. dollar at [ 1.17 ] and the [ Chinese yuan ] at [ 8.42 ]. We are not currently expecting the sales trajectory to be linear. We see growth resuming in '27 after flattish organic sales in '26. More specifically, for '26, we anticipate perimeter impacts of around EUR 150 million negative, following the completion of our EUR 500 million disposal program that we expect to conclude by the end of this year.

We do expect growth to resume in '27 as orders we have booked in previous years go into production. Christophe has already shown you how this will work with contracts booked between '22 and '25 that will drive increases in sales from '27 onwards.

I'd like now to take a look at our sales objectives broken by division. For POWER, we are aiming for sales of between EUR 10.5 billion and EUR 11.5 billion in '28. As [ Xavier ] explained, electrification will be the main growth driver with increased electrification also leading to increases in our potential value contribution per car. For BRAIN, we are targeting sales of between EUR 6 billion and EUR 7 billion in '28. As Mark explained in his presentation, we are expecting growth to be accelerating from '27 onwards, fueled by large new orders for ADAS, as well as for software-defined vehicles. As you have seen earlier, BRAIN already accounts for 40% of the cumulative order intake over the period spanning from '22 to H1 '25. Finally, for LIGHT, we are forecasting sales between EUR 5.5 billion and EUR 6.5 billion in '28. As Maurizio set out in his presentation, Light intends to continue to build on its leadership position to take advantage of customers' higher expectation, whether in terms of style, more performance or more safety and sustainability.

Turning now to the operating margin by division and how each division will contribute to the overall margin improvement. You will note that each business has its own specific profitability drivers. For POWER, it is the in-depth transformation conducted by Xavier and the teams to raise its competitiveness, which is driving the margin improvement. Thanks to those efforts, we are expecting a significant turnaround in operating margin with an objective of 5% to 6% of sales in '28, up from 2.9% in '24.

For BRAIN, which is already performing above group average, the main engines are growth and the more profitable orders coming into production. As a result, we are aiming for an operating margin of 7% to 8% of sales in '28.

For LIGHT, the story is about building further on existing strong leadership positions and operational excellence. We forecast an operating margin of 6% to 7% of sales in '28.

Looking at the operating margin from a consolidated group perspective. Let me now describe the main levers which have been driving the continuous profitability improvement since '24, and which we see continuing to drive improvement through '28. You have heard Christophe talking about the 3 components of these improvements, right pricing of our technologies, gross margin improvement and reduction in our breakeven point. I would like to illustrate this in a slightly different way here.

I am showing you the bridge between the 4.3% operating margin we reported for '24, and the target operating margin of 6% to 7% we expect to see in '28. So on the left side of the chart, the impact of both growth and the flow-through of more profitable orders, which essentially reflects the right pricing of our technologies. This level should account for around 0.9 points in the operating margin improvement over the period. 1/3 is attributable to growth and 2/3 to more profitable new orders converting into sales.

In the middle, self-help measures. They do represent half of the increase. These measures support the increase in gross margin through the improvement in the industrial sites -- sorry, industrial performance of our sites. They also contribute to the reduction in our breakeven point through the actions taken on fixed costs below the gross margin.

Lastly, on the right, R&D efficiency, also contributing to the reduction of our breakeven point. We estimate the net impact over the period at around 0.2 points, reflecting the combined effect of 2 opposite trends. The positive effect of R&D efficiency gains, which is also partially offset by the impact of the amortization of capitalized R&D. Note, however, that by the end of '28, we expect the so-called capitalization impact, meaning the difference between capitalized development costs in percentage of sales and the amortization of the cost in percentage of sales. So this capitalization impact should be close to zero in 2028.

Let's now have a look at cash generation and deleveraging. As far as free cash flow is concerned, using the new definition, which is after net interest expenses, our objective is to exceed the EUR 500 million mark in 2028. That is more than doubling the level we achieved in '24. As Christophe pointed out, we have transformed Valeo's business model. We are now in a position to generate more cash structurally, and we are seeing that already in '25. And we expect to further grow the free cash flow generation in the coming years.

There are three main levers behind this increase. The first, the fact that we have new orders that we are receiving, and they are more profitable. We have largely commented on this. This is one of the key drivers of the operating margin improvement as well as the increase in cash from operations.

Second, CapEx intensity. We are planning for tangible CapEx to be reduced to between 4.5% and 5%, and we expect this lower ratio to be sustained over time.

The third lever is greater efficiency in R&D. As Christophe said, we believe that there is room to boost R&D efficiencies while preserving our capacity to innovate. Concretely, this means that the level of gross R&D expenses will not grow anymore.

In addition, there are three more things to take into account in terms of deleveraging for the plan. For restructuring cash costs, once the current EUR 400 million exceptional program concludes, we foresee an annual restructuring charge of EUR 100 million compared with the EUR 50 million we used to have in the past. We intend to maintain the policy of progressively increasing the dividend per share. And finally, our plan assumes no major M&A. On this basis, we are confident we can take our leverage ratio down from 1.4x at the end of H1 '25, to below 1.0 in '28. As a consequence, our financial KPIs, should in '28, be aligned with an investment-grade rating.

A quick word now about our current financing situation. You can see from this slide that we have a sound financial structure with a balanced debt profile and a solid liquidity situation. We are aiming to strictly manage our gross debt, which is a key indicator for the rating agencies. We recently issued a new EUR 500 million green bond maturing in 2032 with a coupon of [indiscernible] And we will repay our bond maturing in March '26 as soon as next month on the 18th as we announced 2 days ago.

If we project forward our debt profile at that date, you can see on the chart that we have cleared '26 almost entirely. Therefore, we have no major refinancing needs until '27. Note that green funding is a key financial tool for us. Over the last few years, we have favored sustainability-linked and green bond issuance as financing instruments. This is consistent with our engagement towards sustainability, an integral part of our strategy. We plan to continue this direction in the future. This is also why it is essential for us to maintain best-in-class ESG ratings. And as you can see here, Valeo is recognized by the main ESG rating agencies as one of the best performing groups in terms of sustainability.

In 2025, we maintained our position among the highest rated automotive suppliers. They are all listed on this side. Let me just mention the key ratings. MSCI ESG ratings, where we have a AA rating, CDP, where we are rated at the top of the scale with a single A rating for both climate and water. And [ Sustainalytics ], which assigned us a low-risk rating. In addition to that, Valeo included in the major ESG stock market indices, which are listed on the right hand of the slide that you can see here.

Let's now have a look at our CAP 50 plan, which sets out the path towards our goal to achieve net zero by 2050. Our trajectory until 2030 was validated by [ SBTi ], the reference initiative. And as you can see here, we are well on track and even ahead of where we should be based on what we achieved in '24 and our forecast for this year. To achieve our objectives, we'll continue to develop our portfolio of technologies that promote low-carbon mobility.

So just to wrap up before I hand over back to Christophe, let me remind you here the [ Elevate 28 ] objectives and reiterate our key messages on the 3 steps to achieve our plan.

Step 1, profit. As Christophe mentioned in his industry remark, improvement has been ongoing since 2022. The upward trend will continue step after step until 2028, where we expect the operating margin to reach 6% to 7% of sales.

Step 2, cash. Cash is our #1 priority. 2025 will be a year of strong improvement. And I hope we have convinced you that we are successfully transforming our business model to generate more cash structurally. In '28, under our new definition, meaning after interest, we aim to be generating free cash flow in excess of EUR 500 million, or more than double the level we achieved in '24.

Step 3, sales. We expect sales to reach EUR 22 billion to EUR 24 billion in '28. We anticipate a return to growth in '27 based on the orders booked over the period '22 to '25 converting into actual sales. Based on this plan, we'll continue our deleveraging, and we will be able to achieve it organically. In '28, our leverage ratio will have come down to less than 1.0x, which will qualify us once again for an investment-grade rating.

I now hand over back to Christophe for concluding remarks. Thank you very much.

Thank you very much. Well, I wanted to come back to you for a few concluding remarks to wrap up words about the 1.5 hours that we spent together, and we've been setting in front of you our ambition.

As you have heard, we do not share any of the pessimism that some have about our industry, quite the opposite. Yes, yes, at Valeo, we believe that the car has a great future. We believe that individual mobility is freedom. We believe it's life. Yes, at Valeo, we know that this ongoing transformation of our industry is very demanding. It's very quick, it's very deep. It's even difficult. But it's for the better. It's for an electrified car, a safer car, a more affordable car. And this ongoing transformation is full of opportunities for Valeo as we see our position unique and strong.

And yes, we believe, even though the term has already been used, that this transformation is deeply [ Darwinian ]. And by the way, -- by the way, I see you smile. And by the way, we're seeing the first signs of it. The current difficulties of some other players in the industry are opening up opportunities for Valeo to replace them. Our customers are counting on us as partners. This is the message they share with me.

We also believe that thanks to [ move up ], our positioning on key technologies has been strengthened, that our geographical positioning has also been strengthened, and that our financial results have improved. We know our strengths, and we know very well what we need to improve. And we had it in mind when preparing Elevate 2028.

So what is Elevate 2028? Elevate 2028 is about seizing opportunities. It's about taking the initiative. It's a growth plan. It's a growth plan that's powered by 1 to 3. I guess you get it now, 1 to 3. Growth of our profitability, growth in our cash generation, growth of our sales in key geographies. And thanks to an even stronger positioning, we will achieve this. We will achieve this, thanks to the amazing commitment of the Valeo teams. In Valeo. At Valeo, we will be very much stronger in 2028. Thank you very much for your attention today.

Thank you very much. We will now enter the Q&A session. So I will come back on stage. The sales will be transformed in a few seconds together with Edouard, with [ Xavier ], with Marc, with Maurizio that I thank for their presentation. And altogether, we'll answer your questions.

Okay. Good morning. I see hands raised already. I will say a few words before we start, just a few seconds. So we are now starting the Q&A session. We have set an hour, approximately an hour for that. A few things I would say before we start to ensure we have a smooth process.

First, this Q&A is reserved to sell-side analysts. Second, we would like to prioritize those who are in the room and who have made the effort to attend in person. So we'll take the questions from the room first. [Operator Instructions] And with that, I hand over to the hands raised. I can't remember which one was raised first.

[ Mark ] from [ Alkem Asset ] Management. Sorry, I'm not a sell-side analyst, but I own 4% of the company. I bought 10 million this morning. So excuse me in advance, I love the company, of course, but my question will be -- that's my job, will be a bit challenging negative.

All the car manufacturers have been projecting forecast in '27, '28 and nobody believe them, including your predecessor [indiscernible] for 10 years. So why should we believe you now if [indiscernible] hasn't delivered for -- and I like [ Jack ], but [ Jack ] hasn't delivered for 10 years. What's now what's the change now? First question.

Second question, India. Everybody has been dreaming about India, Renault with [indiscernible], Volkswagen with [indiscernible] I forgot the name of the car. Everybody has been dreaming about India for 10, 15 years, but it has always been a dream. What's the change now?

And last one, sorry, after that, I stop. China, the same. Everybody is saying they catch up with Indian and they develop the car in 12, 18 months instead of 36 months. Do you have a specific advantage? Or are you just catching up with the competition?

Okay. Thank you, Mark. Thank you for being here, and thank you for trusting us. When it comes to your first question, sales, you saw the assumptions that we took building Elevate 2028. And you saw specifically the market size that we are working on when building this Elevate 2028 sales plan for 2028.

The assumption is 90 plus -- [indiscernible] million cars, which is lower than the market as it will be in 2025, which seems to be according to the very last S&P from November, [ 91.8 million ]. So we're planning only for 90 million cars in '28. We're planning in '28 for a market that will be lower than the one we have in 2025. And why did we do that? Why did we apply a [ haircut ]? And why did we [indiscernible] of 3% on S&P? We want our projection. We want this plan to be extremely realistic. We want to make it happen. We will make it happen.

Now when it comes to not the market, but we, Valeo, through the 4 examples that I've picked, I hope I gave you the confidence that it's coming. These orders that I show are real orders with real customers that unfortunately, I could not name. I wish I would have been able to name the customer, the project and all the nice products and technologies that are behind, but I cannot, cannot for confidential reason. But these orders are real. And you saw the green bar, you remember the green bar. This is what we have in our plan.

But you saw probably behind the gray bar, which is what our customers are telling us about the expected volumes for the years to come. And you saw that the green bars are very much lower than the gray bar because we have this [ ERCOT ]. So we're not basing this plan on what the customers are telling us. We're basing the plan on what S&P is telling us minus 3%, so taking into account a discount. And we have this growth in the order book coming.

India. Well, India was not fully a market for us before. And you see it, India is 6 million cars today, out of 90 million cars. So it's 5%, 6%, 7% of the overall world market, but it's only 1% of our sales. So there's a disconnect. India is 1% of our sales. It represents 6% of the world market. Why so? Well, because it's not yet -- it was not yet a technology market. Now it's becoming very fast a technology market.

In terms of electrification, but in terms of ADAS, the front camera, for instance, is going to become mandatory. The parking sensors are becoming mandatory. So we used to have 2 divisions. Now we have 3 divisions. Now we are extending [ Pune ] in the division of [ Xavier ] for electrification. Now we're creating [indiscernible], a plant that we created a few months ago that's almost fully full today. So yes, India is now getting a technological market where our technologies can have a role, and this is what we intend to do. And this is why our sales will triple by 2028.

China. Do we have an advantage? Do we have a competitive advantage in China? I would not say so. I would not say so, but a lot of people that believe that we have a competitive disadvantage, and I firmly oppose to that. We don't have any disadvantage in China. We are Chinese in China. Our R&D teams are Chinese in China. Our plants are Chinese in China. Our people are Chinese. Our suppliers are Chinese. We have access to exactly the same cost. So we have the right cost base. We have the right technology. We have everything to succeed in China. And we are absolutely determine.

I see China as an opportunity and not as a risk. China is 30% of the market. It's 50% of Valeo sales. I consider that the technologies of Valeo, its cost competitiveness is creating an opportunity for us. And you saw it in all the presentation from the 3 divisions. We're all extremely focused on China because we are absolutely believing that the one that are going to succeed in China will succeed everywhere in the world.

You cannot imagine what we are learning over there, how to reduce the cost of our product, how to optimize the cost of our product, how to optimize the design of our product. We know how much we learn over there. Those that are not strong in China will not have the opportunity to learn. And as a consequence, will not be competitive anywhere in the world. Being strong in China is giving us advantage over the everywhere.

Michael Foundoukidis, ODDO BHF. So my question is, could you give us more color regarding the [ Power ] division you highlight. I could have made the same comment for light, but you highlighted in the presentation a favorable [ NAV ] trend, some growing content per [ car]. But in the end, your revenue assumptions suggest very limited growth, if any. And the division is expected to remain structurally less profitable than the other one. So I just wanted to get more color on that.

And maybe speaking in a very quick one for [ Edouard ] on free cash flow next year. You raised the guidance for 2025 because our [ tanks to a delay ] in restructuring costs. So what does it mean for 2026? Should we expect free cash flow to continue to grow? And what restructuring cash out should we expect next year?

Thank you for your question. So first question is for [ power], we let [indiscernible] answer and second question for Edouard.

So regarding power, when we have created power, so just for a reminder, we merged [ power train ] and thermal. And at this point of time, the perimeter was loss making. Of course, we made a lot of change in our organization. I explained that [indiscernible] one level of your [indiscernible] management. And at the same time, we have absorbed [ VSE, Valeo-Siemens]. And we had to face headwinds regarding the program coming from the JV for the voltage.

So we see the difficulties in terms of volumes for the program we had, notably with our German customers. We were very cautious in our projection of sales for 2028. So you remember, we are between [ EUR 105 million and EUR 11.5 billion]. At the same time, we are able to doubling our operating margin to go to 5% to 6%. So it's clear that we will still be dilutive regarding the operating margin versus the growth ambition.

But we will converge to the margin. And that with a lot of cautions we have taken in our projections. So yes, I don't want to give dreams for today. I just want to be sure that step by step, we will rebuild our profitability. We will [indiscernible] we have started negative some years ago. 2024, it's 2.9%. You have seen that 2025 will be quite better in 2028, between 5% and 6%.

It's not a dream. It's just a reality and I am not here to say that we will be at [ 8 ] in 2028, if I don't believe in my numbers. So it is perhaps not totally ambitious, but it is something I can commit today to expect.

And mathematically, there has always been a division below the group average. I'm afraid.

We felt it would be another division, but unfortunately, it might.

But when low, you have an opportunity to go back to the average and be better. Thank you, Mike, for your questions. So as far as next year is concerned for free cash flow -- as [ Christoph ] said, '26 will be better than '25 because we are on the trend towards '28 in both operating margin and cash flow. And there is only one reference to my point of view now, it's free cash flow after interest, so '26 would be better than '25.

As far as the restructuring costs are concerned, you have in mind that the order of magnitude last year of restructuring cost was EUR 130 million, EUR 50 million standard and EUR 80 million, this specific part of our additional programs, it will be EUR 220 million, something this year and therefore, EUR 200 million next year. And even despite these restructuring costs, '26 will be better '25.

Yes, I think we have [indiscernible] and behind [indiscernible] and [ Joe ] -- sorry, your [indiscernible] for quite some time.

Thomas Besson, Kepler Cheuvreux. I have a question about the relationship between orders and CapEx. You're showing the accumulated orders over [ 22% ] to the first half of '25 being 1.3x revenues. But it's a reflection of 2 different periods. You had an explosive order intake in '22, '23 and then another intake below revenues over the following 18 months. And that has allowed you to collapse your CapEx and R&D spend over the last 18 months and generate a better free cash flow. If I want to say it a bit bluntly, of course, I understood you don't want to present it this way.

Can you help us understanding whether you can effectively increase your orders in '26, '27 to secure future growth while having effectively a CapEx, tangible CapEx, intangible CapEx, that remains under control because this is effectively something that Valeo has struggled to do in the past, apart for a few years, mid-last decade when everything was [indiscernible], and China was growing fast. So that's the first question.

The second -- I mean there has been a lot of hiccups as you say, over the last 3 years, it's been a challenge. And I think last time you presented the plan, it was just after the invasion of Ukraine. So you have been quite unlucky. As a consequence of these pickups, you've received a lot of conversations from your consumer customers just compensated you for past events. Could you just give us a magnitude of how much you've received in '24 and year-to-date?

And whether this is not something that is going to be missed both in the operating profit and in the free cash flow. Just explain us what are the main types of compensation what you still may have in the future. And effectively, I understand it's a conversation, but I think it has helped maybe a bit '24, '25 figures.

Thank you, Thomas, for your questions. On the first one, well, I don't agree with you. I believe we are actually deeply transforming the business [indiscernible] Valeo. You take 1, 2 or 3 years. I'm going to take a longer view first over the last 10 years. The tangible CapEx of Valeo has been in the range of 5.2%. So it's not 1 or 2, 1 year up, 1 year down. But overall, [indiscernible] is 5.2%.

We believe that we are in a position to be below 5%, 4.5% to 5%. And you're going to tell me we are always which kind of assumption when it comes to order intake, because for sure, there's a little bit of relationship between order intake and CapEx. Point number one, if you take the last 3 years, '22, '23, '24, the average is EUR 26 billion of order intake, which is very good order intake.

Because remember, it's the OEM, it's the OE order intake. To give the sales of Valeo, you need to add another EUR 3.5 billion to EUR 4 billion, which is [ tooling], R&D, aftermarket, all things that we sell on top of OE sales. So EUR 26 billion -- [ 22, 23, 24 million ] on average is a good number. It's a strong number, this is what we're planning for the future. I think that Valeo having an order intake period of let's say, between [ 25, 26 billion, EUR 27 billion, EUR 28 billion ] should be the right ambition and the right target to ensure the continuous growth of the group, point number one.

Now why are we in a position to reduce the tangible CapEx? Because we're buying better. Because we're not buying in Germany anymore.

Sorry, the question was tangible and intangible CapEx so?

I'm just answering on first on the tangible CapEx because we used to buy all these machines, all these production lines in higher cost country because they were the only one to be able to give us assurance that these lines will come with the right quality at the right time, and it's so important to have the line working with no interruption at the right time. Well, the world has changed.

The world has changed dramatically in the last 4 years. And now there are ways to buy CapEx in much better conditions and today, more than 50% of the CapEx that we bought in 2025 have been purchased in low cost or very cost competitive. And this is giving -- this is creating a change. This is on top of sterilization. This is on top of reusable workstations because maybe these this deep work that we do will not convince you. But on top of that, what we used to buy 100, we buy much less today.

Okay. Now when it comes to intangible, it's pretty much the same. AI is a true game changer. You will find some people telling you that with AI in R&D, they will save 30%, 40% 50%. This is not what I'm telling to you today because I want to be realistic because I want to be rigorous and we don't have this road map yet. We're building it, but we don't have it yet. We don't know yet whether we're going to save 10%, 20% or 30% or more in the years to come.

But what we know is that we're going full speed on AI. We're going full speed with the 4 partners that we have. We have already significant results. And R&D, I have to say, has been a significant issue for Valeo in the past. Remember what I said, I said it very frankly, the R&D of Valeo, if you take the last 10 years have increased at a pace which is double, the pace at which we increase our sales, it cannot continue. And it does not continue.

We stopped that -- the peak was H1 '24 look at H2 '24, look at '25. We said it. We said that the R&D will be EUR 200 million lower in '25 than '24. And then we've said conservatively that it will not go up again because we don't know yet how much it will decrease. We don't know that yet. And I will not make any commitment in front of you, but just not increasing anymore, we are already changing the business model [indiscernible], we're already increasing the free cash flow duration of the group, and we are already getting into a leverage ratio below 1 in '28.

Question on compensation. I have to say I'm not very happy that we got compensation. I would much have preferred to have the sales. And we have much preferred that the programs will have delivered the sales that were promised to us by the customers. Unfortunately, some of these programs collapse. Unfortunately, some of these programs got canceled, and it was our duty to protect value and to go for compensation, there is compensation in '25 and there's going to be probably some other compensation in '26 because there will be maybe some programs that will not meet the initial customer expectations.

So it's a running business for Valeo to go for compensation. It is not subnormal. It's just fair. We have invested, we have spent R&D. We have created capacity for a certain volume. If volume is not there, it's absolutely normal to go for compensation. Now how much is it? It's -- as you can imagine -- I have this question usually, I say I'm the CEO of the company, but as well the Chief Sales Officer, I need to make the job of the sales team of Valeo not more difficult but easier.

Therefore, this kind of information are protected by, let's say, for competitive reason, I cannot disclose the amount. -- but I don't see that it's going to hurt the profitability of 2026. I don't see that. because there will be other compensation in 2026. And because the progress we do in restructuring the company, lowering the breakeven point and making it more efficient, will continue to pay off in the years to come.

Maybe one point on top is that when we have compensations because [indiscernible] said, it's fair compensation. On the other hand, we have impairment. So on a pure operating margin point of view, at the end of the day, you can have compensation, but you have the impairments on the other side. So the impact is not substantial for the profitability of the group.

[ Stefan Beamo, Bank of America]. I have 2 questions. The first one is regarding your performance per region. So you said that you would like -- your ambition is to outperform the Chinese market by 2027. I was wondering what's your thoughts regarding your performance in Europe and North America. And what's your view about your pricing power because I guess that there is some pressure. For instance, India will be dilutive. I would assume that in China, there's also some pressure on the pricing. So what's your view globally on outperformance and pricing?

And my second question is regarding your free cash flow guidance. So you mentioned profitability improvement strict CapEx control. What about working cap? This has been a historical strong driver for you. So what's your view about the working cap?

Thank you for your question. And we'll let -- give the second question to Edouard and I'll take the first one. We're not doing a bad job in Europe. If you take the years 2017 to 2024, the European market has decreased by 20%. The European market has not recovered the volumes that we enjoyed in 2017. Still, when the market has done minus 20% in Europe, our sales have increased by 20%, minus 20, plus 20%. So we're doing a good job in Europe to increase our [ content per car ] to [ drive ] market share to set our technologies and to put our technology in the car. And I think we're doing the same in North America.

So we're going to continue. The fact that I picked and I chose to deep dive China, North America and India is obviously not the sign that we're not going to do anything in Korea, in Japan or in North America. By the way, do you know we are the largest French company in Japan? We are the largest French company in Korea, and we be very strong in these geographies. Pricing for -- well, again, I'm a Chief Sales Officer as well. So I would be very careful about the way I phrase it.

After COVID after the semiconductor shortage crisis, I think there has been a period of 2 strong pricing power possible. Our customers were a little bit disorganized, let's say, this way. And I think we took advantage of that. If they are the same pricing for today, now that the Chinese prices are becoming a kind of standard in the industry. I will not put it exactly this way. I think there's a margin power we have a margin power because we are adjusting to the price we have to have in order to be successful in the market but reducing our costs in a way that's protecting our margin.

And you heard from me price discipline, which you can understand as margin discipline. We're very disciplined on margin. We're not taking any business that does not meet our expectation. And our expectation, as you know, is not lowered at all. So we have a margin power in the sense that we can accompany the price expectations of our customers at the same time that we are lowering our cost and how do we lower our costs.

You heard this morning, we have 34 sites less in the company. We have 10,000 people less in the company. We're reducing the CapEx. We're reducing the R&D, but we're reducing the way we purchase components as well. here as well, it was said with some selected words, but we are making sure that we have the right supplier base that we have the right cost base.

And at this point of time, we are able to protect our margin even if this pricing power -- this pricing pressure, sorry, coming from China. So I see no situation today where we are not -- despite this pricing pressure, where we are not in a position to keep our margin and to deliver margin in our order book that meets our expectation.

Thank you, [ Stefan], thank you very much for questions, Bank of America. As far as free cash flow guidance and working capital is concerned, I would answer in 2 steps, [ 125 ] and then the [ ELEVATE 28 ] plant. As far as '25 is concerned, you have in mind that in H1, we had a negative impact on working capital, and I still do not see a positive impact of [indiscernible] a negative impact of working capital for these current 25 years.

As far as the plan is concerned, we do not count on working capital improvement to achieve the plan. It does not mean that we will not continue to work on the working capital because it is same to work on the working capital to get paid earlier part for customers to pay later used to place is just part of the game, but we do not count on it to achieve the plan that we presented.

José Asumendi from JPMorgan. I want to come back to Mark's question and maybe just compare a little bit the previous plans versus the existing plan. and there's an opportunity for the [ brain ] division to grow as proportional revenues within the group in the coming years. So can you talk a bit about the margin potential of this division in the future? And when do you expect CapEx to come down for this very rapidly growing products?

And second, it's not rate for me in power, what is driving the margin? Is it cost cutting? Is it volume? Is it a bit of both? Can you maybe just go back again and address what are the levers to improve the market in power?

And then finally, when I look at the margins of other competitors, they do disclose margins by region. I know you obviously don't want to go there. But the question is, have you done enough cost cut in Europe? What is the opportunity cost cutting wise to drive the profitability in Europe because with the current margins, clearly, Europe must not be contributing to a lot, and there must be a big opportunity to improve margins in -- specifically in Europe.

Well, thank you, Jose, for your question. I think your first question was specifically on [ brain ] so we'll let [ Mark ] take it. The second was in power, we'll let [ Javier ] take it, and I will take the third question on we have enough cost cutting in Europe.

Thank you, Jose, for giving the chance to elaborate on your question. I think definitely, [ 28 ] is a midterm, is not long term. When I mentioned in my presentation that, for instance, we have 1/3 of our order book in SDV type of programs. So it means that down the road when we look in of 2030, it will be 1/3 of our sales. And for that, there is a potential. And as Christophe said, we are very, very much obsessed by the margin discipline and raising the profitability of our businesses and both business come with very significant better profitability. And we do the job to adjust.

It means that for us, we are pivoting as well the organization. If I take one specific example, you have gone to our German plant vending, which is our [indiscernible] of the [ ADAS ] in Europe. Within 2 years, we have been kind of adjusting by 1/3 of our total headcount, and that plant will almost double in sales with the next 3 years, thanks to this kind of pivoting our product portfolio. So yes, very small. I'm not going to tell you which percentage and so on, but definitely 8% is certainly not the end of the world far from it. So we have the potential to do more.

So regarding power -- of course, there is cost costing. I cannot say that we didn't do it in 2024. But we do -- we did it, sorry, with the reorganization. So meaning decided to merge 2 former business group and to reduce a lot the level of organization by region, by product line by product group. So now my organization is quite all -- so it's the first point. But it was, I will say, the beginning of the recovery.

To be more structural, the second key point for the reduction of our of our cost is a job we made in terms of bill of material. A bit of material of my business is quite high. And at the same time, we're in China now for 30 [indiscernible] and we have a strong team working in terms of purchase component in China, and I have now more and more component even for my business in Europe coming from China.

So we were able to reduce a lot of bit of material. To serve point, it is -- so personnel costs bill of material. And the third point, which is surely the most interesting for us in order to prepare and to secure our future is what we have -- what we have done, sorry, in terms of R&D expenses. I will not give the -- in value where we were in 2024 but we have the decrease of development effort by more than 20% and for 2 reasons.

The first one is now we are totally focused on the client demand region by region when we are developing a product in 12 months in China. And when we are developing a product in 13 months in U.S. or in Europe, it's not the same cost, but by using AI and by adapting perfectly our R&D team to the specific land demand, we were able to make a huge effort. And now we see the reduction of our R&D effort, we're able to take more business, more profitable, and we can see the start of the first business in China with a good EBIT. And meaning that now it is a part a big part of our recovery plan.

The third question is, have we done enough cascading in Europe. Well, it's -- it's a difficult question. Please accept the idea that we've done a significant part of the job. Look at the numbers that I showed earlier in my presentation. the EUR 400 million that we spent mostly power and mostly Europe. So we've really concentrated our efforts on Europe. Is it over it's never over because there's a need to make the car affordable, there you need to reduce the cost of the product and the price of the product.

So it's not over. Have we done the job? Yes, we've done a significant part of the job. By the way, we've done it efficiently, silently, quietly. You have not heard about it too much, but it was done. It was very serious. It was [indiscernible]. Is it over? No, it's not over. And this is the reason why we have put in the forecast EUR 100 million restructuring costs down the road per year. We used to be able to live with EUR 50 million. Now we say it's more likely to be EUR 100 million.

Now that's the middle term. That's '26, '27, '28. If your question is more even longer term, let's say, in 10 years from today, it depends on what the European Commission and the politicians will decide on the European content per car. If they would not decide for a European content per car minimum, then there will be significant massive delocalization of the automotive industry in Europe, from Europe to the rest of the world. Let's say, from Valeo Europe to Valeo, for instance. This is not for '26, '27, '28. We know the loads in the plant. We know the sales. So it's a subject that we have consequences today, but that's for sure a subject that we have a consequence later on.

So long term, it depends what the positions will decide to protect or not the European industry and short term or midterm, while we're putting EUR 100 million per year in order to make sure that we're continuing working on our costs and making sure that we keep the margins of value that we expect to have.

[ Stephen, then Christoph ] and back again to [indiscernible] afterwards, please.

Steve Reitman from Bernstein. I have 2 questions. First of all, on power and then on brain. On power, I know you don't like to talk too much in detail about your customers, but it certainly came up on the news wires [indiscernible] decision to drop value of supply on the [ 7(a)], the data that you're going to be supplying. And then you're saying they would maybe go to China instead that in -- you already said that your costs in China now are at a good level and comparable to those of your Chinese competitors.

So I just wondered if you could talk a little bit about the competitiveness of your European operations where maybe this contract was originally meant to be originating and how much well has to be done in Europe in order to see competitiveness with that without necessarily talking too much about the contract with [indiscernible] general, it just as an indication.

My second question is on the brain and specifically on [ LiDAR]. Arguably, your biggest competitor, Hi, is now talking a lot about the usage of their technology also in humanoid robots. So I thought that would be something that would be a very nice story for Valeo to be we're talking about as well considering the interest in AI and this whole process and whether the undervaluation of other companies.

So I'd be interested in what you can say about that. And also while we're on the [ semi LiDAR], if you could maybe talk as well about where you think we are in terms of the process because obviously, more and more companies, more of our OEMs seem to be looking at the [indiscernible] approach of sort of camera-only end-to-end neural networks.

Obviously, make a case about the [ edge ] cases, LiDAR is necessary and the like. But they argue it's not. So I'd just like to say heavy your take really on where we are in the process from a regulatory standpoint and where you think practically we are.

Thank you. So the first question is the [indiscernible] rare matter. I was sure I will have the -- and so thank you for the question. So just to explain the situation with what happened with [ Renault]. It was not a new business. It was a common predevelopment on [indiscernible]. And the plan was to have a [ site ] technology in a new car in some years, but to be able to redevelop these technologies -- for the motor, I will say, the rotor for the [ Renault ] side and the [ state ] for the Valeo side. We had a good development with Renault with a good relation between our 2 teams. They gave us the target price for the state, and we were aligned with their target price.

I want to remind that it was a French for [indiscernible]. So state of built in a Valeo plant in France and the rotor in [ Renault ] plant. We gave our proposal for the target price. Going 5 months, nothing happened. And after they decided, and it is their decision, and I don't have to say that I am happy or not happy, but it is their decision, and I respect their decision. They decided to launch the discussion with a Chinese supplier. It's a fact.

At the same time, and Renault requested us to develop with a bullish segments with inside [indiscernible] to make the contact. So it's something creating some particles and so on. We were not totally happy with the decision of [ Renault ] we discussed with [indiscernible] to have more or less the same techno with more power, but without any in order to be [indiscernible] that there will be no particles emission with this echo.

Now -- well, no, I read the newspapers like you yesterday that Renault is again contemplating the solution from [indiscernible]. I will have a discussion with [ Philippe Bone], who is the new [ CEO ] of Renault. But at this point of time, we didn't put all our effort on with Renault. Now we are developing with [ Malu]. And we have the technology to be able to propose 3 [ wares ] motors for clients.

So we are continuing working on the technology very hard. We believe in this technology for the long term. Now we're not commenting too much on this or that or the RFP because there are so many RFPs going on at the same time. On China versus Europe. Well, your question is about the competitiveness of China versus the competitive of Europe. And this is a true question, and this is the reason why we are working so much to hold our position in China and even to consider China as an opportunity and not a risk.

We are considering China for us as an opportunity and not a risk. Because we can increase further ourselves because we are in a position to learn so much about what we what we do in China and to export it -- I'm not saying exported products. I'm saying exports the ideas, export the design, export the cost base. So I mean, being in China, and I think I convince you already -- I already answered the question on that. I think the being in China is making us absolutely stronger for the rest of the world, given what we are learning.

Now at the point of time, will they more -- will there be more Chinese content in the European car possibly, but that does not depend on us. It would take a political decision to decide how much they can be of a non-European content in a European car. It doesn't change [ LV28]. But obviously, it might change the more longer term, but we are fully prepared for any scenario because, as I said, we are getting stronger in China, and we're getting stronger in Europe at the same time.

The last question is about [indiscernible].

Yes. So thank you for your question on LiDAR. So we'll start by the question on nonauto, what we call the beyond auto Yes, we do. we do look at those markets. It's talk about human it, but it's not only a human are. It can be any kind of things linked to the transportation logistics and to 1 where in all kind of main AGVs you have [indiscernible] a bit everywhere.

Now what we need to do is that we have been already for 15 years investing in this business. And want to make sure that not every line are fit any kind of use case. So you can be in a situation where you have to develop specifically module for that -- and we need to make sure that we do the right balance of what we want going to spend versus what can come.

Now to say very clearly, we are now preparing to launch the Generation 3. We are preparing the Generation 4. So we're moving on that side and definitely they are today. very tangible opportunities on the non-auto space. Now regarding [indiscernible], is a very respectable competitor. This is probably one of the businesses in which we the victory between China and non-China is the strongest. It's really you have 2 worlds. You have the Chinese world and the non-Chinese world.

Now in both worlds, I would say, to be very simple, you have not a single car driving Level 3 in the world without [ LiDAR], not a single one, not a single one, not even by the carmaker that you need. It doesn't exist. You don't have -- not a single application, which is the robotic application without multiple LiDARs on it.

So 15 years ago, our technologies have been kind of assessing that you would need in this highly safety environment to have very strong redundancy of sensors and that at the peak of a pyramid of the sensor, you will have [indiscernible]. We haven't changed our mind. And we are still there, and we will be still there. And we -- as you have some of these [ type ] -- we got some nice start-ups, which are burning ashes now, we are there, and we will continue to be there.

Now I would say as well, coming back on China, you have a very strong drive and this is more in the level advanced assistant driving the [indiscernible] that you have, you have a [indiscernible] with multiple [ LiDAR ] solutions, which are -- which is what [indiscernible] is focused on which are extremely competitive and lower performance level of [ LIDARs ] because they don't address the Level 3 needs that address the level 2. Now we are fully in China.

We are learning a lot. We are driving a lot. We understand that one of the key drivers in this adoption of [indiscernible] will be the affordability, and we are working very hard on that. But I can tell you having all OEMs talking to us about [ Lidar ] coming to us as a one reference point on that. There are a lot of projects booming there, and this is going to accelerate in the coming years. I hope I answered your question.

Christoph Laskawi from Deutsche Bank. The first one would be just coming back to the bridge on the margin side. Obviously, it starts in 2024. Could you remind us how much of the self-help measures that you show there have actually already materialized in '25? And how much is still to come? And is that basically spread across the rest of the time frame? Or was it mostly '26?

And then second question would be, we have headlines over the recent weeks that some U.S. OEMs are looking to get their supply chain free of any Chinese parts for U.S. sales. Now obviously, you highlighted the opportunities from sourcing from China being stronger in China. Could you give us an indication how much of the systems that we are selling in the U.S. is sourced from China? And how difficult would it be for you to get that China free? And also if the current targets that you've presented would have any impact if that really were to come by '27 and if more OEMs will follow.

Thank you for your question. The first 1 is obviously for you, Edouard.

Thank you, Christophe, and thank you, Christoph, by the way. Both Christophes. In the bridge, I presented 1.1 points of improvement, thanks to self-help measures between '24 and '28. You have in mind that when we presented our specific programs of EUR 400 million allocated to this program, we said based on '23 would have a EUR 50 million impact synergies in '24, EUR 150 million in '25 and EUR 300 million as of '26. I do confirm these synergies. I do confirm, I do see that today in '25, and I do see this amount in our plan for '26.

Nevertheless, you have to keep in mind that some of these synergies are seen in the capitalized R&D but not necessarily everything these [ 300 ] I'm talking about directly into the P&L as of '26. So it's coming in step by step while we amortize what we have not capitalized thanks to these self-help measures. I hope I'm clear.

Okay. Related to the second question, I will obviously not comment what one or the other customers might give us as guidelines, this is part of their policy and unless their policy is public, I cannot comment on that. Nevertheless, what I can tell you is if a customer would request that all components would come from a region, not from another, from a country, not for -- we can adjust and we can adapt these cost consequences.

So they are priced consequences. And should this situation happen, then we'll be very transparent as we are always in the relationship we have with our customers and tell them this is the price in one condition. This is not a price in another condition and will be extremely transparent with our customers in the way we approach the question that you raised.

It's 5 to 1. So I guess that the last question will be with you [indiscernible].

Vanessa Jeffriess from Jefferies --

Sorry, when I didn't -- so okay, let's go for your question and your question.

I'll be very quick. Just 2026 specifically and the lack of growth that you're forecasting, just wondering if you could talk a bit more about divisional dynamics because, I guess, as we entered this year, the messaging was that 2025 was a transition year for [ brain ] and that it would ramp up in 2026. And it seems like what you're saying is that no growth will be broad-based across the divisions. And then just on China as well, if you're not outperforming in 2026, then it means you're declining by at least low single digits from everything you're saying about your strong book-to-bills and your mix of Chinese OEMs, I feel like you should be at least flat. So maybe if you could just go into more detail there.

We're going to go in many details about '26 at the end of February '26, when we released our results for '25 and we give guidance for '26. But you heard a few things today, you heard that the sales would be more or less flat in '26 versus '25. You heard that we're going to continue improving our profitability, and you heard as well that we're going to continue increasing our free cash flow. You heard all this during the presentation of today.

And obviously, the numbers will be given as a guidance at the end of February 2026. And it will come as well with the divisional dynamic that you're asking me to comment and that I will be happy to comment at the end of February. When it comes to China and 2026, we've been quite specific and precise in our communication today, seeing that we expect the growth in 2016 coming back in China per in H2, it means it doesn't come in H1.

And what is coming at H1 because all the all the SOP or the start of production or the launches that [ Mark Xavier that Mauricio ] has talked about are just at the beginning, and it takes some time for ramp-up to be accomplished and for the sales to be much more visible.

So we have, unfortunately, to wait until the second semester of '26 to see the effect of the Chinese offensive that we have in our company that I think you felt very well because, again, of the point that we believe that being successful over there is the way to be successful elsewhere or say differently for those companies that will decide not to skip this battle to skip this [indiscernible] because it's too difficult then they will lose much more than their Chinese sales. They will lose their world sales in my opinion. And that's absolutely the opposite of the value policy or plan.

So sorry, we're going to take the last question from [indiscernible].

Thank you very much for giving me the question again. Two, please, one for Edouard and one for Christophe. Could you come back on the exercise you've done about cash repatriation in H1, you had a hit that wasn't expected from ForEx because you had part of your cash in the U.S., in China and other subsidiaries. Could you update us on what has been done or what will be achieved in the second half of the year? The reduction in gross cash, which I think makes for a more efficient balance sheet and reduces the risk of further headwinds potentially and talk about whether it has an impact on the free cash flow '25 or not. [indiscernible] that your question.

And Christophe, I have a more difficult question for you, apologies. You're presenting 3 divisions, which are very different. One offers growth prospects that require more investments. [indiscernible] the time over that. I get that. And then 2 more difficult businesses. Does it make sense to have these 3 businesses together? Is there no -- obviously, right now, a lot of suppliers are trying to sell assets. So maybe it's not the best time to sell assets, but [indiscernible] was EUR 4.4 billion, I think at the end of H1. Will it not make sense to simplify our business and sell a decent size assets in some areas of little growth any immediate prospects for margin improvement, for instance?

Thank you for giving me the easy question and giving you the difficult one to Christophe, very nice of you. As far as the cash flow [indiscernible] is concerned. So yes, in H1, you remember we had the increase of net debt, not on gross debt, which decreased by but an increase on the net debt, especially because of the ForEx impact.

I remind to all of us, the impact was EUR 260 million in H1 on the net debt. So I do confirm the plan it's a multiyear plan that we are working on. But the first part of the plan, which is '25 is well on track. Actually, it is coming in. It will not decrease the amount of cash at value globally, but decrease the cash currently in foreign currencies that will be in euros at the end of the day, at the mother company basically.

There is definitely an impact on free cash flow for the year because there is a tax impact, which is multi-tens of millions of euros. I think you get the order of magnitude, thanks to my point here.

Well, actually, your question is not, in my opinion, a difficult one. It's a pretty easy one and straightforward. We're very happy with the 3 divisions we have. The car is becoming electrified. The car is becoming safe, the carbon software and the 3 divisions we have are just as a center of what's going on.

I also upsell, you know what's going on outside of Valeo. I see some splits of companies being decided. I'm not really seeing any value creation as part of these pits and when it comes to selling, for instance, because that might be your question, I thought self that the values and the multiples currently in the industry are extremely low. So as long as we are in a position to be able to develop the 3 divisions because that's the point, are we the best shareholder group cooperation, you are the shareholder.

But are we the best to be in the patient to develop these 3 divisions? Are we in a position to continue to make sure that they have the teams, the scale the money to be developed? As long as it's possible I think that it's okay to have the 3 divisions. And given the plan that we have on the screen, I see that we are able to develop the 3 divisions, and we're going to continue to observe obviously, the M&A activity around us. And we are in any way deeply thinking about all this permanently.

I think that's the end, Marisa. So I would like to ...

If you allow me a few seconds because there are questions on the webcast that we will not be able to answer. I want -- just want to make sure and say to those people who are connected and send their questions that we will follow up with them directly afterwards. And that's it Christophe.

Sorry for the ones that have asked questions, and these questions could not be asked. Sorry for the one that did not get questions, [ Mauricio]. But probably, you didn't get questions because you have a bright future. And because everything that you said was bright and clear. So sorry for that.

We are now at the very end of the Capital Market Day. I think you understand very clearly today from the presentation and from your Q&A you understand our trajectory. Please be sure absolutely assured that the teams of Valeo, the management team of Valeo, the executive committee of the group, our Chairman today here and the Board of Directors, we are absolutely committed and engaged to make this [ Elevate 28 ] success. So I thank you very much for your attention. And I think we have a little bit of show. It's not a show, but we have a few products in the room upstairs. We have a light lunch and we'll be happy to continue the discussion. Thank you very much for your attendance.