Valeo Pharma Inc

Good evening, this is the conference operator. Welcome and thank you for joining the Valeo first quarter 2026 phase conference call and webcast. As a reminder, all participants are in listen-only mode. After the presentation there will be an opportunity to ask questions. Please note that we will only take two questions per person. Should anyone need assistance during the conference call, They may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Ms. Marisa Baldeau, VP Financial Communication and Investor Relations of Valeo. Please go ahead, madam.

Good evening, everyone, and welcome to Valeo's first quarter self-conference phone. I'm Marisa Baldeau, and joining me is our CFO, Edouard de Thierry. The format for today will be a presentation for 10 to 15 minutes, followed by a Q&A session for sales side analysts. For your reference, the press releases and slides are already available on our website at www.baleo.com. A replay of the call will also be available on our website. Before Edouard begins, I want to quickly direct you Director 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, who delivered a solid performance. Total sales were up 1.3% on the like-for-like basis, consistent with our four-year objective. OEM sales decreased slightly like-for-like in a market down by 3%, resulting in a three-point outperformance. All three 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 20 and 21 billion euros We target operating margin between 4.7 and 5.3% and free cash flow in excess of 400 million euros. These objectives take into account S&P Global Mobility Estimates published in April and assume no significant changes in macroeconomic protections 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 challenge is 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 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 rooted near 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 2.5% 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.