PARIS -- Valeo said it was abandoning its 2020 financial targets because of the hit to its business from the coronavirus outbreak, and had secured 1 billion euros ($1.1 billion) in additional credit lines to shore up its finances.
CEO Jacques Aschenbroich will also relinquish 25 percent of his salary "for the duration of the shutdown to support COVID-19 relief initiatives," the supplier said in a news release on Tuesday.
Members of the executive committee and board of directors will take similar pay cuts.
"Given the drop in business activity, which began to impact Valeo's plants in Europe and North America in the last two weeks of March, and the lack of visibility regarding when the crisis will end, the 2020 financial objectives announced by Valeo in connection with its 2019 full-year results are no longer valid," Valeo said.
The supplier said that after securing the new credit lines from its banks, it now had 2.3 billion euros in total of undrawn credit facilities.
In December, Valeo said it would outperform the global auto market by more than five percentage points in 2020, with the overall market expected to drop by 2 percent.
The company said on Tuesday that sales in March were 60 percent of the 2019 level but "should be back to normal in the coming months."
Valeo said it would conserve capital by "drastically reducing" nonessential investments and costs and would monitor its cash positions daily. It added that it was variabilizing fixed costs across its plants, through part-time work, as well as for some support activities.
The steps announced by Valeo are similar to those taken by other suppliers and automakers to counter the effects of coronavirus restrictions. Demand has fallen sharply across Europe, and it is unclear when assembly plants will resume normal operations.
Valeo has not yet announced what will happen to its 2019 dividend, which it said would be 1.25 euros per share; other auto companies have announced they would be canceling or reducing dividends.
Valeo said all 34 of its plants in China had gradually started to restart production since Feb. 10. European plants have shut down except for those that are producing for export, Valeo said.
Valeo makes a variety of components including mild hybrid systems, electrical and electronic systems, thermal systems, transmissions, wiper systems, and camera/sensor technology.
Valeo ranks 10th on the Automotive News Europe list of Top 100 global suppliers, with automotive revenue of $19.7 billion in 2018.
