After posting a 22% sales increase in the third quarter, French car parts maker Valeo raised its operating margin target for the entire year. Sales improved as the demand grew, particularly in Asia.
When the scrappage incentive schemes ended in Europe, carmakers and suppliers decided to increase their presence in the fast-growing regions including Asia and South America.
Last Thursday, Valeo said that it expects its second-half operating margin to be slightly higher than the 6.1% of sales it posted in the first half. Valeo said that full-year sales should surpass 9.4 billion euros, compared with the 7.5 billion it had last year.
In a conference call, CEO Jacques Aschenbroich told reporters that the group's order book in the third quarter was "exactly in line" with the first half, which was a "historically high level." When Valeo reported its first-half results last July, it indicated that it will reach a full-year operating margin of more than 5% of sales.
Valeo's original equipment sales for light vehicles increased by 23% like-for-like in Asia in the third quarter to 374 million euros. In comparison, sales in Europe increased by 9% to 1.02 billion.
Xavier Caroen, analyst at Kepler Capital Markets, said that overall, this is “better” than what the market had anticipated. He added that the European market had “good news” but that South America was “a bit disappointing,” with its market increasing by 11% while Valeo's sales increased by only 3%. [via Reuters]