The profitability of French parts supplier Valeo in 2012 suffered an 11% decline even after it received record-high orders for its fuel-saving and safety technologies. Last Friday, Valeo revealed that it aims to sustain its profitability this year even though it’s likely to experience a 4% drop in European auto production, after net income decreased to 380 million euros ($502 million) in 2012.
In a statement, CEO Jacques Aschenbroich said that orders were driven by the growth of its business in Asia and emerging countries. He added that the company is “confident” in its capacity to attain a strong and profitable organic growth.
Last year, sales increased by 8.2% to 11.8 billion euros due to a record order intake of 15.8 billion. Valeo is not changing its medium-term target of surpassing a 7% operating margin. Its full-year operating profit increased by 3% to 725 million euros, to get to a 6.2% margin.
Valeo said that at this level, it hopes to sustain this year as global auto production goes up by a predicted 1%. Valeo said that in the first half, profitability will probably decrease. But in the second half, it’s expected to recover due to the revival of the European market. Valeo had revealed a suggested dividend of 1.50 euros per share, higher by 7% compared to the payout last year.