Valeo SA, a French car parts supplier, says it would review its medium-term targets in March 2011 after a quicker-than-expected rebound in profitability. Valeo shares surged 3.7 percent to EUR44.84 at 10:20 CET. The Stoxx 600 European Autos Index increased 2.6 percent while the French CAC-40 index edged up 0.11 percent.
Suppliers and carmakers and suppliers are depending on brisk sales in Asia as European markets have slowed down when the scrappage schemes ended.
In March 2010, Valeo established a new strategic plan, saying it aimed for sales of EUR10 billion ($13.2 billion) by 2013 and return on capital invested of about 30 percent in the same time frame. In October 2010, Valeo tapped its 2010 operating margin target higher and said it saw sales of about EUR9.4 billion for the full year 2010.
An analyst for Natixis, Michael Foundoukidis, says Valeo has been surprised by the much stronger growth than forecast in March.
At the Reuters Global Autos Summit in November 2010, Valeo Chief Executive Officer Jacques Aschenbroich said he did not exclude increasing medium-term targets.
Following a 22-percent surge in sales in the third quarter of 2010, French car parts maker Valeo hiked its operating margin target for the entire year.
Sales in the quarter improved as the demand grew, particularly in Asia. When the scrappage incentive schemes ended in Europe, automakers and suppliers decided to increase their presence in the fast-growing regions including Asia and South America. Valeo's original equipment sales for light vehicles surged by 23 percent like-for-like in Asia in the third quarter to EUR374 million. In comparison, sales in Europe increased by 9 percent to EUR1.02 billion.
Valeo expects its second-half operating margin to be slightly higher than the 6.1 percent of sales it recorded in the first half. The company also expects its full-year sales to surpass EUR9.4 billion, compared with the EUR7.5 billion it posted last year.
Operating from its global base in Paris, France, Valeo is a global automotive supplier that provides a wide range of products not only to automotive companies, but also to the aftermarket. Valeo came into existence in 1923, when it was established as the Socite Anonyme Française de Ferodo. Founded in Saint-Ouen, near Paris, Socite Anonyme Française de Ferodo was initially engaged in distributing brake linings and clutch facings under license of Ferodo Ltd UK.
Socite Anonyme Française de Ferodo expanded in Europe in the 1960s, in the United States in 1980 and in China in 1994. Socite Anonyme Française de Ferodo changed its name to Valeo – which means "I am well" in Latin – in May 1980.