UPDATE 2-Faurecia's profits jump after Asia-led sales gains

Wed Feb 12, 2014 5:12am EST

* Faurecia profit rises on Asian demand

* Company says North America below expectations

* Targets 2014 margin gain on 2-4 pct sales growth (Adds company and trader comments, details, background)

By Laurence Frost and Gilles Guillaume

PARIS, Feb 12 (Reuters) - French auto parts maker Faurecia's second-half profit rose on demand in Asia, which outpaced weak North American results and a tentative recovery in Europe, the company said on Wednesday.

The supplier of car interiors, exhausts and body parts pledged a further profit increase in 2014 as global auto production grows by an estimated 3 percent.

European suppliers have scrambled to refocus on faster-growing markets as a six-year slump hurt business at home. Faurecia, 51.7 percent-owned by PSA Peugeot Citroen , has cut hundreds of European jobs to contain costs.

Second-half net income jumped by 141 percent to 53 million euros ($72 million) on a 1.9 percent revenue gain to 8.764 billion, "driven in particular by remarkable growth in Asia", Chief Executive Yann Delabriere said in the company statement.

Shares in the company were up 1.4 percent at 29.19 euros by 1005 GMT.

Asian sales rose 22 percent in the second half with the operating margin rising to 9.1 percent from 8.3 percent. A budding recovery in European car production also led to a "sharp improvement" in regional profitability, the company said.

But the company said results missed expectations in North America, where the supplier has been expanding.

"Clearly in North America we are not where we expected to be," Delabriere told reporters and analysts in Paris.

Operating income in the region edged up to 36 million euros from 29 million but was held back by costs and complications linked to a ramp-up in seating and interiors production.

The planned closure of Faurecia's Bradford seat plant in Central Ontario, Canada, will allow the company to "redeploy production in the south of the U.S. and Mexico", the CEO said.

The company plans to close a total of eight seat frame plants globally, sources told Reuters last year.

"We remain cautious about the pace of recovery in the U.S.," a Paris-based trader said.

Group operating income rose to 282 million euros for a 3.2 percent operating margin overall, compared with 2.5 percent a year earlier.

A decline in the Brazilian real and Argentine peso also compounded "very challenging" conditions in South America, where second-half sales and profit fell, Faurecia said.

In November, the company had trimmed its mid-term 2016 sales goal to 21 billion euros with a 4.5-5 percent operating margin, from 22 billion euros and 5 percent.

Net income for full-year 2013 came to 144 million euros on sales of 18.03 billion, broadly in line with analyst expectations, according to Thomson Reuters SmartEstimates data.

For the full year 2014, Faurecia pledged to increase its operating margin by between 0.2 and 0.5 percentage points over the 3 percent recorded last year - backed by positive net cash flow and a 2-4 percent sales increase before currency effects. ($1=0.7312 euros) (Editing by Andrew Callus and Greg Mahlich)

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