Valeo says scrap schemes have helped
PARIS (Reuters) - French car parts maker Valeo believes the end of the year will be better than previously expected, thanks to the car scrapping schemes implemented across Europe, its Chief Executive said on Tuesday.
Valeo (VLOF.PA) expects its fourth-quarter sales to be in line or slightly lower than the third quarter, chief executive Jacques Aschenbroich told the Reuters Auto Summit.
"It will be much better than last year of course. We think it will be something similar, probably a bit down, but similar to the third quarter," he said at the summit, which is taking place from November 2 to 5 at Reuters offices in Paris and Detroit.
Valeo last month posted third quarter net income of 4 million euros and raised its production forecast for the second half of 2009. Aschenbroich said at the time, however, that he remained "cautious" about 2010.
Aschenbroich said Valeo, which made about 7 percent of its total sales in China in the third quarter of 2009, wanted to double this proportion in the next four to five years, to bank on the rising need for safer vehicles from Chinese customers.
"China is absolutely exploding. And there is no reason the Chinese market shouldn't carry on being very fast in the few coming months," he said.
In China, Valeo recently took full control of a joint venture that makes compressors, and the group is reviewing all six of its joint ventures in China as it aims to carry on its 20-percent growth rate there.
Valeo has close to 500 million euros of sales in China and employs 5,000 people there. The group makes about 18 percent of its sales in the wider Asian region, Aschenbroich said.
The CEO also said Valeo was looking at acquisitions in three different businesses, safety and comfort, vision, and energy savings.
"I'm pretty sure in the years to come, cars will be smaller, more comfortable, and safer. Every combination of business that could consolidate one of these three topics, we'll look at it," Aschenbroich said.
"After every crisis, there's a wave of consolidations. There are more OEMs today than a few years ago," he added. "Of course, we want to be an actor of this consolidation in the years to come."
DOLLAR IS A CONCERN
Aschenbroich said the weakness of the U.S. dollar was a concern for the group, particularly for the long term, because many emerging countries had tied their currencies to the greenback.
"The erratic moves are a concern. In our business we don't see many imports from China, and it makes our location in China very competitive. But in the long term, it is a concern," Aschenbroich said.
He also said Valeo wanted to meet trade unions in the coming weeks to discuss possible consequences of the reorganization announced in July.
By 9:57 a.m. EDT, shares in Valeo were down 3.9 percent to 17.86 euros, underperforming France's wider CAC 40 index .FCHI, which was down 1.27 percent, and the DJStoxx European Auto index .SXAP, which was down 2.98 percent.
(Reporting by Helen Massy-Beresford and Michel Rose, additional reporting by Marcel Michelson, Gilles Guillaume, Matthias Blamont and Marie Mawad; Editing by Hans Peters)
