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UPDATE 1-Valeo raises goal as expansion defies currency slide
July 24, 2014 / 5:10 PM / in 3 years

UPDATE 1-Valeo raises goal as expansion defies currency slide

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PARIS, July 24 (Reuters) - French car parts supplier Valeo raised its earnings guidance on Thursday after first-half profit rose 21 percent on an overseas expansion and demand for fuel-saving technologies.

Net income increased to 278 million euros ($374 million) in the six months to June 30, Valeo said, as buoyant sales in China and North America helped offset a slide in emerging-market currencies.

Valeo now expects a 2014 operating margin above 7 percent, an improvement on its previous pledge to match the 6.6 percent recorded last year, it said.

A 25 percent surge in new orders “confirms once again the company’s strong organic growth potential”, Chief Executive Jacques Aschenbroich said in a statement.

Paris-based Valeo, which recently returned to France’s CAC-40 benchmark index, is well placed to benefit from tightening emissions and safety standards as well as future demand for self-driving cars.

Revenue rose 7 percent to 6.35 billion euros in the six months, the company said. Operating income jumped 15 percent to 442 million euros, lifting the operating margin to 7 percent of sales from 6.4 percent.

Progress on sales and profit came in spite of a “significant depreciation of emerging-market currencies as well as the yen and the dollar against the euro”, Valeo said. Foreign exchange effects reduced revenue by 3.1 percent, the company added.

The share of revenue generated outside Western Europe nevertheless rose by a percentage point to 63 percent, with sales to vehicle makers up 29 percent in China and 23 percent in North America. European sales rose a more modest 4.1 percent.

$1 = 0.7427 Euros Reporting by Natalie Huet and Laurence Frost; Editing by Andrew Callus and Jane Baird

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