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PARIS, Feb 22 (Reuters) - French auto parts maker Valeo said profit fell in the second half of 2017 as it faced adverse exchange rates and raw material prices, invested more in future vehicle technologies and took a one-off charge related to U.S. tax cuts.
Valeo has positioned itself to benefit from a widespread regulatory emissions crackdown, thanks to its push into electrification and other fuel-saving vehicle technologies. It has also become a major supplier of autonomous driving systems.
But net income dropped 24 percent to 380 million euros ($468 million) in July-December, the Paris-based company said, on an 8 percent increase in group revenue to 9.09 billion.
The results reflected “a more complex economic environment,” including a stronger euro and volatile raw material costs, Chief Executive Jacques Aschenbroich said in a company statement.
Second-half operating income rose 5 percent to 723 million euros, for an 8 percent operating margin - down from 8.2 percent a year earlier. Tax cuts reduced the value of Valeo’s deferred tax assets, wiping 117 million euros from its bottom line.
The results missed analyst expectations of 9.24 billion euros in revenue, 760 million in operating income and 499 million in net profit, based on the median estimates in an Inquiry Financial poll for Reuters.
Research and development spending rose 16 percent to 548 million euros as Valeo expanded its electric and autonomous vehicle technology programmes. But Aschenbroich stressed the R&D outlay was stable as a share of rising order intake.
The company said it was targeting 8 percent revenue growth this year, with an operating margin close to its 2017 level of 7.8 percent before equity contributions. It proposed an unchanged 1.25 euro dividend on 2017 earnings.
Valeo Siemens eAutomotive, a joint venture created in 2016 to develop competitive electric and hybrid vehicle systems, booked 6.1 billion euros in orders last year and 10 billion to date - of which more than half in China.
The venture’s sales are expected to exceed 2 billion euros by 2022, Valeo said on Wednesday.
$1 = 0.8116 euros Reporting by Laurence Frost; Editing by Mark Potter