Valeo Stock Rises as Revenue Gain Sustains 2013 Forecast

Valeo SA (FR), France’s second-biggest auto-parts maker, rose the most in more than five weeks after reporting third-quarter sales growth in China and North America and signaling that the European car market is stabilizing.

Valeo jumped as much as 3.3 percent, the biggest intraday increase since Sept. 10, and was trading up 2.6 percent at 69.50 euros at 10:15 a.m. in Paris. Volume was 51 percent of the three-month daily average after a little more than an hour of trading. The stock, which has been at the highest price since January 2000 for the past week, has gained 85 percent this year, valuing the manufacturer at 5.53 billion euros ($7.56 billion).

The French manufacturer reiterated a full-year target yesterday of a “slight increase” in operating profit as a proportion of revenue, “assuming stabilized market conditions in Europe.” Industrywide car sales in the region are set to shrink for a sixth consecutive year following an 18-month recession in the euro region that ended in the second quarter.

Third-quarter sales at Paris-based Valeo increased 2.2 percent from a year earlier to 2.91 billion euros, the manufacturer said yesterday in a statement. Excluding acquisitions, disposals and currency effects, sales to carmakers rose 25 percent in North America, 13 percent in Asia and 10 percent in both Europe and South America, exceeding competitors’ growth in all markets, Valeo said.

‘Fastest Growing’

“This leaves Valeo the fastest-growing European auto supplier and highlights its credentials as an attractive growth stock,” Philip Watkins, a London-based analyst at Citigroup Inc., said today in a report to clients.

Valeo, whose products span windshield wipers, headlights and stop-start ignition systems, is focusing on technology promoting vehicle safety, comfort and pollution reduction to increase profitability. Chief Executive Officer Jacques Aschenbroich pledged in March 2011 to boost annual revenue to 14 billion euros by 2015, propelled by sales of fuel-saving components.

The third-quarter figures “reflect the gradual entry into production of the high order intake recorded by the group over the last three years and the strength of Valeo’s growth model,” with gains in both original-equipment and spare-parts sales demonstrating “balanced growth,” Aschenbroich said in the statement yesterday.

Valeo is sticking to predictions that Europe’s car market will shrink 2 percent to 3 percent this year, with worldwide auto sales rising 2 percent, Aschenbroich told journalists and analysts on a conference call yesterday.

To contact the reporter on this story: Mathieu Rosemain in Paris at mrosemain@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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