ACE Valeo to review medium-term outlook in March 2011 ACE

PARIS (Reuters) -- French car parts supplier Valeo SA said it would review its medium-term targets in March after a quicker-than-expected rebound in profitability.

Carmakers and suppliers are counting on brisk sales in Asia as European markets slow after the end of scrappage schemes designed to revive demand.

Valeo shares rose 3.7 percent to 44.84 euros at 10:20 CET. The Stoxx 600 European Autos Index rose 2.6 percent while the French CAC-40 index edged up 0.11 percent.

In March, Valeo set out a new strategic plan, saying it was aiming for sales of 10 billion euros ($13.2 billion) by 2013 and return on capital invested of about 30 percent in the same time frame.

In October, Valeo nudged its 2010 operating margin target higher and said it saw sales of about 9.4 billion euros for the full year 2010.

"This announcement is in line with what we thought," said Natixis analyst Michael Foundoukidis in a research note.

"It is clear that the group has been surprised by the much stronger growth than forecast in March," he added.

Speaking last month at Reuters' Global Autos Summit, Valeo CEO Jacques Aschenbroich said he did not rule out increasing medium-term targets.

"The way out of the crisis on a worldwide basis, even in Europe, has been much much quicker than expected, and we are improving in terms of profitability much quicker than expected," he said at the time.

Foundoukidis said: "On the revenue side, the 10 billion euros target should be reached as soon as next year, versus 2013 in the group mid-term guidance."

He added: "Valeo will be debt free by 2012 and could make some acquisitions before that, probably in China."

"Valeo will review its medium-term outlook during an investors' day to be organized in March 2011," the group said in a statement on Friday.

On Thursday, ratings agency Moody's said it affirmed Valeo's Ba1 rating and lifted its outlook to "positive" from "stable". Aschenbroich said in November that he saw a return to investment grade rating -- one step above its Moody's Ba1 rating -- in the short-term.

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