Valeo raises outlook; Q3 sales

PARIS (Reuters) -- French car parts maker Valeo nudged up its operating margin target for the full year after posting a 22 percent rise in third-quarter sales as demand for cars grew, particularly in Asia.

Carmakers and suppliers are increasingly counting on boosting their presence in fast-growing regions including Asia and South America, with demand for cars in Europe stagnating after the ending of scrappage incentive schemes.

Valeo said on Thursday it expected its second-half operating margin to be slightly higher than the 6.1 percent of sales it achieved in the first half.

Full-year sales should exceed 9.4 billion euros, compared with the 7.5 billion it achieved last year, it said.

The group's order book in the third quarter was "exactly in line" with the first half, which was a "historically high level", CEO Jacques Aschenbroich told a conference call with reporters.

In July, when it reported first-half results, it said it would achieve a full-year operating margin of over 5 percent of sales.

Valeo's original equipment sales for light vehicles rose 23 percent like-for-like in Asia in the third quarter to 374 million euros. In contrast, European sales grew 9 percent to 1.02 billion.

"Overall, its better than the market expected," said Xavier Caroen, analyst at Kepler Capital Markets. "The good news comes from the European market ... however South America was a bit disappointing, where the market rose 11 percent and Valeo's sales rose only 3 percent."

Valeo said sales in Asia accounted for 20 percent of its original equipment sales in the third quarter, compared with 18 percent in the third quarter of 2009.

"Evolution in organic growth (in Asia) will be slow -- we went from 18 percent to 20 percent in a year," Aschenbroich said. "Longer-term our objective is to increase the proportion of sales in Asia to around 30 percent. That would be through organic growth -- to go further we would have to plan for some acquisitions."

Europe accounted for 56 percent of original equipment sales, down from 62 percent in the third quarter 2009.

In September Valeo said second-half revenue would be higher than forecast, without giving a precise figure.

French car parts maker Faurecia on Monday hiked full-year targets after quarterly sales jumped.

Valeo in March set out a strategic plan as part of which it said it wanted to achieve sales of 10 billion euros in 2013 and an operating margin level of 6 to 7 percent.

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