Valeo FourthQuarter Profit Drops on CableUnit Sale (Update2)
Valeo Fourth-Quarter Profit Drops on Cable-Unit Sale (Update2)
By Laurence Frost
Feb. 12 (Bloomberg) — Valeo SA, Europe;s third-largest
maker of car parts, said fourth-quarter profit fell 17 percent on
the sale of its cabling unit.
Net income dropped to 50 million euros ($73 million) from 60
million euros a year earlier, the Paris-based company said today
in a statement. Valeo;s full-year operating margin rose to 3.6
percent from 3.4 percent as it sold more sophisticated
components.
“This was a year of turnaround,;; Chief Executive Officer
Thierry Morin said in a conference call with analysts after the
results were announced. He forecast a “further improvement in
profitability in 2008,;; without elaborating, and reiterated his
6 percent margin target for 2010.
European auto-parts suppliers face a profit squeeze as raw-
material costs rise and carmakers exert pressure to keep prices
down. Valeo, which makes components ranging from windshields to
headlights, is moving jobs out of western Europe as it sells off
basic parts production to focus on more profitable technologies
to improve fuel efficiency, safety and driver comfort. Germany;s
Leoni AG agreed Oct. 16 to pay 255 million euros for cabling unit
Valeo Connective Systems.
“Morin sent a bullish message,;; said Gaetan Toulemonde, a
Paris-based analyst for Deutsche Bank, who has a “hold;; rating
on Valeo shares. “But it;s still very difficult to read the
numbers;; because of the cable unit sale.
Operating Profit
Valeo shares advanced 1.74 euros, or 7.8 percent, to 24.14
euros in Paris before the results were announced. The stock has
fallen 14 percent since the start of the year.
Operating profit jumped 30 percent to 96 million euros in
the fourth quarter. Excluding the cable unit, Valeo said
operating profit rose 46 percent.
Net income exceeded the 26.5 million-euro median estimate of
six analysts surveyed by Bloomberg News. Sales fell 3 percent to
2.44 billion euros. Revenue was 3.9 percent lower at 9.69 billion
euros for the full year.
Morin said rising raw-material prices trimmed less than 30
million euros off earnings last year and “are going to
stabilize;; in coming months.
The sale of the cable unit, which fetched 47 percent of its
annual sales, resulted in a 51 million-euro capital loss that
weighed on earnings, Valeo said. Morin has pledged to sell assets
representing a further 1.2 billion euros in sales by the end of
next year.
`On Schedule;
While the company is “on schedule;; to meet that objective,
a slump in automotive stocks may complicate the task, Morin said
in a conference call with analysts after the results were
announced.
“We will have to be careful with the market conditions,;;
Morin said. “If markets are now valuing companies for 20 percent
of their sales then I;m certainly not going to take huge losses
giving away divisions that make money.;;
New orders for Valeo;s more profitable, “innovative;;
products rose 45 percent to 3.2 billion euros in 2007, the
company said. The category includes a fuel-saving “Stop-Start;;
system that cuts the engine when a car halts in traffic and
restarts it immediately when the accelerator is pressed.
The “Park4U;; system, which auto-pilots a car into an
adjacent space between parked vehicles, is now on order for 12
models, Morin said.
Operating profit jumped 30 percent to 96 million euros in
the fourth quarter, increasing to 3.9 percent of sales from an
operating margin of 2.9 percent a year earlier, Valeo said.
To contact the reporter on this story:
Laurence Frost in Paris at
