(Adds analyst, CEO comment, shares)
By Laurence Frost
LONDON Feb 28 French auto parts maker Valeo
set higher mid-term sales and profit targets on
Tuesday - seeking to reassure investors that they need not wait
too long for returns on its investments in hybrid, electrified
and self-driving cars.
Paris-based Valeo, which has made a number of recent
acquisitions in areas from LED lighting to fuel-efficient
gearbox components, pledged to lift sales to 27 billion euros
($29 billion) in 2021 from 16.5 billion euros last year.
The maker of self-driving and self-parking systems,
low-emission hybrid technologies and vehicle lighting will meet
the new goals "by leveraging the growth opportunities in the
automotive industry for electrification, autonomous and
connected vehicles," Chief Executive Jacques Aschenbroich said.
He was speaking before presenting his new strategy to analysts
Management also aims to increase the company's operating
profit margin from last year's 8.1 percent to 8.5 percent of
sales in 2019 and about 9 percent in 2021. It had previously
targeted 20 billion euros in sales and an 8-9 percent margin for
Valeo's shares have doubled in two years and are up 46
percent over the past 12 months, while the Stoxx Europe 600
Automobiles and Parts sector index has risen 24 percent,
leaving some investors wondering how much more growth to expect.
The shares were up 0.5 percent at 58.49 euros as of 1128 GMT
on Tuesday, as analysts welcomed the new goals.
"Despite high expectations (going) into the event, Valeo was
able to exceed even the most bullish expectations," said Chris
McNally of Evercore ISI. Furthermore, "Valeo has a reputation of
exceeding guidance," the London-based analyst said.
The group is further accelerating in Asia, where it said on
Tuesday it expects to generate 37 percent of its sales to
carmakers by 2021, compared with 27 percent last year.
Valeo also said it aims to generate 3.7 billion euros in
free cash flow for the 2017-2021 period, nearly double the 2
billion recorded from 2012-2016.
The expected performance will likely drive higher
shareholder payouts as well as further expansion, CEO
Aschenbroich told analysts at the London presentation.
"That cash generation brings us lots of opportunity to pay
dividends and potentially to make some bolt-on acquisitions," he
(Additional reporting by Gilles Guillaume in Paris; Editing by
Greg Mahlich and Susan Fenton)