Valeo bets on hybrids, self-driving cars to beat industry growth
Reuters
Published Mar 15, 2015 22:00
Valeo bets on hybrids, self-driving cars to beat industry growth
By Laurence and Frost
PARIS (Reuters) - French auto parts maker Valeo (PA:VLOF) pledged on Sunday to outgrow global vehicle production in the coming five years through an expansion into connected cars, autonomous driving and hybrids.
Before a Monday investor presentation in London, Valeo said it would boost sales to 20 billion euros (14.25 billion pounds) by 2020 from 12.7 billion last year, outstripping overall industry growth by an estimated 5 percentage points annually.
Valeo said its "increasing footprint in high-growth regions" would beat the market, with Asian sales rising to one-third of the group total from 28 percent last year.
It also intends to raise its operating margin to 8 percent by 2017 from 7.2 percent last year, with profitability remaining in the 8-9 percent bracket at the end of the decade.
Paris-based Valeo is pushing into fast-selling hybrid technologies, which help cut fuel consumption and CO2 emissions, as well as connected and self-driving cars.
The supplier announced a deal with Mobileye (N:MBLY) on March 11 to use the Israeli tech company's image processors in autonomous driving and collision-avoidance applications.
Valeo's shares have risen 36 percent this year - outstripping the broader sector (SXAP) - and 5.9 percent in the past week alone, ahead of the strategy presentation.
"Valeo will continue to show best-in-class organic growth," London-based UBS analyst David Lesne said in a recent note.
Annual sales of efficiency-boosting electric superchargers alone may rise above half a billion euros by 2019 from a negligible level last year, Lesne added.
Monday's presentation offers a "potential catalyst to the share price", JPMorgan (NYSE:JPM) analyst Jose Asumendi predicted.
Valeo also said it aimed to convert more than 30 percent of earnings before tax, depreciation and amortization into positive free cash flow by 2020 - compared with 21 percent last year.
The investor presentation is scheduled to begin at 1000 GMT (10.00 a.m. BST) on Monday and will be broadcast live on the Valeo website.
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Written By: Reuters
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