Valeo, a car parts manufacturer, is confident that it will reach full-year targets By Stocksak

© Stocksak. FILE PHOTO – A view of the Valeo booth in the Las Vegas Convention Center during CES 20,22 in Las Vegas (Nevada), U.S.A, January 6, 2022. REUTERS/Steve Marcus

Lina Golovnya, Elena Vardon

(Stocksak), -French auto parts maker Valeo (EPA:) Thursday’s announcement by EPA indicated that it is confident in its ability reach its full-year guidance. The company posted slightly higher third-quarter sales than expected.

The group, which specialises in the design, production and sale of components and services for the automotive sector, confirmed its guidance for 2022 based on estimates from S&P Global (NYSE:) Mobility, which tracks data and predicts automotive production.

The business information provider for this month predicted that the global production of light cars would reach 81.8 millions this year and that it will increase to 85.3million in 2023.

“Programmes we receive from our customers remain strong in this end of the year,” Chief Executive Christophe Périllat said on a call.

Périllat added the group saw an acceleration of sales in September and no order cancellations from its clients, and expects this trend to continue into the fourth quarter.

Third quarter sales reached 5.26 billion euro ($5.26 billion), more than the 5.23 billion euro expected by analysts in a company compiling consensus.

Valeo stated that changes in exchange rates caused by the depreciation euro against the U.S. Dollar and the had a positive effect of 6% on its quarterly sales.

The French company expects total sales to reach 19.2-20.0 billion euros in 2022, with a core profit margin of between 11.8%-12.3%. This is below the 13.4% in 2021.

Périllat added the group is sheltered against rising energy costs, having signed long term contracts when prices were low in early 2020, many of which protect it for 2022 and into 2023.

Russia cut its gas supplies to Europe, causing energy shortages in Europe. This raises costs and puts additional pressure on tight supply chain that auto parts makers rely upon to make their components.

Valeo expects to see a 60 million-euro increase in its energy bill by 2023 due to the rise in electricity and gas prices. This would mean that the energy bill for 2021 would go up by 30%, which Valeo considers a “very satisfying” ratio.

($1 = 0.9996 euros)

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