Third quarter 2006 operating revenues at Valeo were off 3% to EUR2,263m year on year with exchange rates having a negative impact of 0.8%.


World automotive production dropped 4% in western Europe and 9% in North America, and gained 11% in Asia and 3% in South America.


Gross margin for the quarter was off 8.2% to EUR335m  for the quarter, due in particular to the rise in raw material prices, assessed at 0.8 margin points.


Operating income was EUR45m (2.0% of total revenues) compared to EUR81m (3.5% of total revenues) a year previously. This included “other net expenses” of EUR21m, compared to EUR2m in 2005. Total R&D expenses (net of customer funding) and administrative and selling expenses was EUR269m, down 4.6% compared to the third quarter 2005.


Net income was EUR7m compared to EUR29m in 2005, after income tax of EUR23m (EUR15m in 2005).

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At 30 September 2006, Valeo’s net debt was EUR1,077m, compared to EUR1,080m at 1 January 2006. The debt-to-equity ratio was 64%, compared to 63% at year-end 2005.


Valeo expects automotive production in Europe to stabilise in the fourth quarter, reflecting sustained levels of production in eastern Europe and a fall in western Europe.


Production should drop by 5% in North America (-11% for the Big 3). In this context, Valeo intends to improve its market share as raw material prices stabilise also.