Valeo full-year 2007 revenues rose 1.5% year on year to EUR9,689m and gross margin rose by 2.3% to EUR1,497m or 15.7% of sales, versus 15.5% in 2006. Operating margin was up 8.1% to EUR346m thanks to quality improvement efforts and a re-engineering programme. Operating income rose 17.7% to EUR319m or 3.3% revenues (2.8%).
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But net income halved to EUR81m from EUR161m in 2006 due to a non-strategic activities loss of EUR59m, of which EUR51m was a capital loss from the sale of the wiring harness business on 31 December. In 2006, a non-strategic gain of EUR22m included a net capital gain of EUR41m from the sale of the motors and actuators unit. Excluding all this, net income rose by 10%, Valeo said.
“2007 was a turnaround year for Valeo marked by a rise in sales (+6.2%) related to growth in emerging countries where Valeo is increasingly present and to customers’ growing appetite for new products developed by Valeo,” the supplier said in its results statement.
“The second half results enabled a marked improvement in the group’s performance in 2007 versus 2006.”
Valeo continued its rationalisation policy last year, selling the wiring harness unit and acquiring Irish company Connaught Electronics in order to strengthen its image processing abilities.
The rationalisation of purchasing also continued, with “competitive cost” countries now accounting for 37% of total purchases. The group also set up two new joint ventures in India.
For 2008, Valeo said it would further increase profitability “in an environment of uncertain automotive markets and stabilised raw material prices”.
Re-engineering of the group’s support functions would deployed on a wider scale and further rationalisation was likely “with discernment”.
“The group reaffirms its objectives for 2010 of an operating margin of 6% and a doubling of the return on capital employed compared with 2006,” Valeo said.
