First half operating income at component maker Valeo rose 6.9% to EUR169m (3.2% of total revenues) compared with EUR159m (also 3.2% of total revenues) a year previously.

Gross margin rose 3.9% to EUR835m (15.9% of sales), versus EUR804m (16.3% of sales) for H1 2005.

The group said that the rise in raw material prices reduced gross margin by 0.6 points.

Total operating revenues were EUR5,309m in the first half 2006, up 6.4%. Excluding the impact of exchange rates (+2.1%) and changes in the consolidated reporting entity (+3.3%), total operating revenues increased by 1%, in line with growth in the group's automotive sector production.

"The group's half-yearly results show strong resilience in an environment (automotive production and raw materials) that deteriorated between the first and the second quarter. Valeo has recorded progress in the areas of productivity and order intake," it said in a statement.

H1 income before tax was EUR147m versus EUR110m in 2005. This includes a net debt cost of EUR31m, up by EUR8m versus the first half of 2005, resulting from the acquisitions and share buyback programme implemented in 2005. It also includes a capital gain of EUR20m generated by the sale of the stake in Bluetooth specialist Parrot.

Earnings per share totalled EUR1.23, up 41.4%.

For the second half of the year, Valeo expects stable light vehicle production in Europe and a decrease of 2% in North America.

It will step up efforts to offset the negative effects of the rise in raw material prices on profitability.