By Mathias de Rozario and Gilles Guillaume (Reuters) -French car parts supplier Valeo does not expect its sales to grow before 2027, but targets improved operating margin and revenue a year after that
Valeo Projects Growth by 2028, Despite No Sales Increase Next Year
By Mathias de Rozario and Gilles Guillaume
(Reuters) -French car parts supplier Valeo does not expect its sales to grow before 2027, but targets improved operating margin and revenue a year after that, it said on Thursday.
It expects its annual operating margin to land between 6% and 7% in 2028, with sales of 22 billion to 24 billion euros ($25.4 billion to $27.7 billion) in the same year, after an expected return to growth in 2027.
Shares of Valeo were down 3.2% at 0830 GMT, after falling more than 6% at market open.
Jefferies analysts said in a research note that Valeo had chosen realistic and achievable targets rather than highlighting material improvement potential, which may underwhelm some investors.
The group, which supplies systems and components for vehicle electrification, thermal management, lighting and advanced driver assistance technologies, said it would have a particular focus on China, India and North America over the next three years.
"In terms of geography, we still have some way to go in China, as it accounts for 15% of our revenue, but 30% of the automotive market," CEO Christophe Périllat told journalists in a call, saying the China business should return to growth in the second half of 2026.
Valeo aims to triple its revenue in India by 2028 and will continue to focus on North America, he said, describing the latter as a profitable, dynamic and technologically advanced market.
The group was unable to meet the targets it had set for 2022-2025, including 27.5 billion euros in revenue and an operating margin of 6.5%, due to a slower than expected auto market and transition to electrification, coupled with market share gains by Chinese manufacturers, Périllat said.
Valeo expects its free cash flow after net financial interest to be above 500 million euros in 2028.
It also raised the 2025 free cash flow outlook after one-off restructuring costs, its former calculation method, to more than 550 million euros, from the previously expected 450-550 million. It confirmed other targets for this year.
($1 = 0.8680 euros)
(Reporting by Mathias de Rozario in Gdansk and Gilles Guillaume in Paris, editing by Milla Nissi-Prussak)
