(Reuters) – French car parts maker Valeo on Thursday forecast “strong” sales growth this year after its core earnings beat expectations for 2022 despite a tough environment marked by chip shortages and inflation.
The group said it is targeting sales between 22 billion and 23 billion euros this year, against the 20.04 billion posted for 2022. The 2022 performance was in line with its guidance from October.
Valeo is betting on the acceleration of car electrification and the adoption of advanced driving assistance systems (ADAS), as governments and companies shift towards a low-carbon economy while consumers warm to the idea of driverless cars.
“We have achieved all of the financial objectives we set at the beginning of 2022 in a challenging environment marked by high inflation, the electronic components shortage, lockdown measures in China and the conflict in Ukraine,” CEO Christophe Périllat said in a statement.
He added Valeo will aim to curb inflationary impacts this year through productivity, cost reduction and price increases. It expects an improved operating margin between 3.2%-4%, against the 3.2% in 2022.
Microchip shortages made worse by COVID-19 in China and the war in Ukraine weighed on the automotive sector in 2022, adding pressure to rising costs in tight supply chains on which auto parts manufacturers rely to produce components.
The car parts supplier said the net impact of higher costs of raw materials, energy and transportation in 2022 was roughly 200 million euros, and 60 million for wages.
Valeo’s core profit (EBITDA) for 2022 came in at 2.40 billion euros, above the 2.34 billion expected by analysts in a company-provided poll.
The company said it will propose a dividend of 0.38 euro per share.
(Reporting by Olivier Sorgho in Gdansk; Editing by John Stonestreet and Matthew Lewis)
