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PARIS -- French automotive supplier Valeo SA Wednesday gave its first major strategy presentation since its current CEO took the helm, sending its shares higher with a plan to harness growth in emerging markets and emissions technology, and to boost profitability and sales. The presentation is the most explicit outline yet of how Jacques Aschenbroich, who took the reins a year ago, plans to lead the company to new growth after a tough period, which has featured an unprecedented slowdown in vehicle production. Valeo's shares rose strongly, with analysts saying the plan is an ambitious one. Bullish on its prospects, the company said it may also swoop for acquisitions, acting as an agent of consolidation in its sector. "Two major trends should drive growth in the automotive market in the next few years: C02 emissions reduction and high growth in emerging markets," Aschenbroich said. "By focusing our investments in these two areas, I am convinced that Valeo will be able to return to organic growth and play an active role in the consolidation of the sector," he said. The market reacted positively to Valeo's announcement, and the shares traded up 6.7 percent at EUR24.40 each at 1240 GMT, considerably outpacing an overall gain of 0.3 percent on the SBF-120 index. In a note to investors, the brokerage Cheuvreux said Valeo has announced "precise and ambitious targets" and predicted that shares would react positively. Cheuvreux was particularly enthusiastic about the company's prospects for growing internally. "Lack of organic growth was the most crucial weakness of the group," Cheuvreux said, adding: "The new management gives it top priority." When Valeo's previous CEO, Thierry Morin, was still in charge, the private-equity fund Pardus Capital, Valeo's core shareholder, had been pushing the company to streamline its businesses and focus on the most profitable ones. Pardus "can only be happy" if Valeo's management pulls off its new plan, said Alexandre Iatrides, an analyst at KBL Richelieu, a private bank He also termed the plan "ambitious" but said there is a considerable risk that it won't all be possible and he remains "quite skeptical" of elements such as a goal to achieve an operating margin of 6 percent to 7 percent in 2013. Valeo reported an operating margin of 1.8 percent for 2009. Cross-town rival Faurecia SA (EO.FR) posted an operating margin of 1.9 percent. Valeo, whose 2009 sales came to EUR7.5 billion, also said it hopes to bring its sales up to EUR10 billion in 2013 and EUR15 billion in 2020. Beyond its plan to expand its existing businesses, Valeo said it is particularly interested in acquisition opportunities in areas related to reducing C02 emissions. Still, the emphasis of the company's plans as announced Wednesday is on its own internal development, fueled by targeted investment. Valeo said it plans to devote 60 percent of its investments to emerging countries in order to strengthen itself in China, India, Brazil, Thailand and Turkey, and progressively to develop its presence in Russia. In order to maximize its gains from the drive to cut tailpipe emissions of C02-- widely understood to be a cause of climate change--Valeo said it plans to devote two-thirds of its advanced research investment to innovations in that field.
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