PARIS—French auto-parts supplier Valeo SA Monday reported
double-digit sales growth in China during the first half of the
year, bucking the downward trend in the world's largest car market
as it benefited from Chinese car makers seeking to upgrade their
vehicles with premium car parts.
Valeo said net profit rose 34% to 344 million euros ($378
million) in the first half of this year, up from €256 million in
the same period last year, while sales increased 15% to €7.3
billion. A rebounding European market and the low euro also helped
boost sales.
Sales in China, an increasingly important region for Valeo, rose
10% in the first half from the same period a year ago.
While China has propelled the global automotive industry in
recent years, sales of new cars have declined, paralleling the
weakness of the economy. Valeo, which makes a large suite of car
components including lighting systems and dashboard displays, said
it has outpaced the market by selling more high-tech products to
domestic Chinese brands who are seeking to upgrade their vehicles
to remain competitive with foreign brands.
This doesn't make them immune to the China slowdown: Sales in
that country grew 6% in the second quarter, down from 15% in the
first quarter. But that is still above the 4.8% rise in
passenger-car sales in China during the first six months of 2015
compared with the same period in 2014, a rate far below the gains
seen over several years.
During the first six months of this year, Ford Motor Co. saw its
China sales largely unchanged from a year earlier. Other big car
makers, including General Motors Co. and BMW AG, recently reported
losses in sales. In June, car sales in China declined 3.4% from the
same month one year ago.
Valeo said its exposure to local manufacturers means it can
continue to outpace overall Chinese demand in the second half of
the year.
"Chinese clients are becoming more important. We see a very
strong rise among them," said Valeo Chief Executive Jacques
Aschenbroich. Sales to local car producers constituted 44% of
Valeo's revenue in China.
Mr. Aschenbroich said Valeo is selling more products like
CO2-reducing filters, and driving and parking assistance systems in
China. Valeo has been pouring its research funds in recent years
into developing products in emissions control and autonomous
driving technologies. Globally, these high-tech parts now account
for 30% of Valeo's current global order intake, the company
said.
In a note, Credit Suisse analyst Alexander Haissl applauded the
results but was skeptical of the company's rosy forecast, saying
Valeo's "outlook on China seems optimistic to us."
Valeo's European business is booming thanks to the rebound in
car manufacturing on the continent. European sales were up 10%
during the first half of 2015.
Write to Matthias Verbergt at matthias.verbergt@wsj.com
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