Valeo sales growth slows on U.S., China auto production dip

By Laurence Frost

PARIS (Reuters) - French auto parts maker Valeo (VLOF.PA) said revenue growth slowed to 3 percent in the first quarter, held back by a strong euro and a contraction in Chinese and U.S. car production.

After jumping 12 percent last year, revenue rose to 4.917 billion euros (4.3 billion pounds) from 4.767 billion, the Paris-based company said on Wednesday. Currency effects cut sales by 5.4 percent as dollar-zone revenues lost value in euro terms.

"Organic revenue growth will accelerate sharply over the rest of the year," said Chief Executive Jacques Aschenbroich, citing the company's order intake.

Valeo is well positioned for an industry push into electrified and autonomous vehicles. But its shares have fallen some 10 percent this year and 18 percent from a May 2017 peak, as development costs ate into immediate profits.

Valeo reiterated its 2018 earnings guidance and market outlook, predicting a 1.5 percent expansion in global automotive production and stable profitability.

Last week, Valeo's French rival Faurecia (EPED.PA) also reported higher first quarter sales and struck a confident tone for its outlook for the rest of 2018.

Valeo's first-quarter sales number was in line with the 4.91 billion euros expected by analysts, based on the median estimate in an Inquiry Financial poll for Reuters.

Revenue rose 1 percent in Europe but declined 3 percent in China and 2 percent in North America excluding currency effects, disposals and acquisitions, as production fell in both regions.

Valeo stated its headline numbers before the application of a new IFRS 15 accounting standard that alters the treatment of customer contributions to research and development spending.

Under the new standard, revenue came to 4.881 billion euros, almost unchanged year-on-year on a like-for-like basis.

(Reporting by Laurence Frost; Editing by Adrian Croft/Sudip Kar-Gupta)