Valeo Shares Plunge After Profit Forecast Cut on China Slowdown
(Bloomberg) -- Valeo SA’s shares plunged the most on record in Paris trading after the French car-parts maker cut its profit forecast because of a slowdown in China and new rules on emissions testing in Europe.
Operating margin this year will be 6.2 percent to 6.5 percent, the Paris-based company said after the market closed Thursday, the second time this year it’s lowered the target. Sales growth also will be lower than forecast, the company said.
The announcement adds to evidence that consumer demand is slowing along with the economy in China. European automakers and suppliers from Daimler AG to Continental AG have warned about profit this year. Tiremaker Michelin cited falling sales in Europe and China this month and Renault SA disappointed investors with weak sales in emerging countries.
While Valeo had signaled that it was going through a “bad patch,” the announcement was “much worse than feared,” Raghav Gupta-Chaudhary, an analyst at Citigroup Inc. in London said in a report to clients.
Valeo dropped 18 percent to 24.60 at 9:17 a.m. in Paris, cutting the company’s market value to 5.9 billion euros ($6.7 billion). The stock has fallen more than 60 percent this year.
Car registrations in Europe dropped 23 percent in September after the new emissions-testing rules took hold.
Valeo margins have been contracting since the first half of last year, Jefferies wrote before the results. It flagged unfavorable raw material prices, lower auto production and a sharp increase in the workforce.
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