French car parts manufacturer Valeo is set to witness strong sales growth this year as the automotive industry faces the challenges of the ongoing pandemic, chip shortages, and geopolitical tensions. The group is expecting sales between 22 billion and 23 billion euros, which is a significant increase from the 20.04 billion euros recorded in 2022.
Valeo’s impressive 2022 performance was due to its record 2022 orders, with a total intake of 32.6 billion euros. The demand for electric vehicle components and Advanced Driving Assistance Systems (ADAS) technology played a critical role in achieving the company’s success.
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Valeo’s Chief Executive, Christophe Périllat, highlighted the role of car electrification and the adoption of ADAS in the company’s success. Governments and companies worldwide are shifting towards a low-carbon economy, and consumers are increasingly accepting the concept of automated driving. Valeo is relying on these trends to sustain its growth in the coming years.
While the company’s core profit for 2022 surpassed analyst expectations at 2.40 billion euros, Périllat acknowledged macroeconomic pressures, including inflation, chip shortages, COVID-19 in China, and Russia’s invasion of Ukraine. These factors contributed to relatively weak global car production in 2022.
Valeo expects to curtail the impact of inflationary pressures through productivity, cost reduction, and price increases. The CEO stated that the company has already passed on a significant chunk of its costs to clients. The group aims to record an improved operating margin between 3.2%-4% in 2023, surpassing the 3.2% margin recorded in 2022.
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Valeo’s impressive performance in 2022 is a testament to the growing demand for electric vehicle components and ADAS technology worldwide. The company is positioning itself to take advantage of the transition towards a low-carbon economy and the increasing acceptance of automated driving. With productivity, cost reduction, and price increases, Valeo is poised to record improved performance in 2023, despite the ongoing macroeconomic challenges.
