Valeo shares surge 8% as third-quarter sales beat expectations

Investing.com - French automotive supplier Valeo SA reported third-quarter sales of €4.997 billion, exceeding analyst expectations and driving shares up 8.03% on Friday as the company confirmed its full-year 2025 guidance despite challenging market conditions.

Sales rose 3.5% on a like-for-like basis compared to the same period last year, outperforming consensus estimates of €4.824 billion.

The company’s original equipment sales, which account for 85% of total revenue, increased 3.7% like-for-like, driven primarily by strong performances in the POWER and LIGHT divisions.

Valeo’s European operations outperformed automotive production in the region, with sales up 6.3% like-for-like. The company also made significant progress in China, where it reduced its underperformance gap compared to the Chinese market to -13 percentage points, a substantial improvement from the -20 percentage points reported in the first half of 2025.

"In a difficult and demanding environment, the Group’s third-quarter performance is in line with its full-year objectives. It highlights the complementary nature of our technologies and our geographic positioning," said Christophe Périllat, Valeo’s Chief Executive Officer.

"Our efforts to reposition ourselves among Chinese automakers are paying off and, in line with our expectations, we are significantly reducing the gap in our performance compared with the Chinese market."

The POWER division was a standout performer with original equipment sales up 11% YoY, outperforming the market by 7 percentage points. This growth was attributed to progress with Chinese automakers and customer compensation in the high-voltage business as electric vehicle projects in Europe faced delays.

However, the BRAIN division experienced an 8.2% decline in sales due to the discontinuation of low-margin ADAS projects and production delays in North America.

Based on these results, Valeo confirmed its full-year 2025 guidance, projecting sales of approximately €20.5 billion, EBITDA margin between 13.5% and 14.5%, and operating margin between 4.5% and 5.5%.

The company also maintained its free cash flow targets of €700-800 million before one-off restructuring costs and €450-550 million after these costs.

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