Valeo says Q3 sales up but warns of GM strike impact

Europe

PARIS — Valeo cautioned on Thursday that the General Motors strike was currently costing it around 160 million euros ($178 million) in sales and around 50 million euros ($55.5 million) in operating margin terms.

The French auto supplier made the forecast as it reported that its third-quarter revenue rose 8 percent to 4.77 billion euros ($5.3 billion). It also confirmed its 2019 guidance — but excluding the one-off impact of the General Motors strike — despite a 6 percent decline in global automotive production.

“To continue the action plan launched in the first half of the year, we are continuing to roll out our program to reduce cost by more than 100 million euros and further scaling back our capital expenditures by around 200 million euros,” Chairman and CEO Jacques Aschenbroich said in a statement.

“This will help improve our operating margin and free cash flow generation in the second half of the year,”

As part of an ongoing review of the business portfolio, Valeo also said it would withdraw from the top column module segment and was no longer taking orders for this product line.

Last week, General Motors and the UAW reached a tentative agreement for a new four-year labor deal, moving closer to ending a costly strike that has lasted more than a month.

Valeo ranks No. 10 on the Automotive News list of top 100 global suppliers, with fiscal 2018 sales to automakers of $19.68 billion.

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