PARIS -- Valeo expects to outperform a tough auto market in 2020 as strict cost controls help it increase free cash flow and operating margin.
Valeo also said its 32 plants located outside Hubei province in China, which account for 90 percent of nominal sales in the country, had resumed production following the coronavirus outbreak.
It said that it was too early to evaluate the impact of the virus on the company's 2020 results and the wider auto industry but added that the supply chain was progressively getting back to normal, without providing a schedule for full recovery.
"We respect all the rules implemented by the Chinese authorities," CEO Jacques Aschenbroich said on Thursday on a call with journalists.
To date, most coronavirus cases have been in Wuhan, the capital of Hubei province, where Valeo operates three sites, including a technology center which develops parts and components for intelligent vehicles.
Paris-based Valeo specializes in mild-hybrid technology, thermal controls, wipers and electric and electronic systems. The company said that 2019 sales came to 19.48 billion euros ($21.02 billion), in line with the average estimate of 19.47 billion euros in a Refinitiv poll, and that free cash flow increased more than three times to 519 million euros.
Automakers are struggling with an auto industry downturn, particularly in China, and the need to increase investment in electric vehicles as several countries move to eventually ban conventional combustion engines. Valeo said it expected automotive production to fall 2 percent this year.
Valeo ranks 10th on the Automotive News Top 100 global suppliers, with automotive revenue of $19.7 billion in 2018.