PARIS - Shares in French parts maker Faurecia leaped as much as 20 percent on Friday, spurred by upbeat earnings comments and speculation its main shareholder PSA Peugeot Citroen could sell its stake.
The stock, which has gained more than 45 percent since Wednesday's close, was trading up 16.5 percent at 54.00 euros by 0930 GMT after a barrage of buy orders powered it to a 13-month high.
Analysts and dealers said the rally was triggered by comments from PSA Chairman Jean-Martin Folz, who told shareholders this week a rise in turnover at Faurecia in 2003 would have a positive effect on its operating profit.
He also confirmed PSA eventually aimed to cut its 71.5 percent stake in Faurecia to 51 percent, and dealers said rumors were swirling that the carmaker would pull out of Europe's third-biggest car parts maker by sales altogether.
"There are rumors flying around that PSA plans to sell its stake, after Folz said at the AGM that Faurecia's results were improving," said one Paris-based analyst, adding he was skeptical about the rumor.
Folz has said several times the group would consider cutting its holdings in Faurecia to 51 percent when market conditions were right, but would retain a controlling stake.
A Faurecia spokesman declined to comment but noted that the firm earlier this week said it was confident of achieving its target of boosting operating margin sequentially quarter over quarter.
No one at PSA was immediately available for comment.
One London-based analyst said it might make sense for PSA to cut its stake since although profit margins at Faurecia were improving, they were still lower than at the group's core carmaking division.
"In terms of profitability and return on capital, Faurecia has poorer returns than the rest of the business," he said. "Bid speculation is helping the stock but I'm not sure who would want to buy it in this market, certainly not in Europe."
Faurecia skidded to a net loss in 2002 as bad deals hurt profitability and restructuring costs stung, but has said most of a sweeping revamp aimed at reviving its fortunes is done and aims to boost its operating margin quarter on quarter in 2003.