FRANKFURT -- Beru forecast more growth on Thursday after a jump in nine-month profits, thanks to new products which have offset price pressures from customers.
Shares in Beru rose five percent after the maker of electronics and ignition components for the likes of DaimlerChrysler, Volkswagen and Ford said earnings before interest and tax (EBIT) rose 22 percent to 41.6 million euros ($52.72 million) in the nine months to the end of December.
"Depending on the start-up speed of our new projects, we assume that we will at least achieve our goal for the full year of increasing sales revenues by 15 percent," Chief Executive Marco von Maltzan said in a statement.
Consolidated revenues in the first nine months grew 15.9 percent to 248.3 million euros, while orders rose 17.2 percent to 265.3 million euros.
Beru said profitability also improved as its EBIT margin climbed to 16.8 percent from 15.9 percent the year before and hit a high of 18.2 percent in the third quarter thanks to stabilising material costs and lower staff expenses relative to sales.
"This is really outstanding," said Patrick Juchemich, analyst at private bank Sal. Oppenheim. "They're clearly well ahead of their 15-percent margin target for this year."
Beru cut its workforce to 2,690 from 2,718 in the last three months of 2003 and it should drop further as the company focuses spark plug production at its French plant in Chazelles-sur-Lyon.
Profitability also rose as Beru's high-growth unit making tyre pressure monitoring systems for cars like Volkswagen's Touareg and Porsche's Cayenne broke even.
NEW PRODUCTS, NEW GROWTH
For the next business year, starting in April, Beru expects more double-digit organic growth thanks to eight new products.
"It is important to respond to the manufacturers' intense price pressure," von Maltzan said, adding that technological innovations would be a key element in remaining competitive.
Despite these pressures in Europe and North America shares in Beru are at 16-month highs as the firm rolls out new products such as an electronically-controlled heating system for high-volume diesel versions of VW's new Golf V and the next generation of the Ford Focus.
Beru stock, which has already put on about 13 percent this year, was up 5.6 percent on the day at 62 euros by 1051 GMT, making it the second strongest performer amongst constituents of the 0.4 percent higher MDAX index.
"We are neutral on the share and tempted to upgrade our rating but the recent rally means we probably can't," said Sal. Oppenheim's Juchemich. "I will almost certainly be raising my earnings outlook for this year and next, though."
In particular Juchemich welcomed a 34.8 percent sales surge at Beru's electronics and sensor technology division.
At its core diesel business, which accounts for about half of revenues, sales rose a more modest six percent but Beru forecast more growth thanks to deliveries of new cold start products for Mercedes and General Motors.