PARIS -- Valeo is looking for acquisitions in the US, spurred by a favorable exchange rate and financial difficulties experienced by local suppliers.
"The supply industry in the US is weaker and the dollar is weak," said Valeo CEO Thierry Morin at a press conference here last Friday.
"Draw your own conclusions," he replied when asked whether that meant Valeo wanted to expand in the US through acquisition.
US partsmakers such as No. 1 US-based supplier Delphi and No. 3 US supplier Visteon have financial troubles and may have to sell parts of their businesses.
The dollar is trading at about $1.20 per euro, compared with about $0.80 to the euro at the start of the decade. The change means a euro-based company can buy a US asset for about two-thirds as much now than five years ago.
Morin said any acquisition would serve to reinforce Valeo in its three business areas: driving assistance, powertrain efficiency and comfort features such as air conditioning.
"We shall bolster those domains," he said. "We won't add a new one."
The recent rise in Valeo's debt level is not a hindrance, Morin said.
He said the company could easily spend E450 million on acquisitions, not counting cash generated by possible divestments.
Valeo's net debt (debt minus cash) rose to E1.26 billion by June, from E500 million on January 1.
As a share of shareholder equity -- the net asset value of the company -- the ratio has jumped to 73 percent from 26 percent.
"One can exceed a 100 percent gearing ratio for a few quarters," Morin said.
Valeo's debt surge mostly reflects a E327 million acquisition of the engine electronics division of Johnson Controls and a E251 million share buyback.