FRANKFURT: German automotive parts supplier Leoni raised its full-year revenue target by 3 percent after reporting quarterly turnover above 1-billion-euros ($1.33 billion) for the first time.
Strong demand for BMW and Mercedes-Benz cars in China and the United States boosted the company's sales more than expected despite its heavy dependence on European carmakers for business.
Leoni now expects roughly stable sales of about 3.8 billion euros this year, 100 million euros more than previously forecast, it said on Tuesday, sending its shares up 6 percent.
"The demand for wiring systems and cable harnesses from customers among the export-heavyweight German motor vehicle industry was especially dynamic," it said in a statement.
Leoni expects to benefit from a long-term trend in the auto industry to make more electric cars and hybrids.
The company stuck to its earnings target of about 170 million euros before interest and taxes, down almost 30 percent from a year earlier, and said profits would be weaker than expected at its Wire & Cable Solutions division, hit by weak demand from customers such as Siemens.
"In the second half of the year too we must expect, alongside the major costs to start up new projects, a weak level of capacity utilisation in the industrial business as well as heavier than originally budgeted restructuring costs," it said.
Leoni has dubbed 2013 a transition year as it stems higher capital expenditure for new auto parts and an international expansion aimed at reducing its exposure to Europe.
These should lay the groundwork for a new phase of growth starting in 2014, when operating profit margins should start improving noticeably and surpass 7 percent in 2016, it said.
Steubing analyst Tobias Schmidt said investors should not forget that US rival Delphi was likely to continue beating Leoni in terms of margins even after the German group hits 2016 medium-term goals.
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