UPDATE 1-Car parts group Valeo Q1 profits up, keeps '08 goal


(Adds details, CEO comments in newspaper)

PARIS, April 25 (Reuters) - French car parts group Valeo posted a forecast-beating 21.6 percent rise in first quarter operating profit on Friday despite a weaker automotive market, helped by cost cuts and asset sales.

Valeo, which has been under pressure from activist fund Pardus Capital Management to boost value for shareholders by stepping up divestments or considering a break-up, kept its goal to improve its operating margin in 2008.

Operating profit rose to 90 million euros ($141.8 million) from 74 million in the same quarter 2007 while net profit rose 30.3 percent to 43 million euros.

Analysts polled by Reuters Estimates had forecast net profit of 35.7 million euros and operating profit of 78.75 million euros.

Pardus has around 20 percent of Valeo and has been seeking representation on the supervisory board. Pardus also has a stake in Visteon of the U.S.

Valeo makes car parts from wipers to stop-and-start small hybrid engines and also Park4u parking-assistance systems for auto makers like Toyota Motor , Renault , Peugeot Citroen , Volkswagen or Audi .

It is smaller in Europe than unlisted Robert Bosch GmbH, German tyre and car part group Continental AG or Faurecia , controlled by Peugeot Citroen.

In an interview with Les Echos newspaper, Valeo Chairman and Chief Executive Officer Thierry Morin said the group would continue its programme of divestments and selected acquisitions but at its own pace and not under any time pressure.

Morin said Valeo was half-way through his plan to shed underperforming activities which represent turnover of two billion euros. On April 3 it sold its engine-cooling activities to Sweden's EQT.

"We have to reckon with a market which at the moment is not very favourable to asset sales," he said, noting the decline in share and asset prices in the wake of the debt crisis and higher raw material costs.

"To step up these sales or even extend the scope, like Pardus would want us to do, makes no sense," he said.

Morin said he had proposed to Pardus principal Karim Samii that there could be two board members proposed by the fund -- one independent candidate at the next annual meeting and later, another person to represent the fund. (Reporting by Dominique Vidalon and Marcel Michelson; Editing by Quentin Bryar)



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