PARIS, Oct 17 (Reuters) - Europe's largest listed car parts maker Valeo is likely to post flat third-quarter profits next week as industry woes erase gains from cost cuts, said analysts, who will look for details on its expansion plans.
Seven analysts surveyed by Reuters predicted net profit at an average of 31 million euros ($35.9 million), unchanged from last year, and operating profit at 108 million euros, up slightly from 105 million, on sales down some seven percent at 2.09 billion euros.
Paris-based Valeo has been battling to swell its operating margin quarter-on-quarter as it completes a turnaround that yanked it back to profit last year after charges at its loss-making U.S. unit pounded it to a loss in 2001.
Analysts are mostly confident Valeo will meet this goal as well as a full-year target of boosting its operating margin -- a key measure of profitability -- from last year's level of five percent.
They will also be scouring comments by Chairman Thierry Morin for hints on the firm's acquisition plans.
"Uncertainty over Valeo's acquisition strategy is worrying, and the market is looking for clarification," said one Paris-based autos analyst. "They have a lot of cash and could go for a big buy, but several smaller acquisitions would be easier to integrate and favoured by investors."
Valeo issued a convertible bond July that means it has 500 million euros in available funds, and Morin has made clear the firm is on the prowl for buying opportunities.
But he has been tight-lipped on details, saying only the company might be interested in the electronics industry or the area of motor control.
Talk has swirled that Valeo itself could be a takeover target as the sector consolidates -- suggestions the company has shrugged off.
Valeo stock has slightly outperformed the European DJ Stoxx Autos index with a rise of some 16 percent so far this year as radical cost cuts helped cap the impact of a sliding car market.
Valeo reports third-quarter results on Monday after the close of the Paris bourse and holds a news conference the following day at 0700 GMT.