Carbone Lorraine SA, a French maker of electric motor parts, rose the most in six months in Paris trading after raising its 2011 sales target on a 500 million euro ($711 million) plan to increase production of equipment for renewable energy.
Carbone Lorraine advanced as much as 3.44 euros, or 10 percent, to 37.88 euros, the biggest gain since March 18, and traded at 36.08 euros as of 11:55 a.m. in Paris. The shares have declined 22 percent this year, valuing the company at 523 million euros ($743 million).
The push into the “strong growing'' solar and wind markets will “increase the resilience'' of the company, Merrill Lynch & Co. analyst Caroline Cohen, who has a price target of 40 euros for the stock, said in a report today.
Renewable energy is a “historic opportunity'' for the company, Chief Executive Officer Jean-Claude Suquet told reporters on a conference call. Sales from the power generation and distribution markets will increase to 30 percent of group revenue by 2012 from 13 percent last year, the Paris-based company said in an e-mailed statement. The company is targeting 2011 sales of 1.1 billion euros.
Boost Capacity
Carbone Lorraine plans to spend 220 million euros from 2009 to 2011 in part on raising production capacity, about half of which will be to make components for solar and wind energy systems, the company said. It also plans to invest 200 million euros on “selective and profitable'' acquisitions between 2008 and 2011. The total cost of the expansion will be 500 million euros by 2011.
The company is in “talks'' on possible acquisitions before the end of the year that would boost growth, Suquet said.
Carbone Lorraine expects a “near-doubling'' of demand by 2012 for graphite, which is used in the production of the silicon used to make solar cells.
In response, the company said it will raise graphite production at plants in Chongqing, China and St. Mary's in Pennsylvania in the U.S., to 17,000 tons a year by the end of 2012 from a previous target of 10,000 tons a year in 2010.
Carbone Lorraine's sales to the solar industry are forecast to rise to between 160 million euros and 180 million euros by 2012 compared with 12 million euros last year.
Sales Forecast
The company is seeking to raise sales to the wind energy industry to between 50 million euros and 60 million euros by 2012 compared with 13 million euros last year. This will be done by expanding production for Europe and Asia of brushes and slip- ring assemblies for wind power systems, the statement said.
Carbone Lorraine returned to profit in 2004 after cutting jobs and reducing manufacturing costs by moving production from France to Asia. It's expanding in India and China, and expects 30 percent of sales from Asia in 2012 compared with 17 percent last year. The latest expansion will be financed by recently renegotiated credit lines and a capital increase for up to one fifth of the total cost, the company said.
“We have the means to start development,'' without the capital increase, Suquet said. The company will proceed with the increase, possibly through a rights issue, “when market conditions permit one,'' he said.
One of the companies that became Carbone Lorraine was created in 1891 in the Moselle region in northeastern France and made electric motors.
