ElringKlinger CEO on acquisition path

FRANKFURT (Reuters) - German automotive parts supplier ElringKlinger (ZILGn.DE: Quote, Profile, Research, Stock Buzz) is looking to buy one or two companies to bolster its plastic cam cover and heat shields business, its chief executive said on Tuesday.

"There are a few out there that are interesting ... We are working on that, and I am sure that we will be successful," Stefan Wolf said at the Reuters Autos Summit in Frankfurt.

He said his company would not make the mistake of acquiring an asset larger in size than ElringKlinger, so he was looking to buy a couple of rivals at most that would add combined sales of 50-200 million euros ($74-$296 million).

"I would not buy 10 companies; you should focus on one or two," Wolf explained.

Acquisitions would be integrated within six months, he said, with the ultimate aim of bringing an asset's operating margin in line with the group's own profitability.

With shareholder equity accounting for 48 percent of total assets at the end of September, ElringKlinger's balance sheet is underleveraged and Wolf said returning cash to investors was also an option.

"Of course, if you don't invest in those acquisition projects, sooner or later you have to discuss this point," he said.

"A new consolidation process has started in the automotive supplier industry in the last six months. We should have at least two years to be successful in that area," Wolf said.

Cam covers accounted for roughly a fifth of the company's group sales, while heat shields contributed almost 14 percent last year.

ElringKlinger's core business of cylinder head and specialty gaskets is already highly consolidated. ElringKlinger, Federal Mogul FDMLQ.OB and Dana DCNAQ.PK control the global market.

(For summit blog: summitnotebook.reuters.com/)

(Reporting by Christiaan Hetzner, editing by Will Waterman)