France's restructured PSA Peugeot Citroen back in black

GMT 12:51 2016 Wednesday ,24 February

Arab Today, arab today France's restructured PSA Peugeot Citroen back in black

Employees of French auto maker PSA Peugeot Citroen factory work
Paris - AFP

French automobile maker PSA Peugeot Citroen said on Wednesday it has moved back into the black in 2015 with a net profit of 1.2 billion euros ($1.4 billion) after a successful restructuring and on higher demand, two years after it almost went to the wall.

Europe's second biggest carmaker revealed a 5.7 percent rise in sales to 56.3 billion euros as it said it would unveil its new "strategic sustainable growth plan" on April 5.

The results are a turnaround for a group which posted a 555 million euros loss in 2014. Last month PSA said its global sales advanced by 1.2 percent in 2015 compared with 2014 despite a small retreat in China and Southeast Asia.

The news helped to bolster the firm's stock, which climbed 4.1 percent in early trading in Paris to 14.23 euros.

Buoyant European demand led the way although 2014 saw China become the group's biggest car market, outstripping France.

Wednesday, PSA said it had exceeded several targets, operating margin notably hitting five percent, exceeding a projected two which had been projected for 2018.
Also exceeded was free cash flow of 3.8 billion euros last year, beating a target of 2.0 billion euros for 2015-2017.

PSA, which makes the Peugeot, Citroen and DS brands, is the number one French carmaker with 2.97 million units produced last year as the group came out of the 2008-2013 crisis in the European car industry which led the group in 2014 to require a bailout from the French state and China’s Dongfeng Motor Corp, who both took a 14 percent stake.

A restructuring plan dubbed "Back in the race" was designed to return the carmaker to the forefront of the industry in Europe and indeed the company said last month it would return to Iran in a partnership deal with a local manufacturer worth 400 million euros ($436 million) with first units produced from 2017.

That deal followed Iranian President Hassan Rouhani's visit to France and made Peugeot the first Western carmaker to announce a return to Iran since sanctions were lifted against the country after it signed a deal to limit its nuclear programme.

Peugeot and its French partner Citroen will work with Iran Khodro to produce 200,000 vehicles a year using parts manufactured in Iran.

Financial director Jean-Baptiste de Chatillon indicated in noting the group had surpassed a range of targets that "we are largely ahead on our initial market plan" although he conceded that operating margin had been achieved at least in part due to "favourable winds," not least on raw material prices.

Without such factors the margin would have been nearer 3.3 percent, he added, indicating that Peugeot "will continue to improve productivity significantly in 2016."

The company added it would be paying out an average 2,000 euro bonus to French-based employees as a reward for the strong results.


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