Peugeot promises new profit plan as restructuring is complete

[PARIS] PSA Peugeot Citroen said it'll issue new growth targets this year after it completed a restructuring program ahead of schedule amid increasing demand in its home market of Europe.

Recurring operating income last year climbed to 2.73 billion euros (S$4.2 billion) from 797 million euros a year earlier, Europe's second-biggest carmaker said in a statement Wednesday. Revenue rose 6 percent to 54.7 billion euros. Peugeot will issue its growth plan on April 5 and said it will start paying a dividend in line with the industry from this year's earnings.

The result "puts our company back in the race and proves its potential," Chief Executive Officer Carlos Tavares said in the statement. "We will be able to harness this strength when implementing our new plan for profitable growth." Bailed out in 2014 by the French state and China's Dongfeng Motor Corp., which each bought a 14 per cent stake, Peugeot posted its first profit in three years after shutting a plant, cutting jobs and freezing pay. Still, the company has yet to prove it can sustain its turnaround amid a slowdown in China, the world's biggest auto market, and the diesel emissions scandal at Volkwagen AG. While Peugeot has denied cheating, more than half its European sales rely on the engine type.

The French carmaker had targeted a 2 per cent operating margin in the automotive division by 2018. It exceeded that goal by far last year, posting operating profit of 5 per cent of revenue. The company also exceeded its 2 billion-euro target for operating free cash flow in the period through 2017, generating 3.8 billion euros last year.

Last year, Peugeot's global deliveries rose 1.2 per cent to 2.97 million cars and light commercial vehicles, boosted by the Middle East, Africa and Asia as well as its home European market.

The company is betting on further expansion in China. The recent agreement with Peugeot's Iranian partner to produce 100,000 vehicles a year in Iran starting in late 2017 is also part of the company's plan to move from cost-cutting toward growth.

BLOOMBERG