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Peugeot-maker PSA lifts profit goal after record 2018

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PSA's financial performance "demonstrates the ability of our group to deliver a profitable and recurring growth", says chief executive Carlos Tavares.

Paris

FRENCH carmaker PSA Group raised its medium-term profit guidance on Tuesday after reporting record full-year sales and earnings, buoyed by the success of its Peugeot 3008 and 5008 SUV models.

PSA's recurring operating income jumped 43 per cent to 5.69 billion euros (S$8.73 billion), giving a 7.7 per cent profit margin, helped by its acquisition of Opel-Vauxhall. Sales advanced 19 per cent to 74.03 billion.

The financial performance "de-monstrates the ability of our group to deliver a profitable and recurring growth", said chief executive Carlos Tavares.

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Strong sales of its latest Peugeot SUVs have helped PSA to build on a steady recovery from near-bankruptcy in 2013-14.

Mr Tavares is applying the same discipline at the Opel division acquired from General Motors in 2017.

The Paris-based group said its 4.5 per cent average margin goal for the 2019-2021 period would henceforth include the less profitable Opel-Vauxhall division, effectively raising the benchmark.

Chief financial officer Philippe de Rovira said the conservative "all-weather" objective covered the potential scenario in which Britain crashes out of the European Union in a no-deal "hard Brexit", as well as other market setbacks.

Peugeot's relatively confident tone was in contrast to its domestic rival Renault, which set out earlier in February a weaker full-year profit goal.

The Peugeot-Citroen-DS (PCD) division, housing its legacy French brands, reported a record 8.4 per cent margin as sales rose 18.9 per cent despite adverse currency moves and higher raw-material costs. Opel-Vauxhall (OV) recorded a 4.7 per cent margin on sales of 18.31 billion euros.

Analysts had expected group recurring operating income of 5.61 billion euros on revenue of 74.76 billion, based on the median of 10 estimates polled by Infront Data for Reuters.

In addition to the new margin goal, Mr Tavares unveiled steps to address the group's increased dependence on Europe - which now accounts for 80 per cent of global vehicle sales in the wake of the Opel acquisition.

The Citroen brand will launch in India as Opel returns to Russia in pursuit of a 50 per cent group sales increase outside Europe by 2021, PSA said, and a long-promised assault on the North American market will be led by the Peugeot brand. REUTERS