France's restructured Peugeot back in black

24th February 2016, Comments 0 comments

France's biggest automobile maker PSA Peugeot Citroen said Wednesday it 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-euro loss in 2014.

Ratings agency Standard and Poor's raised its longterm credit rating for PSA by one notch in response to the results, taking it to "BB" with a positive outlook.

"Peugeot posted a substantially better operating performance in 2015 which demonstrates a significant improvement of its business in our view," S and P said in a statement, published only hours after the company's earnings report.

The news also helped to bolster the firm's stock, which was up 1.1 percent in Paris at 13.81 euros in mid-afternoon, off an early high of 14.67 but still vastly outperforming a falling CAC-40 index.

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

PSA said on Wednesday that it had exceeded several targets, operating margin notably hitting five percent, exceeding a projected two which had been forecast 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.

- 'Back in race' -

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.

It 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 said, 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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© 2016 AFP

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