Peugeot predicts sales growth despite profit slide

27th July 2004, Comments 0 comments

PARIS, July 27 (AFP) - French carmaker PSA Peugeot Citroen said Tuesday a decline in first half net earnings had been less severe than expected and predicted overall sales growth this year as well as an operating margin similar to that of 2003.

PARIS, July 27 (AFP) - French carmaker PSA Peugeot Citroen said Tuesday a decline in first half net earnings had been less severe than expected and predicted overall sales growth this year as well as an operating margin similar to that of 2003.

The announcement was well received on the Paris stock market, where Peugeot shares were up 5.05 percent at EUR 45.57 in mid-day trade on an overall market that had gained 0.47 percent to 3,549.10.

Peugeot reported a 21.6-percent drop in net profit in the first six months of the year to EUR 681 million (USD 829 million) compared with the same period of 2003.

The group had expected net earnings in a range of EUR 525-647 million, which would have amounted to a decline of 25.5 to 39.7 percent from first half 2003.

Sales in the first six months rose 4.25 percent to EUR 28.942 billion and the company said it foresaw "a progression in sales volume and a 2004 consolidated operating margin comparable to that of 2003".

Peugeot Citroen worldwide sales grew 0.6 percent to 3.286 million vehicles in 2003 for an operating margin of four percent.

At the operating level during the first six months of this year, earnings declined 17 percent to EUR 1.068 billion for a margin of 3.7 percent of sales, down from 4.7 percent in the same period of 2003.

Operating margin in the second half of 2003 was 3.5 percent.

"The company's first-half margin of 3.7 percent puts Peugeot well on its way to surpassing last year's 4.0 percent group margin," Morgan Stanley analysts said.

Morgan Stanley also noted that Peugeot had doubled its net cash position to EUR 1.084 billion in the first half and has already surpassed its forecast for the full year.

"While we agree that French market demand and the overall pricing environment remain unfavourable, we see little reason to get incrementally more cautious on the second half," the analysts said.

Citigroup Smith Barney added that Peugeot's results were ahead of its forecasts and consensus, describing it as another "decent" European auto result.

"The company's first-half operating margin of 3.7 percent (barely down on last year's 4.0 percent) suggests Peugeot is on track to meet its target of a 4.0 percent margin for the full year," Citigroup analysts said.

© AFP

Subject: French news

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