Christian Streiff needed a little bit of luck. He had nine months to gestate a plan that showed he could turn the Peugeot and Citroen twins into brands that will grow and thrive. It has not been long enough. He needed new product and helpful market conditions and he’s had neither. The product’s coming; but the market in Western Europe – by common consent – is now weakening. One positive out of two gives him just a fifty fifty chance of looking smart. Those who have been alongside him with sleeves rolled up will say that he deserved better.
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On the surface the Q3 results don’t look all that good. And beneath the surface they might not look very good either. It rather depends whether the instincts of the analysts are right or whether they were just being provocative.
It was the first time in the chair for the very amenable new CFO, Isabel Marey-Semper who was promoted to stardom on Streiff’s arrival from Airbus.
The plan was just to give the sales numbers for Q3 and the three quarters consolidated which is pretty dry listening for financial analysts whose job is to tease out the consequences for the all-important earnings per share forecasts.
By the time question time came they were restless, and far from gentle.
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By GlobalDataThe very first question was merciless and required Mme Marey-Semper to remember several of the numbers she had just given out, to accept the questioners’ representation of the comparable figures from a year ago, to remember the different dealer and manufacturer stocks, to juggle the stock/day ratios of several quarters, do all that in her second language of English late in the evening on an iffy phone line…and to be diplomatic. Impressed the hell out of me.
The juggling went on for a while but the balls eventually dropped and agreement was made to revisit later.
The suggestion appeared to be that the suddenly-good revenue growth for the third quarter meant PSA had booked revenue that was essentially inventory. There was a mis-match on the general pattern of inventory/revenue ratios.
Next up was the ever-so-slightly loaded compliment that revenue in quarter three was an “impressive” year-on-year improvement. Was it all done at a good margin? “I will not comment on the operating margin maths but I can tell you that the operating margin will be higher than 2%” (which is the ratio that supports the share price).
Then there was a bash at C5 which has to contend with Renault’s Laguna which made it to market to some acclaim just ahead of the Citroen.
The Q3 sales numbers for the various markets were not great. Streiff’s stated principal objective is to ensure that PSA regains its lost market share in Western Europe. That target was missed. PSA underperformed all the markets other than Germany of the Big Four – which is its smallest, underperformed Russia where it is a late entrant and massively in China where it had a head-start as a manufacturer. It outperformed the markets in Eastern and Central Europe quite well, and very well in Mercosur.
It might be a little rough to fix on the market share positions when worldwide volumes were up 3.4% in the nine months to the end of September and hit 2,548,000. But it’s on market share, on its progress relative to other brands that PSA has asked to be judged, so we do. And it ain’t winning. Yet.
Rob Golding
