On opposite sides of the Atlantic last week, the two auto industry new boys with the most to do reported first quarter results within hours of one another.
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Although Alan Mulally is very new to the job at Ford, and Christian Streiff is even newer to the top job at PSA Peugeot Citroen, they know each other well enough. Mulally comes to Ford from Boeing. Streiff (pronounce to rhyme with deaf) flew in to PSA from a very short tenure in charge of Airbus – Boeing’s only significant competitor.
Now they assess their companies and each other, not from cockpits, but from behind the wheel. Their battleground will be Europe.
They took a very different approach to the job last week. Mulally decided to take the lead in the Ford webcast. Streiff just lobbed his message out to the stock exchange after hours, and then sat back to see what the critics would make of it.
That’s not to say that the man who is doing Bill Ford’s work for him these days was being particularly pushy. He read his presentation from the handout. He got Don Leclair, the Ford CFO, to answer nearly all the questions. And when Q&A time was up, he did not take the opportunity to have the last word by giving a summary.
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By GlobalDataEarly days though for both of them; each has only had one previous set of results to present.
Both statements were reasonably cheerful. Streiff’s first task is to stop the rot in Europe where both Peugeot and Citroen brands have been losing market share since 2002. He nearly managed it: 14.3% in the first three months of this year compared with last year’s 14.4%. The trump cards were the new Peugeot 207 and the Citroen Grand C4 Picasso. But the real growth was once again from outside Western Europe. China, Eastern Europe and Argentina were all up more than 15% and the revenue therefore climbed 6.5%.
No profit numbers from the Frenchman yet. They come later.
Interestingly, Mulally is commencing his financial turnaround not in North America where Ford has been shot to pieces over the years by Toyota and Honda, but on the autoroutes of Europe. Ford lost US$223m or 12 cents per share from continuing operations in the January-March period this year. Last year, the company earned US$458m or 24 cents per share on its home patch.
In Europe, however, the profit from the Premier Auto Group (inclusive of a farewell contribution from Aston Martin) was a record for a single quarter – up US$250m on last year, and Ford of Europe was up US$150m. That was even before the impact of new Mondeo which is taking to the stradas and boulevards just about now, and will be attempting to deflect the efforts of the upper medium Peugeots and Citroens.
Is Jaguar yet profitable asked the analyst from Goldman Sachs? All four of the brands improved on last year, was the answer. Yes, but was Jaguar profitable? “The biggest improvement was at Land-Rover.” In translation, that answer means “Jaguar is still not profitable after 17 years of Ford ownership.”
Here’s another good question that arose from the analysts on the Ford webcast.
“Given that after the job cuts, Ford of Europe and PAG together now employ more people than Ford in North America, is there scope for restructuring in Europe?”
That was a bit of a sudden one. Leclair took a stab: “Europe is a different business. The make up is different.” That really means that Jaguar and Ford of Europe have taken a lot of pain very recently, that there is disproportionate investment in the European businesses at the moment, and there probably will be another round of cuts. But now is not the time.
Streiff though is right in the thick of it. Rumours are flying around PSA that there are big job cuts to come. It won’t be a single plant but it will be France and it will be across all classes of employee. The just-auto guess is 5,000 job losses to be announced on May 9.
Streiff said it would be necessary. He is going to do it. Having done it and got away with it he will be a force to be reckoned within the organisation; new maybe, but a force.
Rob Golding
