PSA Peugeot Citroen boosted first half 2008 operating margin to 3.6% from 2.7% a year ago, saying most of the improvement was due to recovery in its automobile division.
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Net income rose 49% to EUR733m and automobile division operating income was up 58% to EUR633m or 2.6% of sales, compared with 1.7% a year ago. Vehicle sales rose 4.6% worldwide.
“PSA Peugeot Citroën [is seiing] the benefits of actions implemented through the CAP 2010 programme launched in 2007, and is well-positioned to rise to today’s challenges,” PSA said in a statement announcing the results. It added it had achieved cost reductions of EUR882m under the plan.
Group sales rose 1.6% to EUR31,299m with automobile sales up 1.4% to due to higher volume, higher prices and the overall product mix.
Banque PSA Finance sales rose 8.6% to EUR1,059m, the division benefiting from a 3.8% increase in total credits outstanding and strong international growth, PSA said.
Gefco sales were up 6% to EUR1,904m due to an 8.7% increase in sales to the PSA group and a 1.7% rise in sales to third-party customers.
Faurecia sales were up 1.4 % with the unit reporting “steady business in Europe and high growth outside Europe, especially in North America, South America and Asia”.
PSA said improved vehicle quality had led to a drop in warranty expenses and it had also sharply cut overheads and fixed costs and boosted productivity, adding EUR882m to the increase in operating income, offsetting the negative impact of cost rises of EUR461m for raw materials, labour and currency exchange, plus R&D.
The company booked a one-off charge of EUR86m, compared with EUR287m in H1 2007, for restructuring costs, 70% for the automobile division and 30% at Faurecia, related mainly related to a voluntary redundancy plan.
Peugeot SA net income rose to EUR733m from EUR492m in H1 2007.
Looking ahead, PSA said the CAP 2010 programme focused on growth and competitiveness remains key and will continue to reduce costs and boost sales and marketing. Additional raw material costs of EUR300m to EUR350m are expected, however.
The group nonetheless expects a 4% slowdown in western European markets for full year 2008 but sees a 15% hike in developing markets. It launched 10 new models in the first half and plans nine more in H2.
PSA is sticking to its 2008 sales target for vehicles and CKD units of 3,550,000-3,650,000 units, growth of around 5%, and is aiming for 3.5% consolidated operating margin.
