PSA Peugeot Citroen has reported achieving an operating margin of 3.8% of sales for 2004. Net income for the year declined to €1,357 million from €1,497 million in 2003, representing 2.4% of sales versus 2.8%. Earnings were €5.64 compared with €6.14 the previous year.
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The full-year operating margin under French GAAP accounting rules was €2,182 million compared with €2,214 million in 2003, and represented 3.8% of sales compared with 4.1% a year ago.
The group sold 3,375,100 vehicles world-wide compared with 3,286,100 in 2003.
Net sales for 2004 reached €56,797 million, an increase of 4.7% from the €54,238 million reported in 2003.
Fourth quarter sales rose 6.6% to €15,053 million as production of new models such as the Citroen C4 ramped up.
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By GlobalDataAutomobile division sales rose 4.8% to €45,791 million thanks to higher global sales by Peugeot and Citroën and the favourable impact on product mix of increased sales of recent models, which was partly offset by an unfavourable change in geographic mix due to a decline in the contribution from Western Europe.
Gefco revenue totaled €2,894 million, up 5.5% over 2003.
Faurecia’s sales came to €10,720 million, an increase of 5.9% over 2003. On a like-for-like basis – excluding the effect of changes in exchange rates, the prices of precious metals used in the manufacture of exhaust systems and the scope of consolidation – the increase was 7.9%.
Banque PSA Finance outstanding loans totaled €21.2 billion at December 31, 2004, an increase of 8.0% over the year-earlier figure.
After reaching a low point of €925 million (3.5% of sales) in the second half of 2003, operating margin improved steadily in 2004, to €1,068 million (3.7%) in the first half, and €1,114 million (4.0%) in the second.
Automobile Division operating margin amounted to €1,126 million compared with €1,300 million in 2003, representing 2.5% of sales versus 3.0%. The net decline reflected heightened competition in Europe, although pressure on the group eased in the second half thanks to the favourable impact of new model launches. Higher raw materials costs also had a negative impact. These unfavourable developments were partly offset by increased volumes, a favourable change in product mix and ongoing reductions in production costs.
Banque PSA Finance’s operating margin totaled €512 million, a sharp increase over €418 million in 2003 and €319 million in 2002. The strong improvement was attributable to business growth, higher lending margins and tight control over general operating expenses and credit losses.
Gefco’s operating margin rose by 9.1% to €156 million from €143 million in 2003, and to 5.4% of sales from 5.2%.
Faurecia’s operating margin rose to €366 million from €303 million, and to 3.4% of sales from 3%. The improvement was attributable to solid business momentum throughout the year, improved manufacturing performance, which offset the pressure on sales prices and the initial effects of higher raw materials prices, and stabilisation of start-up costs and selling, general and administrative expenses.
Capital expenditure was €2,920 million in 2004. This figure, which includes €229 million in expenditure for the construction of the Trnava plant in Slovakia, is consistent with the aim of capping annual capital expenditure at €3,000 million. The total included €128 million for the purchase of shares in Dongfeng Peugeot Citroën Automobile, raising the group’s interest in the joint venture to 50% from 32%.
2005 outlook
For 2005, PSA Peugeot Citroën expects car and light commercial vehicle demand to hold firm or increase slightly in Western Europe and conditions to be more favourable in the rest of the world.
After launching the Peugeot 407 sedan and station wagon and the Citroën C4 sedan and coupé in 2004, PSA will launch the Peugeot 1007 and 107 city cars, the subcompact Citroën C1, the mid-size Peugeot 407 coupé and the Citroën C6 during the year.
With no easing of competition in sight in Europe, the group intends to continue with its so-called ‘selective marketing policy’ focused on preserving margins rather than on increasing volumes. Consequently, sales are expected to grow at only a ‘moderate’ rate in 2005.
PSA expects production costs to continue to decline, while the new models are expected to have a positive impact on sales margins and the contribution of non-automobile businesses should hold firm.
However, higher raw materials prices are likely to reduce automobile division operating margin by €250 million to €300 million.
Therefore, the group is aiming for an operating margin of 4.0% to 4.5% of sales.
