PSA Peugeot Citroën reported a profit for the first time in three years as cost cutting measures, including the closure of a plant near Paris, began to help the company turnaround by reducing its break-even point.

Operating income in the first half of the year jumped to EUR477m (US$639m), reversing an operating loss of EUR100m in the same period last year.

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Automotive operations reported a EUR7m operating profit, the first since 2011, after recording a EUR538m loss in the first half of last year.

PSA said it had cut its net loss for the first six months to EUR114m compared with EUR471m in the first half of 2013.

First-half revenue was flat at EUR27.6bn while revenue from automotive operations was unchanged at EUR18.6bn.

Free cash flow – a key indicator for a company haemorrhaging money – surged to EUR1.7bn from EUR203m.

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The figures were helped by a strong performance from Faurecia, the company’s parts operations which reported operating income of EUR311m, an increase of EUR55m compared with first-half 2013 led by international growth, especially in China.

But the company warned that the second half of the year would be tough with growth in Europe and China offset by declines in Latin America and Russia.

PSA said that it expects sales in Europe to grown 3% and by 10% in China, but fall 7% in South America and 10% in Russia.

“The commitment of every PSA Peugeot Citroën employee to deploying the Back in the Race strategic plan has enabled the Group to reap the initial benefits of this transformation,” said Carlos Tavares, chairman of the PSA Peugeot Citroën managing board. “Nevertheless, we remain disciplined and focused on executing our plan until we have completely recovered.”