PSA Peugeot-Citroen said third quarter 2011 group revenues rose 3.5% year on year to EUR13.45bn but automotive revenues slipped 1.6% “impacted by sourcing difficulties and increased pricing pressure”. It announced a new plan to save EUR800m in 2012 which critics said could cost 5,000 jobs. However, PSA announced later on Wednesday that 3,500 posts would be axed in Europe.
Faurecia revenues rose 15.9%, Gefco was up 7.1% and Banque PSA Finance up 6.2% in the third quarter of 2011.
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It said globalisation was on track, with sales volume outside Europe up 41% at the end of September versus 37% in 2010 after volume gains in China, Latin America and Russia.
“Automotive division recurring operating income should be close to break-even for the full year in a more difficult European market environment for the group,” PSA said in a statement that also heralded an EUR800m cost reduction plan for 2012.
For the full year, it said the European market looks set to remain stable in 2011, while growth is expected to reach nearly 7% in China, almost 6% in Latin America and 30% in Russia. The group confirmed negative impacts over the full year of EUR250m from the aftermath of the earthquake in Japan and EUR700m from higher raw materials prices.
“In addition, the competitive environment has become more challenging due to pricing pressure, which has intensified in Europe since September, and the unfavourable impact on the country mix of the fall-off in demand in southern Europe. In September, the difficulties in sourcing from a supplier disrupted the production of 45,000 vehicles,” PSA said.
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By GlobalDataOperating income for the automotive division is now expected be close to break-even for the full year, up between EUR620m to EUR650m at Faurecia and “improving” at Gefco and BPF. Free cash flow from the manufacturing and sales companies is expected to be negative at 31 December.
The action plan to save EUR800m in 2012 will be achieved by reducing purchasing costs by EUR400m and fixed costs by EUR400m.
Automotive
Worldwide sales totalled 788,000 vehicles, down 2.5%, with sales of assembled vehicles 4.5% lower at 668,000 units. The decline reflected a sharp contraction in Europe, partly offset by growth in unit sales outside Europe.
Revenues from new vehicle sales amounted to EUR6,689m, compared with EUR6,898m in third-quarter 2010, a 3% decrease.
Assembled vehicle volumes fell 6.8%, excluding China. The interrupted supply of screws in September affected all of the European plants, causing a production shortfall of 45,000 vehicles and heavily impacting the sales performances of the two brands in Europe. In addition, competitive pressure intensified in the last month of the quarter.
The currency effect was a negative 1.8%, reflecting unfavourable trends in the Argentine peso, British pound and Turkish lira against the euro.
These adverse factors were offset by a further 5.6% improvement in the product mix, led by the impact of the Peugeot 508 and the Citroën DS4.
Prices remained relatively stable over the quarter, rising just 0.1%, but pressure increased dramatically in September, reducing margins by 0.8 points that month.
Faurecia
Faurecia reported revenues of EUR3,787m for the third quarter of 2011, a 15.9% increase driven by gains in every zone, including Europe (up 8.5%), North America (up 23.6%), South America (up 17%) and Asia (up 17.1%) Revenues from product sales rose by 13.5% to EUR2,524m. Growth was evenly spread across the business base, with automotive seats gaining 7.9%, interior systems 12.2%, emissions control technologies 18.1% and automotive exteriors 27.1%.
Gefco
Gefco’s revenues totalled EUR850m for the quarter, up 7.1% reflecting a 3.4% rise in revenues from other group companies, as well as a 13.2% increase in business from customers outside the group. The acquisition of 70% of Mercurio, on May 2011, will enable Gefco to further diversify its customer portfolio and speed expansion in both the upstream automotive supply chain and the global marketplace.
Banque PSA Finance
Banque PSA Finance’s revenues rose by 6.2% to EUR493m in the third quarter. The loan book increased by 3% to EUR23.5bn. A total of 200,000 new loans were originated, a decline of 3.4% due to the slowdown in group vehicle sales over the period.
Cost cuts could take 5,000 jobs
