PSA Group boosted operating income 56.6% last year to EUR1,752m achieving a 2.9 % operating margin, up from 2% a year previously.
Go deeper with GlobalData
“With an H2 consolidated operating margin of 3.1%, the group exceeded the objective announced in July 2007,” PSA noted in its results statement.
Most of the improvement came from the automobile division’s EUR858m operating income, or 1.8% margin, compared to EUR267m and 0.6 % in 2006.
This tripling of income was due mainly to the first positive effects of the Cap 2010 competitiveness programme: quality improvements with a drop in warranty expenses, plus a sharp drop in fixed costs and overheads and higher productivity, PSA said.
EUR932m was gained through cost reductions, with business growth adding a further EUR355m. These gains were offset by rising costs for raw materials and wages, and foreign exchange hits.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataGroup turnover rose 7.1% to EUR60,613m.
The automobile division turnover rose 6.5% to EUR47,456m due to increased vehicle sales volume and improvements in price and product mix.
Despite the highly volatile banking environment, Banque PSA Finance’s operating income increased 0.7% to EUR608m due to a rise in credits outstanding and well-managed risk control, it said.
Banque PSA Finance reported revenue corresponding to gross interest income of EUR1,999m, up 13.5%, after a rise in new contracts and total credits outstanding.
Gefco reported recurring operating income of EUR155m, a 4.4% operating margin, compared to EUR151m and 4.7 % in 2006.
Gefco turnover rose to EUR3,554m, up 9.5 %.
Faurecia’s operating income rose to EUR121m or 1% of turnover, compared to EUR69m and 0.6 %.
Faurecia turned over EUR12,661m, up 8.7 % on 2006.
Other non-recurring income and expenses totalled EUR632m compared to EUR808m.
This was mainly non-recurring write-downs of automobile division assets in H1, rationalisation costs and non-recurring write-downs at Faurecia and restructuring charges related to the voluntary departure scheme for employees.
Net income was EUR885m, compared to EUR183m in 2006. Earnings per share rose to EUR3.88 from EUR0.80.
Outlook
PSA said its CAP 2010 programme would have an even greater impact in 2008, especially through the reduction of overheads, warranty expenses, manufacturing and purchasing costs and the launching of a sales and product offensive.
In western Europe, where the business environment is likely to see a slight decline in the automotive market, the group expects to enjoy continued success with the Peugeot 207and the Citroën C4 Picasso, and see a rising demand for the Peugeot 308 and other models launched in 2007.
New models this year include the Citroën C5, more 308 models (such as a station wagon), and the launch of the Citroën Nemo/Peugeot Bipper and Citroën Berlingo/Peugeot Partner van lines.
In its strategic expansion regions (eastern Europe, Mercosur, China and Russia) the group is forecasting double-digit market growth, slightly lower than 2007.
“Considering the extension of the group’s model-range, PSA Peugeot Citroën should continue to enjoy profitable growth,” the automaker said.
It is maintaining its sales target at between 3,550,000 and 3,650,000 vehicles and CKD units in 2008, growth of around 5% and stronger in the second half, considering new vehicle launch schedules.
The group hopes to achieve a 3.5% consolidated operational margin, on track with CAP 2010 objectives.
