PSA Peugeot Citroen has reported an 11% drop in first half net profit to 30 June of €681 million compared with €869 million a year ago.

Operating margin also fell to €1,068 million for €1,289 million in H1 2003 though sales rose 4.2% to €28,942 million from €27,763 million.

Earnings per share amounted to €2.81, compared with €3.54 for the first six months of 2003.

Automobile division sales rose 4.0% to €23,288 million, in line with the 3.2% increase in unit sales.

Banque PSA Finance reported revenues of €861 million, unchanged from the prior-year period. Loans outstanding, including securitised loans, increased by 5% to €20,447 million at June 30, 2004.

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Gefco sales increased 4.6% to €1,469 million.

Faurecia sales increased by 5.3% to €5,521 million.

The operating margin of €1,068 million (€1,289 million in first-half 2003) represented 3.7% of sales, versus 4.6% in first-half 2003 and 3.5% in second-half 2003.

Automobile Division operating margin totaled €537 million compared to €846 million in first-half 2003 and €454 million in second-half 2003. The change reflects the combined impact of a more aggressive competitive environment, at a time when the group could not yet leverage its new models to resist the increased price pressure, and of the positive effects of the sustained reduction in production costs and tight control over R&D budgets.

Banque PSA Finance’s operating margin rose 21.7% to €241 million, from €198 million in first-half 2003, and represented 2.5% of average net outstandings compared with 2.1% in the year-earlier period.

Gefco’s operating margin amounted to €80 million, or 5.4% of sales, compared with €74 million and 5.3% of sales in first-half 2003.

Faurecia’s operating margin rose to €201 million, or 3.6% of sales, from €161 million and 3.1% of sales in the prior-year period.

Capital expenditure, dedicated to new model launch programmes and the group’s international expansion, totaled €1,426 million, versus €1,427 million for the prior-year period and €3,007 million for full-year 2003.

“The faster growth in business in the second quarter, when car sales rose 6% and exceeded 900,000 units for the first time, is paving the way for even stronger growth in the second half than in the first, PSA said in a statement.

“The increasing contribution from new models should help to gradually improve automobile division margins. Faurecia and Banque PSA Finance expect to sustain the significant gains made in the first half. As a result, the targets announced at the beginning of the year of an increase in unit sales and a 2004 consolidated operating margin comparable to that of 2003 have been confirmed.”