Peugeot resumes dividend as profit increases

by SpeedLux
Peugeot Citroen pictures

PSA Group, the French automaker in talks to purchase Opel from General Motors, revealed its first dividend in six years and raised its medium-term profitability objective on Thursday after full-year revenue nearly doubled.

The maker of Peugeot and Citroen vehicles said more stronger pricing, sales of higher-specification models and cost cuts raised the automotive operating margin to a record 6 percent in 2016 from 5 percent in 2015.

The group raised its vehicle margin goal to an average 4.5 percent for the 2016-18 duration while refusing to comment in detail on its continuing Opel takeover talks with General Motors.

PSA’s 6.8 billion euro ($ 7.2 billion) in net money equips the business to make “profitable financial investments in the interest of our shareholders”, Chief Financial Officer Jean-Baptiste de Chatillon informed press reporters on a call.

But he included: “At this stage there can be no certainty regarding the outcome of these talks.”

The French group and American automaker GM validated on February 14 they were in talks over a PSA-Opel tie-up to develop Europe’s second-largest automaker by sales after Volkswagen.

PSA expects the offer to cause combined sales of 5 million automobiles in 2020-22 and cost savings in between 1.5 billion and 2 billion euros, sources informed Reuters on Wednesday.

Net income increased 92 percent to 1.73 billion euros in 2016, PSA stated. Repeating operating earnings increased 18 percent to 3.235 billion euros on 54 billion euros in earnings, down 1.1 percent.

That surpasses expectations of 3.14 billion euros in recurring operating earning and 53.7 billion in earnings, based on the average estimates in an Inquiry Financial poll of 13 experts.

Under CEO Carlos Tavares, PSA has actually rebounded from a 2014 brush with bankruptcy and state-backed bailout to record levels of success, because of a program of cutbacks set up by his predecessor Philippe Varin.

Emergency advancement budget cuts left a hole in the pipeline of new models that is just now starting to be filled.

With a new product offensive in its first stages, PSA stated pricing enhancements contributed 365 million euros to 2016 revenues. Cost cuts in acquiring, production and overheads provided an additional 863 million euros.

“The impact will be amplified this year,” Chatillon stated, as the speed of the launch of new models boosts.

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