Peugeot Posts First Profit in Three Years on Cost Cuts

on February 18 2015 | in Daily Headlines Trending | by | with No Comments

PSA Peugeot Citroen posted its first annual profit in three years after slashing costs by closing a plant, cutting jobs and reducing spending on new car models.

Operating income was 905 million euros ($1.03 billion) in 2014 after a loss of 364 million euros a year earlier, the Paris-based company said in an e-mailed statement today. Revenue edged up 1 percent to 53.6 billion euros.

After teaming up with China’s Dongfeng Motor Corp. to expand outside the saturated European car market, Peugeot reached its goal of positive operational free cash flow two years earlier than originally targeted. Today it said it would generate 2 billion euros in operating free cash flow in the period through 2017 and repeated a goal of achieving a 2 percent operating margin in the automotive division by 2018.

“They need to generate some profit from here,” said Kristina Church, a London-based analyst for Barclays Plc who rates the shares underweight. “It’s great that they’re generating some cash, but they need to start showing that cash is sustainable.”

Peugeot shares rose as much as 4.1 percent to 14.05 euros and were up 2.6 percent at 10:48 a.m. in Paris trading. The stock has risen 35 percent this year, valuing the company at 10.8 billion euros.

In China, the carmaker said it expects demand to rise by about 7 percent. In Europe, it said it expects a 1 percent increase.

Read more at Bloomberg Business.

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