Peugeot-Citroen – positive earnings first half of 2015

Europe’s second largest automaker is now in the black – PSA Peugeot-Citroen posted earnings of 571 million euros (RM2.4 billion) for the first half of 2015, its best ever since 2011. A report by Bloomberg states that a cutback in spending and an increase in the sales of higher priced vehicles are a few of the factors that have contributed to the automaker’s positive standing.

Recurring operating income also jumped from 387 million euros (RM1.6 billion) in the first six months of 2014 to 1.42 billion euros (RM5.9 billion) in 2015 – the surge comes mostly from the automotive division, with a third of it from a “favourable business environment,” while the remainder of its earnings were derived from lesser discounting and expenditure cuts along with increased sales.

The company’s strategy to recovery is through accelerating growth, called “Back in the Race.” Spearheaded by newly-minted CEO, Carlos Tavares, the move is starting to pay off – to some extent. The roadmap involves restructuring of operations in South America and Russia as well as expansion out of Europe, introduction of the premium DS lines and streamlining of its products for more profitable segments.

Peugeot has seen a total of 1.55 million cars inclusive of light commercial vehicles delivered, marking a 0.4% climb for the first half of 2015, with demand coming from Asia, Europe and the Middle East that has helped soften declining sales in Latin America and losses made in Russia. The Peugeot 308 hatch and Citroen C4 Cactus crossover was reportedly said to have driven this growth.

For the remainder of the year, the group expects to grow by 6% in its domestic market (Europe) and roughly about 3% in China through its partnership with Dongfeng motor. The company adds that performance in Latin America and Russia is however expected to contract by 15% and up to 35% respectively in its market outlook for the second half of 2015.

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