European News

28, Jul 2010.

PSA Peugeot Citroen, Europe’s second-largest carmaker, returned to profit in the first half on a global automotive recovery.

Net income was 680 million euros ($884 million), compared with a 962 million-euro loss a year earlier, Paris-based Peugeot said in an e-mailed statement. First-half sales surged 21 percent to 28.4 billion euros buoyed by new model introductions. The company pledged a full-year operating profit of 1.5 billion euros.

Under Chief Executive Officer Philippe Varin, Peugeot has pledged an emerging-markets expansion to reduce dependence on Europe -- which accounts for almost two-thirds of its volumes. The carmaker outpaced its European home market’s 0.6 percent growth in the first half, raising its share of industry-wide registrations by 0.8 percentage points to 13.7 percent, according to data from the Association of European Carmakers.

“Peugeot has done quite well in the first half with a very strong volume performance,” Mike Tyndall, a London-based automotive specialist with Nomura Securities in London, said before the announcement. “The key focus is whether they can stay profitable in the rest of the year -- and on the strategy going forward.”

First-half results were “driven by market-share gains and the benefits of the performance plan,” CEO Varin said in the statement. Thanks to a second joint venture in China announced this month, “we’re now confident that we will generate half of our vehicle sales outside Europe by 2015.”

Analysts had expected net income of 416.7 million euros on sales of 28.3 billion euros, based on estimates compiled by Bloomberg.

Operating profit excluding one-time items was 1.14 billion euros, or 4 percent of sales, compared with an 826 million-euro loss a year earlier. At the core automotive division, operating profit was 525 million euros, for a 2.5 percent margin.

Peugeot’s global car and light-truck sales surged 17 percent to 1.86 million units, the company said this month, helped by European government incentives and new models such as the Citroen C3 subcompact and Peugeot 3008 and 5008 minivans.