PSA Peugeot Citroen has announced its results for 2005. It's a solid picture, but not a sparkling one. Sales were much the same, up 0.4 per cent from 2004 to 3.39 million cars. Consolidated profits declined to €990 million from €1.6 billion.
PSA has kept up the pressure on production costs, saving €614 million, though the rise in the price of raw materials and the cost of Euro IV compliance cost €437 million. 2006 is the year PSA says it will return to growth in Europe. The current trend is the other way: operating margin was significantly down from €2.4 billion to €1.9 billion; 4.4 per cent to 3.4 per cent.
Whilst making cars in Europe now costs more than ever thanks to Euro IV compliance and the rise in the cost of raw materials, Banque PSA France has been doing rather nicely, its operating margin rising from €518 million to €607 million. As with many European manufacturers, growth in sales and margins was outside Europe, sales there now accounting for 30.4 per cent of the total rather than 28.3 per cent in 2004.
The hopes for keeping the ship steady are based on continuing cost cuts, the boost from the launch of the Peugeot 207 and a good performance from the new models launched in 2005, plus sharp growth in China and other non-European markets – a strategy somewhat familiar from the plan Renault announced yesterday.