The resurgent Citroen, DS and Peugeot brands reported an 18% increase in profits in 2016
Jim Holder
23 February 2017

The PSA Group, which makes Citroën, DS and Peugeot cars, has reported another leap in profits, fuelling speculation it will imminently buy the Vauxhall and Opel brands from GM.

PSA purchase of Opel and Vauxhall completed

PSA has shown increasing interest in a purchase of Opel/Vauxhall and also the ailing Proton brand, following an 18% jump in profits in 2016, which further underlined its revival in recent years. Its operating income rose to €3.24 billion (£2.71bn) in 2016 from €2.73bn (£2.31bn) a year before. This includes a loss of €280 million (£237m) from currency swings in the wake of Brexit.

Automotive operating profit widened to from 5% to 6%, it reported; The Volkswagen Group's operating profit is around 6.5%, but buoyed by the wider margins of Audi and Skoda; Volkswagen itself operates at closer to a 2% margin.

"These results demonstrate our ability to consistently deliver an excellent performance in an adverse environment," PSA CEO Carlos Tavares said in a statement. "The group is building the conditions for profitable and sustainable growth."

The results come with the PSA Group having sold fewer - but more lucrative - cars in the past year.

PSA's chief financial officer Jean-Baptiste de Chatillon added that PSA's €6.8bn (£5.76bn) in net cash equips the company to make "profitable investments in the interest of our shareholders.” However, he added: "At this stage, there can be no certainty as to the outcome of these talks."

Three years ago, PSA had to be bailed out by the French state and Chinese automaker Dongfeng Motor following heavy losses.

At the latest announcement, Tavares also promised “an electric car blitz,” saying that 80% of the PSA's vehicles will be sold with a form of electrification by 2023. He also pledged that its first fully electric car would be on sale by 2019. It is likely to be developed in-house, although the potential GM deal raises the possibility of this technology being shared with the Chevrolet Bolt.

Tavares didn't elaborate on the proposed Vauxhall/Opel deal beyond describing it as a "nice to have, not must-have". No timeline for a deal was given, although most analysts continue to predict an arrangement will be reached before mid-March if a deal is to be done.

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Comments
13

23 February 2017
"Tavares didn't elaborate on the proposed Vauxhall/Opel deal beyond decribing it as a "nice to have, not must-have" Sounds a bit like defeatist talk to me.

 

Hydrogen cars just went POP

23 February 2017
[quote=xxxx]"Tavares didn't elaborate on the proposed Vauxhall/Opel deal beyond decribing it as a "nice to have, not must-have" Sounds a bit like defeatist talk to me.[/quote] Not really - more that the terms have to be right, else it's not worth it. Sounds pragmatic to me.

28 February 2017
I believe I'm not the only one who feels that Tavares, the new PSA boss almost always sounds bullish including the recent remarks that the 3008 is better that the X1 and the Tiguan. Quite far from defeatist.

23 February 2017
If only PSA had a UK factory, in say Ryton, Coventry...

23 February 2017
"terms have to be right" that goes without saying in any business.

 

Hydrogen cars just went POP

23 February 2017
Just saying that calling it defeatist is an assumption. Sounds a good negotiating stance to me.

23 February 2017
I don't see how being bailed out by the French government and the Chinese translates to or in their words " demonstrate our ability to consistently deliver on excellent performance in an adverse environment" ! My question is are we witnessing here a ploy to get failing European banks to give a last throw of the dice and invest in PSA group as they appear to be on the cusp of an amazing new deal ? the banks are now so desperate to see some profit somewhere they just might fall for it. PSA must be having a right laugh now watching their share price grow, first they skim the French taxpayer with the help of the ever so friendly Chinese and then it's the Germans turn.

 Offence can only be taken not given- so give it back!

23 February 2017
Didn't he sing Heaven must be missing an Angel?

3 March 2017
..do you go from massive losses AND having to be bailed out by the French government/China TO having (£5.76bn) in net cash in JUST 3 years. Especially when you're only making 5% profit on a yearly turn over of £2.5 Billion. EU accounting practices me thinks.

 

Hydrogen cars just went POP

3 March 2017
you may be correct correct, I am an Accountant and never believe other peoples presentations.There would be the depreciation added back to profit as that does not effect cashflow only the capital additions and disposals.If that was similar to the profit and no capital expended it could make sense but in reality they will have spent money on new models etc to offset depreciation so looks twice as much cash other things equal asyou would expect.

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