Currently reading: PSA Group profits jump, raising Opel and Proton investment talk
The resurgent Citroen, DS and Peugeot brands reported an 18% increase in profits in 2016
Jim Holder
News
2 mins read
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.

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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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jagdavey 3 March 2017

Brexit Rubbish Again!!!!

Brexit Rubbish Again!!!! "This includes a loss of €280 million (£237m) from currency swings in the wake of Brexit." All of 'em, PSA,Ford,GM & the rest all blame losses on the Pound/Euro currency swing, but they never talk about the good times they had making cash loads of money when the exchange rate was in their favour, & that was the last decade or so!!! The UK became their best European market because they were making more money selling cars here than in their "home" markets, now it's shifting the other way they, (especially Ford & Co.) are moaning they can't make any profit here. (so we'll sack a few workers at Bridgend to save 10 euro's) Well if thats the case why do they continue selling here???? I say raise up the drawbridge, & we'll just buy the cars made in this country like Jags,Land Rovers, Honda's, Toyota's, Nissan's, & the odd Aston, Bentley & Rolls. (& Vauxhalls if PSA don't do another Chrysler like they did 30 years ago).
aatbloke 3 March 2017

[quote=jagdavey]Brexit

jagdavey wrote:
Brexit Rubbish Again!!!! "This includes a loss of €280 million (£237m) from currency swings in the wake of Brexit." All of 'em, PSA,Ford,GM & the rest all blame losses on the Pound/Euro currency swing, but they never talk about the good times they had making cash loads of money when the exchange rate was in their favour, & that was the last decade or so!!! The UK became their best European market because they were making more money selling cars here than in their "home" markets, now it's shifting the other way they, (especially Ford & Co.) are moaning they can't make any profit here. (so we'll sack a few workers at Bridgend to save 10 euro's) Well if thats the case why do they continue selling here???? I say raise up the drawbridge, & we'll just buy the cars made in this country like Jags,Land Rovers, Honda's, Toyota's, Nissan's, & the odd Aston, Bentley & Rolls. (& Vauxhalls if PSA don't do another Chrysler like they did 30 years ago).
It's called capitalism. The Brexit vote single-handedly devalued the UK's currency and that's enough to make foreign manufacturers in the UK think twice about their UK-situs business investments.
xxxx 3 March 2017

How...

..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.
Ski Kid 3 March 2017

could be they have not paid a load of bills

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.
aatbloke 3 March 2017

[quote=xxxx]..do you go from

xxxx wrote:
..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.
Cash is not the same as profit or loss. It's only a small part of the balance sheet equation which also includes assets from plant and machinery to more convertible assets such as inventory and receivables. Then you have to deduct payables, long-term loans, existing equity, debentures and all the rest of it to arrive at your profitability.
Straff 23 February 2017

Tavares

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