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Earnings

Peugeot-maker PSA lifts profit goal after record 2018

Key Points
  • PSA's recurring operating income jumped 43 percent to 5.69 billion euros ($6.46 billion), giving a 7.7 percent profit margin, helped by its acquisition of Opel-Vauxhall. Sales advanced 19 pct to 74.03 billion.
  • The financial performance "demonstrates the ability of our group to deliver a profitable and recurring growth", said Chief Executive Carlos Tavares.
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2018 was 'historic year' for PSA Group, CEO says

French carmaker PSA Group raised its medium-term profit guidance on Tuesday after reporting record full-year sales and earnings, buoyed by the success of its Peugeot 3008 and 5008 SUV models.

PSA's recurring operating income jumped 43 percent to 5.69 billion euros ($6.46 billion), giving a 7.7 percent profit margin, helped by its acquisition of Opel-Vauxhall. Sales advanced 19 pct to 74.03 billion.

The financial performance "demonstrates the ability of our group to deliver a profitable and recurring growth", said Chief Executive Carlos Tavares.

Strong sales of its latest Peugeot SUVs have helped PSA to build on a steady recovery from near-bankruptcy in 2013-14. Tavares is applying the same discipline at the Opel division acquired from General Motors GM.N in 2017.

The Paris-based group said its 4.5 percent average margin goal for the 2019-2021 period would henceforth include the less profitable Opel-Vauxhall division, effectively raising the benchmark.

Chief Financial Officer Philippe de Rovira said the conservative "all-weather" objective covered the potential scenario in which Britain crashes out of the European Union in a no-deal "hard Brexit", as well as other market setbacks.

Peugeot's relatively confident tone was in contrast to its domestic rival Renault, which set out earlier in February a weaker full-year profit goal.

Krisztian Bocsi | Bloomberg | Getty Images

The Peugeot-Citroen-DS (PCD) division, housing its legacy French brands, reported a record 8.4 percent margin as sales rose 18.9 percent despite adverse currency moves and higher raw-material costs. Opel-Vauxhall (OV) recorded a 4.7 percent margin on sales of 18.31 billion euros.

Analysts had expected group recurring operating income of 5.61 billion euros on revenue of 74.76 billion, based on the median of 10 estimates polled by Infront Data for Reuters.

In addition to the new margin goal, Tavares unveiled steps to address the group's increased dependence on Europe - which now accounts for 80 percent of global vehicle sales in the wake of the Opel acquisition.

The Citroen brand will launch in India as Opel returns to Russia in pursuit of a 50 percent group sales increase outside Europe by 2021, PSA said, and a long-promised assault on the North American market will be led by the Peugeot brand.