Carlos Tavares won his bet … at least in 2014. At the edge of bankruptcy two years ago, in extremis recapitalized early 2014 with the entry of the French state and the Chinese Dongfeng have 14% of its each capital, PSA Peugeot Citroën is out of the red. The president of the tricolor manufacturer can boast an operating profit of € 905 million and a margin of 1.7%. Not bad, while the group was still lost 364 million last year.
finally debt-free company
The only automotive businesses have even made a small operating profit of 366 million, against 880 million loss earlier. Cash flow from industrial and commercial activities was positive for its share of 1.79 billion. Net income (Group share) remains negative 706 million (Group share). But it is a sacred decrease. The net loss amounted to 2.32 billion in 2013. “PSA is now a debt-free company. She has no liquidity problems”, assured Wednesday former right hand of Carlos Ghosn at Renault, presenting the results 2014 Financial PSA.
“Europe and China are the two engines of profitable growth,” insisted the manager. China, in particular, accounts for “a good third of the profits of the group.” The joint PSA joint venture in China with Dongfeng, DPCA, “generates a margin of 7.5% with an operating profit of EUR 651 million last year. A record result,” said for his part Jean-Baptiste Chatillon, Chief Financial Officer of the company. Which, incidentally, is a drop of water … compared to huge profits of the two Volkswagen joint ventures in China!
The other PSA joint venture in the former Middle Kingdom, CAPSA with Changan Group, was still “a slight loss.” True, it starts. Problem: there are still two regions in the world, PSA, continue to lose money: Latin America and Eurasia with especially Russia, two deep crisis area. But “the losses are halved and they will be there again in 2015,” the CFO.
Beau recovery in Europe
The performance in Europe is even more remarkable that the group had lost money in 2008 and 2009 and between 2011 and 2013. How PSA, on the edge of bankruptcy there is little, is it achieved this turnaround on the Old Continent? The small market recovery and the success of some models such as the Peugeot 308 compact, voted “Car of the Year” last year, helped. But it is essentially the internal efforts that pay. “We lowered the neutral 500,000 vehicles last year, excluding China, to 2.1 million units (and) reduces the cost price of manufacturing 730 euros per vehicle compared to 2012,” said Carlos Tavares .
“The company is leaner and efficient”, with a labor cost to sales ratio declined to 13.4% last year, against 14.5% a year earlier. This is the European industrial base that has undergone profound change, it is true spurred by increased industrial sites utilization on the Old Continent, spent a year from 72% to 79%. Carlos Tavares, so, set a new challenge: “reduce the manufacturing cost price of 500 euros per vehicle between 2015 and 2018″
Still some work to do
“We have to improve the efficiency of the company. There is still a large potential for improvement,” he stressed . It has subsequently reiterated its goals of “operating margin of 2% (excluding China) in 2018 for the Automobile Division.” But even 2%, PSA is still among the least profitable … Carlos Tavares, however, has a “target of 5% over the period 2019-2023.” An objective still very, very careful.
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