Improved accounts of the automotive business of PSA has been dramatic in 2014 with an operating margin turned positive at 63 million. The group lowered its neutral 500,000 cars.
The accounts of the PSA group remain in the red with a net income negative group of 705 million euros, but it is far from the poor figures of the previous year and its loss of 2.32 billion euros. This shows how far the company as the economic environment remained tense.
The improvement lies mainly in the economic recovery of the automotive business whose turnover to € 36 billion (excluding China and a total of 53.6 billion) was slightly down (€ 330 million less). Operating margin for the Group (including Faurecia and Banque PSA Finance) was EUR 1.1 billion in 2014, representing 2% of turnover (54.3, billion). For 2018, the group has set an operating margin target of 2%, only on the automotive business.
The operating margin of the automotive business improved by € 1.1 billion from a loss of just over 1 billion (1039 million) to a gain of 63 million. Reduced the number of vehicles sold (2.25 million outside China that does not appear in the accounts), au tomotive activity of PSA gained about 29 euros / vehicle sold in 2014, against a loss of EUR 461 / car in 2013 ( and a loss of EUR 630 / car in 2012).
This reflects an impressive lower the breakeven point of the company increased from 2.6 million vehicles in 2013 to 2,100,000 in 2014 (excluding China) said Carlos Tavares, chairman of the group, with the goal of reaching 2 million in 2015. The magnitude of improvement, with a dead lowered from 500,000 vehicles in one year reflects the speed of change experienced by PSA teams.
Price effect and positive product mix
The improvement in 2014 in automobile operating margin is primarily due to improved business mix product (500 million euros better) and improved price-related and enrichment product (€ 458 million better), while cost reductions account for 553 million euros (331 million production and purchase 128 million in fixed costs and marketing, 94 million in R & amp; D).
Conversely, exchange rates and declining market (PSA called the operational environment) had a negative impact of 500 million euros.
“The improvements in vehicle operating margin is not from the external environment. It’s good performance levers plan Back in the race all of which were operated “ said Jean-Baptiste de Chatillon , CFO of SAP.
Drastic Decrease in stocks
These results are accompanied by a marked improvement in the financial position of group had a negative net position of 4.18 billion euros in late 2013 to a positive state of 548 million euros.
One of the levers for improvement was notably the decrease in working capital (1,752 million) due to lower inventory by optimizing the supply chain. All types of stock were down -29% for industrial parts, -21% for spare parts, -36% for VN stock and -28% for VO stocks. VN PSA stock has decreased 62 000 units from 169 000-107 000 units, while the stock of the network has increased slightly (17 000 more cars) to 232 000 units.
Europe Recovery
If PSA does not present its accounts by region, Carlos Tavares said the return to profit in Europe in 2014 after three consecutive years of losses. “ In Europe we have significantly improved our margins at constant market share”, said Carlos Tavares. In Europe, the cost of manufacturing decreased by EUR 730 in 1 year, with gains made half on engineering and factories, half on purchases. “We exceeded the target set at the end of 2014 was 600 euros,” said Carlos Tavares. “We have added a 2015/2016/2017 reduction plan additional 500 euros despite the penalty is Euro 6 in terms of costs.”
The improvement of competitiveness is also improved from the past production capacity utilization rate of 72% in 2013 to 79% in 2014.
China is also a profitable area with an operating margin of 7.5% for DPCA joint venture with Dongfeng resulting in a contribution of € 230 million in net income, while the contribution of Capsa, the Chinese subsidiary for DS with Changan, still in the investment phase is negative 20 million euros. If India Pacific and Middle East Africa have positive contributions, Latin America and Eurasia (mainly Russia) remain heavily loss-making, despite the reduction in losses on these two areas. Fixed costs were reduced to 34% in Latin America and 50% in Russia.
“We are ahead of the implementation of the reconstruction plan. It remains to improve efficiency . We are ready to come back to profitable growth, “ Carlors Tavares said.
However, it has not advanced on higher volumes for 2015 in a context where the band announced pessimistic forecasts with Europe -1%, China 7%, Latin America 10% and Russia 30%.
Florence Lagarde
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