PSA doubles profits and is ‘ready to grab opportunities’
24 February 2017
PSA Group has announced a doubling of full-year profits, signalling the carmaker's revival from crisis three years ago, and reinforcing its efforts to buy General Motors’ (GM’s) European Opel-Vauxhall operations.
Net income rose 92% to €1.73bn, with recurring operating income up 18% to €3.2bn, due to cost reductions.
PSA chief executive officer Carlos Tavares previously said he would seek to grow PSA after restructuring the business. Chief financial officer Jean-Baptiste de Chatillon said: ‘We are ready to grab opportunities.’
PSA has now accumulated €8 billion in free cash flow since 2013. Jean-Baptiste de Chatillon added: ‘[PSA can now] deploy this cash to make profitable investments and invest this money in the best interest of our shareholders.’
PSA's Tavares is looking to buy GM’s unprofitable Opel unit and to rally support for the deal, has pledged to governments and union leaders that he will secure jobs and turn the company around like he did with PSA. GM’s European operations have racked up more than $20 billion (€18.9 billion) in losses and have been in the red every year since 1999.
The addition of Opel’s 1.2 million annual vehicle sales would help PSA boost its scale, with volume critical for cost-saving economies of scale in the mass-market car sector. The merger would make PSA-Opel the second best-selling carmaker in Europe, with a 16% share, ahead of Renault’s 10% and behind Volkswagen’s dominant 24%. It would also help PSA spread the cost of investments in emerging automotive fields such as autonomous cars, and in the development of cleaner engines – necessary to meet ever stricter EU emissions standards.
However, PSA is not only interested in boosting its core European operations.
PSA has said it wants to export Opel cars globally after the General Motors deal, which could see it competing directly against GM in the US market – in which PSA currently does not operate.
The company is also looking to expand in Asia with the acquisition of struggling Malaysian carmaker Proton.
PSA was rescued by the French state and Chinese carmaker Dongfeng Motor three years ago, after suffering heavy losses.