PSA Peugeot Citroen announced this week it tripled its recurring operating income, as it completed its turnaround plan ahead of schedule, helped by the cutting costs strategy and a growth in demand in Europe.
The French automaker was until recently in a deep financial crisis, reporting big loses from 2012 to 2014. Peugeot Citroen had to be rescued by the French government and China’s Dongfeng, each buying a 14 percent stake in the company. And the revival plan put together by PSA’s Chief Executive Carlos Tavares seems to have worked. Peugeot Citroen had an objective of reaching an operating margin of 2 percent for the Automotive division in 2018, targeting 5 percent within the timing of the next mid-term plan 2019-2023. But that target was exceeded ahead of schedule, with the Automotive unit reporting a 5 percent operating margin as of 2015. “I am delighted with this collective success. It puts our company back in the race and proves its potential,” Tavares said in a statement accompanying Peugeot’s full-year results.
The company posted a full-year net profit of 1.2 billion euros, reversing a 555 million loss in 2014. Group recurring operating income more than tripled to 2.7 billion. Peugeot said its group operational cash flow reached 3.8 billion euros, beating a 2 billion target for 2015-17, pushed by a growing demand in Europe where the market saw car sales rise 9.2 percent last year. Tavares, a former executive at Renault, managed to deliver its objective of restoring the profitability by cutting labour costs and inventory, closing a plant and shrinking the model line-up.