PSA sees recovery favored by economic prosperity image

PSA Peugeot Citroen, the second largest automaker in Europe, is on course to surpass its primary recovery target earlier than planned, according to the company’s chief financial officer.

The economic tailwinds include the uptick in the French carmaker’s status after it was successfully reinstated to the benchmark CAC-40 index following a two-and-a-half-year hiatus. PSA will now jump at the opportunity to “go after the 2 percent operating margin objective as soon as possible”, commented Jean-Baptiste de Chatillon as he rang the opening bell in Paris. The automaker’s recovery plan has been hastened by the weaker euro and lower prices for raw materials, all making up “a more favorable alignment of the planets” than it was previously forecasted. Back in 2014 the firm vowed to bring its auto-unit profitability back to 2 percent margin by 2018, jump-starting a recovery plan envisioned by incoming chief financial officer Carlos Tavares (the former No. 2 at rival French company Renault).

The recovery is not without its hurdles, though. Last week the PSA stock took a 4.7 percent dive following a March 17 investor day at the company’s main research and development centre on the outskirts of Paris, when some analysts said the investors were mulling more ambitious goals. “We mustn’t forget that PSA has only been out of intensive care for a short while,” commented on the other hand Bernstein analyst Max Warburton. Highly reliant on the collapsing European market, after the last major economic crisis PSA found itself in critical condition and needed a massive infusion of capital to survive. China’s Dongfeng Motor and the French government both took matching 14 percent stakes in the carmaker in a 3 billion euros capital increase plant that also brought new leadership and made the Peugeot-founding family loose control over the company.

Via Reuters