Last year in March, Carlos Tavares, the former second in command at Renault was tasked to bring PSA Peugeot Citroen back after years of losses, and after he succeeded in the task, analysts believe he’s now posting conservative goals for the future.
When it presented 2014 financial results, PSA announced it finally posted a profit at its automotive division and the group’s overall net loss shrunk from 2.23 billion euros in 2013 to 555 million euros last year. For 2017, the chief executive officer has tasked the company to reach a cumulative operating cash flow threshold of 4.2 billion euros. Analysts believe the automaker’s 5 percent target for the earnings margin is lower than Renault’s and market researchers also believe other midterm and long-term profitability goals are too conservative, given the rapid recovery seen from Tavares’ Back in the Race turnaround plan. “Tavares is playing the under-promise, over-deliver game after years of watching Carlos Ghosn do the opposite,” commented one analyst.
Among financial analysts, rising confidence in the company’s strategy has led to the consensus forecast that PSA’s auto division operating margin might surge to 1.5 percent in 2015 and quickly jump to almost 4 percent. That would come courtesy of the current increase in plant utilization in Europe as the continent enters its own recovery from the long slump in demand. PSA’s European factories had an utilization rate of 79 percent last year, up from 72 percent in 2013 – with experts traditionally considering that profitability can be achieved when the assembly facilities run at 80 to 85 percent of total capacity.
Via Automotive News Europe