PSA Group Q1 Revenue Drops 1.4% as Overseas Sales Weaken
PSA reported first-quarter 2016 revenue of €12.998bn, down 1.4% year-on-year, as strong European growth was offset by sharp declines in China and Africa.
PSA Group posted a 1.4% drop in first-quarter revenue for 2016, with sales volumes down 1.7% compared to the previous year. The French carmaker reported revenue of €12.998bn for the quarter, down from €13.185bn in Q1 2015, citing unfavourable currency exchange rates as a key factor. Without the negative currency impact, PSA said revenue would have risen by 1.5%.
The group delivered 699,800 vehicles globally in the first three months of 2016. While PSA saw a 5.9% increase in sales in Europe, this growth was more than offset by steep declines in its other major regions. Sales in China fell 17.9%, while deliveries in the Middle East and Africa dropped 22.2%, largely due to the situation in Algeria.
Regional performance: Europe up, China and Africa down
Europe remained PSA's strongest market in the quarter, benefitting from a rebound that lifted the region’s figures. However, the company’s exposure to China and Africa left it vulnerable to regional downturns. The group’s performance in China was in sharp contrast to rivals such as GM, which reported record sales in the country during the same period (seeGM Sets New Sales Record in China for March and First Quarter).
In the Middle East and Africa, PSA’s sales were hit particularly hard by difficulties in Algeria, contributing to a 22.2% fall in volumes for the region. The company’s results reflected broader challenges facing European manufacturers in overseas markets, with currency volatility compounding the effect of weaker demand.
Profitability targets and outlook
Despite the drop in revenue and sales, PSA said it would continue to focus on profitable growth. The group is targeting an average recurring automotive operating margin of 4% between 2016 and 2018, with a goal of reaching 6% by 2021. PSA also aims to increase group revenue by 10% over two years from the 2015 baseline of €54.7bn, and by a further 15% by 2021.
