Opel helps carmaker PSA to record profits
July 24, 2018
France's PSA group on Tuesday beat analyst expectations by announcing a first half net profit of €1.7 billion ($2 billion), up 16 percent on the same period last year.
The auto giant, which manufactures the Peugeot, Citroen, DS, Opel and Vauxhall brands, saw revenues jump 40 percent to €38.6 billion from January to June.
PSA's Opel-Vauxhall division, which it acquired last year from General Motors, saw first half net profit of €502 million on revenues of €9.9 billion.
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"After many years of losses (at Opel), in the first half of 2018, we expect a significant level of profitability," PSA's Chief Financial Officer Jean-Baptiste de Chatillon said.
Shares in PSA rose nearly 10 percent on news of the results on Tuesday, with the stock hitting its highest level since mid-June 2008.
Sales of SUVs helped
Runaway sales of the Peugeot 3008 and 5008 SUVs, along with years of cost savings under Chief Executive Carlos Tavares have helped PSA to record profits.
Tavares pulled the group from near-bankruptcy in 2014 and is now applying the same medicine to Opel, which operates under the Vauxhall name in Britain.
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Cost-cutting at Opel, which lost a billion dollars a year under GM's stewardship, helped the division record a 5 percent operating margin. The French brands' profitability topped 8.5 percent, overshooting PSA's 6 percent goal for 2022.
The speedy return to profit for Opel could complicate negotiations with German unions, as PSA seeks to offload engineering departments at the carmaker's Rüsselsheim headquarters near Frankfurt.
PSA, which is already cutting more than 2,000 Opel manufacturing jobs, enraged unions last month by confirming that it was seeking a buyer for research and development activities that currently employ another 4,000 staff.
Separately, PSA said last week it plans to fully return to the US market by 2026, despite threats by US President Donald Trump to impose tariffs of up to 25 percent on auto imports.
mm/tr (Reuters, dpa)