Peugeot Resumes Dividend as Net Climbs -- WSJ
February 24 2017 - 3:03AM
Dow Jones News
Payout will be first since 2010 as auto maker raises its profit
and revenue targets
By Nick Kostov
PARIS -- Peugeot, the French car maker that is in advanced talks
to buy the European operations of General Motors Co., will pay its
first dividend since 2010, another sign of the strong resurgence
and renewed confidence at a company that was on the brink of
financial collapse just four years ago.
In its full-year results on Thursday, Peugeot said it would make
a payout of EUR0.48 ($0.51) a share, equivalent to a total dividend
payment of EUR430 million. Net profit rose 79% to EUR2.15 billion
from the year before.
The French auto maker, officially known as Groupe PSA SA, raised
its medium-term profitability goal and said it is targeting revenue
growth of more than 10% by 2018 compared with 2015.
The results add weight to the claims by Peugeot Chief Executive
Carlos Tavares that he can steer a successful turnaround at GM's
European operations, partly because the French and German companies
are a good fit.
"There is significant complementarity between the German Opel
brand and our three French brands; there is very limited
cross-shopping," Mr. Tavares said. Peugeot shares fell around 2% in
morning trading in Paris.
GM-owned Opel has posted an average of about $1 billion in
losses each year over the past decade and a half, struggling as a
regional player with a limited product line in the face of bigger,
global auto makers such as Volkswagen AG and Toyota Motor Co.
Speaking to reporters, Mr. Tavares said there was no guarantee
an agreement could be found with GM, but that Peugeot's net cash
position of EUR6.8 billion allowed it to consider this type of
deal. This compares with a net cash position of EUR4.56 billion at
the end of December 2015.
Bringing together the French company's Peugeot, Citroën and DS
brands with the Opel brand and its U.K. counterpart Vauxhall would
bring "quite speedy" cost reductions, Mr. Tavares said. He
confirmed that he intends to keep Opel as a German company.
Executives at the French car maker have scrambled to reassure
politicians and union leaders about the possible acquisition. While
a possible deal initially stoked concerns about job losses, French
Finance Minister Michel Sapin and German Economy Minister Brigitte
Zypries appear to be warming to the idea of Franco-German auto
champion, saying Thursday that a tie-up could boost exports and
help to improve competitiveness at both companies.
Together, Opel and Peugeot would leapfrog domestic rival Renault
SA to become the second-biggest car maker in Europe after world
leader Volkswagen.
Peugeot said that stronger pricing, sales of higher-value models
and cost cuts helped lift the automotive operating margin to a
record 6% last year from 5% in 2015, ensuring operating income rose
to 32% to EUR2.61 billion despite a 1.2% fall in revenue to
EUR54.03 billion. Lower restructuring costs and taxes also
benefited the company's bottom line.
Mr. Tavares said the company's full-year performance showed the
success of the company's structural transformation and had been
achieved in "an adverse environment."
Having taken over in 2014, Mr. Tavares swiftly slashed costs by
reducing the number of cars it makes and cutting the workforce,
while preaching the dangers of expanding too quickly or chasing
sales with discounts. He has recently changed his tune, mounting
the audacious bid to buy Opel and in addition making an approach to
Malaysian auto maker Proton Holdings Bhd.
The company added that it expects auto markets to be stable in
Europe, Latin America and Russia this year, with China growing
5%.
Write to Nick Kostov at Nick.Kostov@wsj.com
(END) Dow Jones Newswires
February 24, 2017 02:48 ET (07:48 GMT)
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