PSA Peugeot Citroen 2007 turnover up 7.1%, operating margin at 2.9%

PSA Peugeot Citroen Group turnover rose to €60,613 mln in 2007, up 7.1 % on 2006. The Automobile division recorded a turnover of €47,456 mln, up 6.5%, thanks to an increase in the volume of vehicle sales and improvements in price and product mix.

Banque PSA Finance reported revenue corresponding to gross interest income of €1,999 mln, up 13.5%, after a rise in new contracts and total credits outstanding.
Among the other subsidiaries, Gefco turnover rose to €3,554 mln, up 9.5 % and Faurecia turned over €12,661 mln, up 8.7 % on 2006.

Group recurring operating income in 2007 amounted to €1,752 mln representing a 2.9% operating margin, compared to €1,119 mln and 2% operating margin in 2006, i.e. an increase of 56.6%.

Most of this improvement comes from the Automobile division’s €858 mln operating income, or 1.8% margin, compared to €267 mln and 0.6 % margin in 2006.

This tripling of income is mainly down to the first positive effects of the Cap 2010 competitiveness program: quality improvements with a drop in warranty expenses, sharp drop in fixed costs and overheads and higher productivity. In all, €932 mln were gained through cost reductions, with business growth adding a further €355 mln.

These gains were offset by inflating costs (raw materials, wages, forex).

The CAP 2010 momentum will have an even greater impact in 2008, especially through the reduction of overheads, warranty expenses, manufacturing and purchasing costs and the launching of a sales and product offensive.

In Western Europe, where the business environment is likely to see a slight decline in the automotive market, the Group expects to enjoy continued commercial success with the Peugeot 207and the Citroen C4 Picasso, and see a rising demand for the Peugeot 308 and other models launched in 2007. 2008 will witness a new phase in the Group’s range-rejuvenation strategy with the launching of the new Citroen C5, the extension of the 308 range, the launching of the Citroen Nemo and Peugeot Bipper and the new Citroen Berlingo and Peugeot Partner LUVs.

Citroen also introduced a new organization in 2007 with Peugeot following suit at the beginning of 2008 to improve the performance of its sales teams.

In its strategic expansion regions (Eastern Europe, Mercosur, China and Russia) the Group forecasts double -digit market growth, slightly lower than 2007. Considering the extension of the Group’s model-range, PSA Peugeot Citroen should continue to enjoy profitable growth.

Under these conditions, the Group maintains its sales target of between 3,550,000 and
3,650,000 vehicles and CKD units in 2008, i.e. volume growth of around 5%. This growth should be stronger in the second -half of the year, considering the new vehicle launches scheduled.

Again, under these conditions, the Group is aiming to achieve a 3.5% consolidated operational margin.