Peugeot Resumes Dividend as Profit Jumps -- 3rd Update
February 23 2017 - 6:17AM
Dow Jones News
By Nick Kostov
PARIS-- Peugeot, 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 the French auto maker that was on the brink of financial
collapse just four years ago.
In its full-year results on Thursday, the French manufacturer
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 group's good results Thursday 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 for the acquisition of the U.S.
auto maker's European operations, 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. In
both Germany and the U.K., where Opel's Vauxhall brand is based,
the deal initially drew resistance from trade unions and
politicians worried about job losses.
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 an
audacious bid to buy GM's troubled Opel unit as well as 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 23, 2017 07:02 ET (12:02 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
General Motors (NYSE:GM)
Historical Stock Chart
From Apr 2024 to May 2024
General Motors (NYSE:GM)
Historical Stock Chart
From May 2023 to May 2024