PSA cuts first-half net losses to 114 million euros

Article by Christian A., on August 1, 2014

PSA/Peugeot-Citroen managed to cut its net loss in the first half of 2014 to EUR114 million ($153 million) from EUR471 million in the same period in 2013. The French carmaker saw its operating cash flow surge to EUR1.67 billion ($2.23 billion) in the first six months of 2014 from just EUR203 million a year earlier, which could be attributed to a push by chief executive Carlos Tavares to cut vehicle inventories and get rid of supply-chain inefficiencies.

Likewise, its auto division posted its first operating profit in a while at EUR7 million, despite stiff currency headwinds. The auto division’s operating loss in the same period last year was EUR538 million.

Chief Financial Officer Jean Baptiste de Chatillon remarked that PSA’s recovery plan is already producing results on “all fronts," adding that pricing had gotten better.

Tavares has vowed to hike PSA’s automotive operating margin to 2 percent in 2018 and 5 percent by 2023 by reducing its model lineup by nearly half, trimming capacity and raising price positioning as well as by cutting wage and component costs.

He added that PSA needs to remain rational and recognize that they only at the beginning of its turnaround. Tavares provided an account of his efforts to push for leaner manufacturing that results to more cash as it cuts stocks of parts and vehicles."

He said that there is a “very joyful implementation” of new ideas that delivered “great results." PSA is targeting to trim EUR1 billion from stocks of parts, materials and finished vehicles via better supply-chain management. ISI Group analyst Erich Hauser remarked that PSA is actually performing well ahead of plan.

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