PARIS (Reuters) - Buoyant sales of new models helped French carmaker PSA Group (PEUP.PA) shrug off losses at newly acquired Opel to lift 2017 revenue, profit and operating margin to new records.
PSA shares surged as much as 8 percent on Thursday after the maker of Peugeot, Citroen, Opel and Vauxhall cars said net income rose 11.5 percent to 1.93 billion euros ($2.35 billion) on a 20.7 percent revenue increase to 65.21 billion.
Rebounding from a 2012 brush with bankruptcy, PSA is pursuing an ambitious turnaround under Chief Executive Carlos Tavares, former second-in-command to Renault (RENA.PA) boss Carlos Ghosn. The group is also racing to bring the Opel lineup into compliance with EU carbon emissions targets.
“We have a very agile company, and we know how to move around the chaos,” Tavares told reporters and analysts in a presentation at group headquarters.
Operating income jumped by almost a quarter to 3.99 billion euros even after a 179 million euro Opel loss since the Aug. 1 consolidation of the former General Motors (GM.N) business. The group-wide automotive operating margin edged down to 5.9 percent from 6 percent.
Strong sales of a revamped Peugeot 3008 compact SUV and Citroen C3 mini improved PSA’s product mix, lifting operating profit by 904 million euros and revenue by 4.5 percent, excluding Opel. French rival Renault also posted record full-year sales and profits last month.
PSA shares were up 6.6 percent to 19.85 euros at 1140 GMT, the biggest rise by a European blue-chip stock and extending their gains so far this year to around 10 percent.
Reiterating 2021 goals that include a 6 percent automotive margin without Opel, compared with 7.3 percent in 2017, Chief Financial Officer Jean-Baptiste de Chatillon said the targets would be reviewed next year and hinted they could be raised.
“Let’s see in 2019,” Chatillon told reporters when asked about the likelihood of a guidance increase. “We’re certainly doing quite well right now.”
PSA’s full-year results beat analyst expectations of 1.9 billion euros in net income, 3.53 billion in operating profit and 64.68 billion in revenue, based on the median estimates in an Inquiry Financial poll for Reuters.
While Opel burned through 1.46 billion euros in cash in the last five months of 2017, Bernstein analyst Max Warburton said he saw room for strong improvement in working capital that accounted for about one-third of the drain.
“The core business is so handsomely profitable that it gives PSA time and flexibility to sort out Opel,” Warburton said.
In a sign of the stiff challenge posed by tightening EU emissions targets and declining sales of fuel-efficient diesels, however, CEO Tavares implicitly criticized governments for the slow rollout of electric-car charging networks.
Financial penalties for non-compliance should be reduced where charging infrastructure remains inadequate, Tavares said in a Financial Times interview published on Thursday. “Consumers will not buy (electric) cars that they are not able to charge.”
The French carmaker raised its proposed dividend to 0.53 euros per share from the 0.48 euro payout on 2016 earnings.
($1 = 0.8205 euros)
Reporting by Laurence Frost Editing by Sudip Kar-Gupta and Mark Potter