Peugeot manufacturer PSA Group offset a slump in vehicle sales across European markets as it posted a record profit in 2019, ahead of its merger with Fiat Chrsyler later this year.
However the firm said that an industrial shutdown in China as a result of the coronavirus outbreak could knock its supply chain, leading to a three per cent contraction in Europe’s automobile market this year.
Group profit increased 13.2 per cent to a record €3.2bn (£2.7bn), whilst revenue also grew one per cent to beat analyst expectations at €74.7bn.
PSA said that this was due to its success selling pricier SUV models, including newly-launched types such as the Citroen C5 Aircross.
The car giant has also slimmed down costs in areas such as purchasing, which has seen it increase its operating margins to 8/5 per cent, another record figure.
However, PSA did report a total €700m in writedowns related to the Chinese markets, where its sales have fallen, as it seeks to exit a joint venture with Chongqing Changan Automobile.
The company returned a dividend of €1.23 per share, a 58 per cent increase on 2018 levels.
Why it’s interesting
PSA’s results mark it out from continental rivals such as Renault, who struggled last year due to ongoing challenges related to its partnership with embattled Japanese car maker Nissan.
By contrast, in December PSA agreed a $50bn merger deal with Fiat Chrysler, a move that will create the world’s fourth-biggest car maker and help the two brands cope better with a fluctuating global market.
Once the merger completes, the combined entity will boast annual sales of 8.7m vehicles and revenues of almost €170bn (£144bn) as well as an operating profit margin of 6.6 per cent.
The tie up is set to complete in 12 to 15 months from December 2019, meaning it may well be finished by the end of the year.
What PSA Group said
Carlos Tavares, chairman of PSA said: “Our skilled and committed teams made the difference once again and we have achieved record results in 2019, driven by our agile, customer focused and socially responsible approach. We are ready for the energy transition and all teams are focused to offer a clean, safe and affordable mobility for customers.
“Based on our business model and fighting spirit which has proved to be efficient, we are eager to enter a new era with the projected merger with FCA.”