Peugeot surges as Opel hits road to recovery

PARIS: Peugeot maker PSA Group turned its recently acquired OpelVauxhall business sharply back into the black while achieving record firsthalf profitability at its French car brands, sending its shares to a 10-year high yesterday.

PSA is benefiting from runaway sales of its Peugeot 3008 and 5008 SUVs enhanced by years of cost savings under chief executive Carlos Tavares, who pulled the group from near-bankruptcy in 2014.

Tavares is now applying the same medicine at Opel, which was acquired from General Motors barely a year ago and last turned a full-year profit in 1999.

“The turnaround of Opel-Vauxhall is now clearly under way,” chief financial officer Jean-Baptiste de Chatillon told reporters on a call.

Its first-half net income to June 30 rose 18% to 1.481 billion (RM7 billion), the company said, as revenue jumped 40% to 38.6 billion (RM183.5 billion).

PSA shares rose as much as 12.6% to their highest since 2008 and were up 10% at 22.48 at 0854 GMT.

“The improvement PSA has achieved over the last six months is remarkable given that (Opel) lost 179 million in the second half of 2017,” said Arndt Ellinghorst, a London-based analyst with Evercore ISI.

Cost-cutting at Opel, which had lost a billion dollars a year under GM ownership, helped the division record a half-billion euro profit for a 5% operating margin.

Overall recurring group operating profit rose by almost half to 3.02 billion, PSA said, for a 7.8% margin.

The results soundly beat analyst expectations of 1.35 billion in net income and 2.33 billion in operating profit on revenue of 38.49 billion, based on the median estimates in an Inquiry Financial poll for Reuters.