France’s Groupe PSA, the owner of the Peugeot, Citroën, DS Automobiles, Opel and Vauxhall car brands, has reported a profit for the first half of 2020, despite the impact of the coronavirus (COVID-19) on the automotive sector.
During the period, PSA’s group net income fell to €595 million, down from €1.8 billion in the first half of 2019, while revenue fell by 34.5% to €25 billion. The group also raised expectations for cost savings in its pending €44 billion merger with Fiat Chrysler.
The group’s automotive division reported an operating margin of 3.7% in the first half of 2020, significantly lower than the 8.7% operating margin achieved in 2019. This remains in line with the group’s hope to achieve an operating margin of 4.5% for the period 2019–2021.
Carlos Tavares, PSA Group’s Chief Executive, stated, “This first half result proves the group’s resilience, as a reward of six consecutive years of intense work to increase our agility and lower our break-even point.”
PSA’s ability to generate cash in the second half of the year will be “highly dependent on conditions under which we operate in the second half of 2020,” he added, explaining “we have no control on lockdowns.”
Tavares stated that greater cost savings from PSA’s merger with Fiat Chrysler, announced in December, are now expected. The group’s original plans for €3.7 billion of synergies is now “a floor”, he stated, with a team of more than 500 PSA staff working to develop “proactive proposals” for more savings.
Tavarez stated that the merger transaction is on track to close in the first quarter of 2021. For the remainder of 2020, PSA anticipates a 25% decrease in the automotive market in Europe, a 30% drop in Russia and Latin America, and 10% drop in China.