PSA boss Tavares wants to trim Opel on profits

In the middle of the talks about an Opel purchase, the French auto giant PSA is setting its margin targets high. CEO Tavares now wants to help the loss-making German manufacturer on its feet. The bar is high.


PSA-Chef Carlos Tavares

PSA boss Carlos Tavares

Thursday, 23.02.2017
10:04

The French carmaker PSA Peugeot Citroën is facing a possible OpelTakeover higher profit targets – and thus also puts pressure on the loss-making Rüsselsheim automaker for years. On average between 2016 and 2018, the adjusted operating profit margin in the PSA car business is now expected to reach 4.5 percent on average VolkswagenCompetitor in presenting his dates with. So far, the target was 4 percent. PSA will help Opel in case of a purchase, “to get back on its feet,” said PSA boss Carlos Tavares.

With its targets and statements on Opel’s future, Tavares sets the direction for the German company, if Opel comes under the PSA wing: it must be saved vigorously and get more profit from the sale of the models. The purchase of Opel is an “opportunity to create a European automobile champion,” said Tavares, who had previously successfully rehabilitated Peugeot Citroën. He had saved PSA for it and significantly improved the model range.

At the same time promised PSA boss Tavares in the event of a takeover of Opel, a cooperation with the German unions. He was determined to partner with “the employees, the unions and the government” in Germany. Opel will remain independent in the group as a “German company”. This also made business sense: Certain car buyers would have no interest in French brands, but would prefer German cars.

Peugeot has recently pledged to stick to the guaranteed by Opel’s parent company job guarantee until the end of 2018. The promised investments for the Opel locations in Germany by 2020 PSA wants to take over. That was a “moral issue,” Tavares said. After the expiry of these timeframes threatened, however, according to experts, a hard recovery course.

“Profitable investments in the interests of shareholders”

“At the moment, there can be no assurance as to the outcome of these talks,” said CFO Jean-Baptiste de Chatillon. However, the € 6.8 billion Peugeot and Citroen manufacturer’s net cash allowances allowed for profitable investments in the interest of shareholders, he added.

PSA Peugeot Citroën and the US parent company of Opel, General Motors(GM), had announced last week to negotiate an ownership change for the deficit GM European business. The message broke in GermanyWorry about jobs at Opel.

German Economics Minister Brigitte Zypries(SPD) meets today the French Minister of Economy and Finance Michel Sapin in Paris. According to her ministry she wants to insist on the preservation of German jobs and locations.

For PSA it runs through Tavares’ strict course significantly better. So the CEO announced the first dividend for six years. “The results are the result of our efficiency improvements in the group,” said the manager.

Thanks in part to price increases and cost savings, the operating profit margin in the auto business rose to a record six percent last year, up from five percent in 2015. The Group does not expect such margins for the coming years – but more than previously thought.

Despite an exchange rate-related decline in sales of 1.2 percent to 54 billion euros, adjusted Group operating profit climbed 18 percent to 3.24 billion euros. The net profit remaining for PSA shareholders almost doubled to 1.73 billion euros.

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