Peugeot maker PSA Group said its profitability reached a record high in 2019 but the French carmaker forecast falling industry sales in Europe this year as it pursues its merger with Fiat Chrysler, which is strong in North America.
PSA has trimmed costs in areas such as the procurement of components as it has integrated its acquisition of Opel and Vauxhall, boosting operating margins to 8.5% last year.
The group, which also produces cars under the Citroen and DS brands, offset a slump in vehicle sales by selling pricier SUV models, with launches including the Citroen C5 Aircross helping to lift revenues by a higher-than-expected 1% to 74.7 billion euros ($81.2 billion).
That helped it stand out in a car market where some rivals including France’s Renault have struggled with sliding revenues and profits, amid a broader downturn in demand.
PSA’s group net profit increased 13.2% to a record 3.2 billion euros, and the company increased its dividend against 2019 results to 1.23 euros per share, up 58% from 2018 levels.
The carmaker was “once again very solid”, analysts at brokerage Oddo-BHF said in a note, adding the results confirmed the company’s “best-in-class status.”
However PSA forecast a 3% contraction in Europe’s car market this year, by far its biggest market. The tie-up with Fiat Chrysler will help it gain exposure to that group’s strong presence in North America with brands like Jeep.
The two companies struck a deal in December to create the world’s No.4 carmaker, to better cope with market turmoil and the cost of making less-polluting vehicles. Fiat also posted more upbeat results than most rivals this year.
