PSA Group SA (PUGOY) lifted its full-year outlook for European sales after posting record first half profits thanks to aggressive pricing and ongoing cost cuts.
The maker of Peugeot and Citroen cars said net income for the six months ending in June rose 3.6% to €1.26 billion ($1.5 billion) as revenue grew 5% from the same period last year to just over €29 billion. PSA Group raised its European growth forecast to 3% from 1% and its China outlook to 5%.
"Groupe PSA record performance was achieved thanks to our customers who have made our last commercial launches great successes, and thanks to the continuous commitment of all Group employees in the execution of the Push to Pass plan, combining agility and business sense," said chairman Carlos Tavares. "The way the teams overcame headwinds brings confidence for the coming challenges."
CFO Jean-Baptiste de Chatillon told investors that the group's automotive margin for the first half of the year hit a record 7.3%, a figure that is well north of the company's "Push to Plan" aim of a 4.5% average between 2016 and 2018 and over 6% by 2021.
Earlier this year, Peugeot said it will buy the Opel and Vauxhall brands of General Motors (GM - Get Report) for around €1.3 billion while PSA and BNP Paribas SA, France's biggest bank, will take joint 50% stakes in Opel/Vauxhall financing for around €900,000, creating Europe's second-largest carmaker behind Volkswagen AG (VLKAY) with a 17% market share.
PSA Group shares rose 5.5% in Paris to change hands at €19.05 each, extending their year-to-date gain past 22% and well ahead of the 0.68% decline for the Stoxx Europe 600 Automobiles & Parts subindex.
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