French carmaker Peugeot SA's (PUGOY) shares went into reverse Wednesday, Oct. 25, falling almost 2% in early trading after its owner Groupe PSA said revenues grew 31.4% to €15 billion ($17.6 billion), after it included Opel-Vauxhall sales for the first time, but warned of slowing growth in China.
Peugeot shares traded Wednesday at €20.06, down 1.55% on their Tuesday close, having touched lows earlier in the day of €19.98. Despite the fall the stock remains up more than 50% over the past year.
Sales at PSA, which also owns Citroen and Opel-Vauxhall, grew in all regions except China and South East Asia, where volume sales fell 28.8% over the third quarter. Sales excluding Opel-Vauxhall came in at €12.2 billion over the third quarter, in line with analyst expectations.
At the automotive revenues level, excluding Opel, the earnings were about 3.4% ahead of analyst expectations "on better mix and strong sales to partners," according to Goldman Sachs analysts.
PSA's Chief Financial Officer Jean-Baptiste de Chatillon said Wednesday that the company was working to "get back on a growth path" in China and had no plans to abandon the country. China is the world's largest car market but has proven a difficult region for foreign car companies, which face restrictions on their control over local manufacturing operations as well as fierce competition from local producers.
PSA said it expected global car sales to increase by about 5% in China this year. The company also maintained its growth target for Europe, of an increase of 3%, while upgrading Latin American growth to 7%, from 5%, and Russian growth to 8%, up from 5%.
Sales in Latin America were the highlight of PSA's quarterly reporting, after they posted a 17% increase in volume year-on-year, while European sales growth also accelerated, climbing 3.9% in unit terms excluding Opel, and 46.9% including Opel.
PSA's full year financial results will likely turn on its ability to quickly stem cash losses at its Opel-Vauxhall, which it acquired in August from General Motors. PSA's CEO Carlos Tavares said last week warned that it may be necessary to cut costs at the business, as margins were significantly worse than at PSA's French factories.
PSA on Wednesday reiterated its targets of a 4.5% recurring operating margin by the end of 2018.
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