PSA’s revenue returns to growth

Peugeot manufacturer PSA Group returned to revenue growth in its core autos division in the third quarter, recovering from a slump during coronavirus lockdowns, though the prospect of new restrictions hit French shares.

PSA has performed better than some rivals after dealerships swung back into action in France and elsewhere from June, a potential boost ahead of its merger with Fiat Chrysler Automobiles (FCA), due to close early next year.

But a resurgence in the COVID-19 pandemic is clouding prospects for the coming months, and France is bracing for a possible renewed month-long lockdown.

PSA shares were dragged 3.6% lower, even though the Peugeot and Citroen maker beat quarterly expectations on revenue by a wide margin, analysts at Jefferies said.

PSA’s overall sales totalled 15.5 billion euros ($18.3 billion) in July-September, down 0.8% from a year earlier. But automotive revenue rose 1.2% to 12 billion euros, after ending the first half of the year down 35.5%.

Financial chief Philippe de Rovira said September had ended on a strong note with a good order book, adding PSA planned to nudge up production in the fourth quarter versus a year earlier.

Car inventories were 25% lower year-on-year in the third quarter, as PSA tries to avoid getting stuck with excess stock.

Bar any unexpected COVID-19 measures, the group would likely generate positive cash flow at year-end, De Rovira added, while the group kept its target for an adjusted operating margin for its automotive division of more than 4.5% for 2019-21.

Under CEO Carlos Tavares, PSA has focused increasingly on its more expensive and profitable models — a model PSA’s French rival Renault is trying to emulate as part of its turnaround plan.

Reuters