French automaker PSA cuts losses after ownership change

France's PSA Peugeot Citroen said Wednesday it slashed losses in 2014 and posted its first operational profit in three years, just months after an ownership change saved it from bankruptcy.
The French carmaker said a sweeping, three-year reorganisation and cost-cutting plan introduced in 2013 had allowed the group to cut 2014 losses to 555 million euros ($631 million), down from 2.23 billion the previous year.
In what PSA chairman Carlos Tavares hailed as a sign that the company is "ahead of our restructuring schedule," the group reported a 2014 operating profit of 900 million euros and stronger than anticipated cash flows.
That improvement came less than a year after PSA was saved from looming bankruptcy in March 2014, when the French state and Chinese auto group Dongfeng each took a 14 percent stake in the group in exchange for a 3.0 billion euro capital injection.
Shortly afterwards, PSA recruited Tavares away from his number two position at rival Renault, and he pushed ahead with a programme of divesting unprofitable units, slashing staff, freezing salaries and decreasing per-unit costs.
As a result, the capacity of remaining PSA plants in Europe rose from 72 percent in 2013 to 79 percent last year, even as output decreased from 2.6 million to 2.1 million units.
In recognition of employees' contribution to PSA's improving financial health, Tavares said every worker in France would receive a bonus of at least 1,094 euros -- even though the group will not be paying shareholders dividends in 2015.
Tavares remained bullish on the group's continued progress towards profitability in 2015, despite sluggish markets in Europe, Russia and South America that are likely to limit PSA's growth in sales globally to one percent next year.
That modestly positive international forecast is largely buoyed by PSA's access to China's car market -- which is growing at a seven percent annual clip --  thanks to its partnership with Dongfeng.
Investors rewarded the results announcement, pushing PSA's share price up 6.56 percent to 14.38 euros at Wednesday's close.