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Fitch Ratings Applauds Peugeot Progress

Fitch Ratings Applauds Peugeot Progress.

Could Use An Alliance To Help Fund Future Investment.

Peugeot-Citroen will make a solid three per cent profit margin in 2015 after breaking-even in 2014 and losing money in 2013, but could use an alliance partner to ensure the long-term viability of the car business, Fitch Ratings said.

Fitch, in a report in which it awarded PSA Peugeot a BB rating, the same as FCA, said the company had made structural improvements to its cost base but because of its fairly modest size compare with global peers it has a strong need for external alliances to lower development costs “in a cost-and asset-intensive industry”.

A week before the Fitch report, Peugeot Citroen announced third quarter sales rose 3.2 per cent to €12.4 billion. French companies don’t report profits at this stage.

   “We acknowledge the group’s significant and rapid progress in implementing its turnaround strategy and cutting costs to lower its break-even point. However, we also believe that competitive pressures will intensify further as most of PSA’s global competitors are also streamlining their cost structures and enhancing their product offering, therefore maintaining pressure on PSA’s volume, pricing and the need to ramp up investments,” Fitch said.

“Fitch projects PSA’s automotive operating margin will increase to more than three per cent in 2015 from about zero in 2014 and a negative 2.9 per cent in 2013.”

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