PARIS (Reuters) -- PSA/Peugeot-Citroen reported a surprise surge in first-half cash flow and the first auto-division profit in three years, as its turnaround plan began to show results.
Operating cash flow jumped to 1.67 billion euros ($2.23 billion) in January-June from 203 million a year earlier, as new CEO Carlos Tavares slashed vehicle inventories and began stamping out supply-chain inefficiencies.
PSA reduced its net loss to 114 million euros ($153 million) in January-June from 471 million a year earlier, the company said in a statement today.
Despite stiff currency headwinds, the auto division returned to a 7 million euro operating profit from a 538 million loss.
"Our recovery plan is already producing results on all fronts," Chief Financial Officer Jean Baptiste de Chatillon told reporters on a call, adding that pricing had also improved.
Tavares has pledged to trim PSA's model lineup by almost half, cut capacity, raise price positioning, and pare wage and component costs to lift the automotive operating margin to 2 percent in 2018 and 5 percent by 2023.
"We need to stay lucid and recognize that we are only at the beginning of our turnaround," Tavares told analysts today.