Nearly 12 months after PSA/Peugeot-Citroen was rescued from financial disaster, CEO Carlos Tavares is on track to turn around the troubled automaker, industry watchers say.
PSA, which presents its 2014 financial results on Wednesday, has been boosted by surging sales in China, a recovery in Europe and the first results of Tavares' “Back in the Race” strategic plan that aims to achieve sustainable profits at the money-losing French automaker.
"Much to the surprise of many, PSA enjoyed a strong 2014," investment advisers Exane BNP Paribas wrote in a Jan. 29 research report. PSA "is starting to deliver" although the company's structural problems remain, Morgan Stanley, another investment firm, wrote on Jan. 19.
Stuart Pearson, an Exane BNP Paribas Research analyst, said in an interview: "We believe Tavares’s plan is working well so far, as shown by the surprise return to profitability of the auto division at first half of 2014 and the strong free cash flow generated last year.”
PSA’s auto operations swung to a 7 million euros operating profit in the first half of 2014 from a 538 million euros operating loss in the first half of 2013. This was the unit’s first positive result since the first half of 2011.
Exane BNP Paribas predicts that PSA’s automotive division is likely to report a 118 million euros trading profit for 2014 – swinging from losses of 2.11 billion in 2013 and a massive 5.76 billion in 2012.