PSA Peugeot Citroen 3rd Quarter Revenue Rises On China, Europe

By Noemie Bisserbe

PARIS--French car maker PSA Peugeot Citroen SA (UG.FR) said revenue rose in the third quarter, lifted by strong growth in Europe and China.

Peugeot reported a 1.6% increase in consolidated revenue to 12.3 billion euros ($15.71 billion) in the three months to September, reflecting a 2.7% rise in revenue at its automobile division.

The increase is a positive sign for Chief Executive Officer Carlos Tavares' new turnaround plan, who took the driver's seat earlier this year after leaving Renault SA.

Europe's second-largest auto maker by volume, Peugeot has been struggling to return to profit after racking up more than EUR7 billion of net losses in 2012 and 2013, forcing it to seek capital from Chinese partner Dongfeng Motor Corp. earlier this year.

Peugeot vehicle sales rose 7% in Europe and jumped 44% in Asia on recent new car model launches.

But the sustainability of the turnaround remains in question, given the fragile nature of Europe's rebound in auto sales--particularly in France--after six years of declines. The shadow of political crises from Ukraine to Hong Kong and the gyrations of emerging market economies in Latin America has cooled the nascent auto recovery in Europe.

The French auto maker's ties to the fast-growing China market through its shareholder Dongfeng Automobile Co. could, however, give Peugeot the needed firepower to solve its European woes.

Peugeot left its guidance intact--recurring positive free cash flow by 2016 at the latest, and a 2% operating profit margin in its automotive division by 2018.

Write to Noemie Bisserbe at [e-mail]

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