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 Paris-based Peugeot is targeting a 10 percent increase in sales by
2018 and a further 15 percent by 2021, as it expands in Latin
America and the Middle East while adding production in India and
Southeast Asia, Chief Executive Carlos Tavares said on Tuesday.
In what he described as a "global product and technology offensive",
Tavares outlined plans to reach more customers through after-sales
offerings, car-sharing, used car sales and a multi-brand leasing
operation tasked with achieving 100 million euros ($113 million) in
profit by 2021.
However, market reaction was distinctly cool. Peugeot shares were
down 7 percent at 13.63 euros as of 0900 GMT, outpacing the broader
sector's 3.7 percent decline as weak German economic data hurt
sentiment.
"We don't believe the plan will have PSA investors ecstatic,"
Evercore ISI analyst Arndt Ellinghorst said, adding that many were
expecting higher profit margins than Peugeot pledged to deliver. "We
don't see much room for upgrades."
Peugeot will also take its first steps toward an eventual return to
the North American market by launching a car-sharing service there
in 2017, Tavares said. A partnership with Paris electric car-sharing
operator Bollore is under consideration.
The so-called "Push to Pass" plan unveiled on Tuesday builds on a
two-year recovery that brought the company back from near-bankruptcy
to its highest profitability in 14 years, with the help of a
government-led bailout.
NEXT YEAR'S MODEL
Peugeot's operating margin surged to 5 percent last year, a target
Tavares had initially set for 2019 onwards. On Tuesday he unveiled a
more conservative goal of 4 percent for the next three years, rising
to 6 percent by 2021.
Tavares aims to step up model launches, introducing a new vehicle
each year for the Peugeot, Citroen and DS brands, including 11 new
hybrids and all-electric cars.
The company also plans production in Southeast Asia and is seeking a
manufacturing partner in India, he said.
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Major carmakers have been taking tentative steps into areas such as
car-sharing and ride-sharing, as the industry reacts to the growth
of technology-enabled services such as Uber.
"The operative word here is the enlargement of our customer base,"
Peugeot's Chief Financial Officer Jean-Baptiste de Chatillon said.
Despite its improving fortunes -- and the planned resumption of
dividend payments in 2017 -- Peugeot vowed that it would not let up
on the cost-cutting that drove its turnaround.
After cutting 211 euros in costs per vehicle last year, Peugeot
raised the savings goal to 700 euros per vehicle from 500 euros.
A prolonged European sales slump left Peugeot in need of a 3 billion
euro rescue that saw the French government and China's Dongfeng
Motor Group Co Ltd take 14 percent stakes in the carmaker in 2014.
Tavares took over from outgoing CEO Philippe Varin the same year and
made immediate headway through tighter control of working capital,
particularly excess inventories of materials, parts and unsold
vehicles.
(Reporting by Laurence Frost and Gilles Guillaume; Editing by James
Regan and Christopher Cushing)
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