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Peugeot boss: we can turn around ailing Vauxhall owner

24 February 2017

French carmaker the PSA Group saw its profits jump previous year and is giving dividends for the first time since 2011, burnishing its image as it weighs a buyout of General Motors' European operations. Net profit rose 79% to EUR2.15 billion from the year before.

"There is significant complementarity between the German Opel brand and our three French brands; there is very limited cross-shopping", Mr. Tavares said.

Tavares said Thursday that PSA was back on solid ground, and showed a willingness to pursue a more aggressive business strategy.

The carmaker increased its automotive recurring operating-margin goal in the 2016-2018 period to an average 4.5 per cent of revenue from 4 per cent.

The results add weight to the claims by Peugeot Chief Executive Carlos Tavares that he can steer a successful turnaround at GM's European operations, partly because the French and German companies are a good fit. "What we see today with the situation of Opel. has a lot of similarities with what we were facing four years ago". This compares with a net cash position of EUR4.56 billion at the end of December 2015.

Feb 23 Britain's business minister Greg Clark will meet the chief executive of Peugeot on Friday as the French carmaker explores the takeover of General Motors' European division, known as Vauxhall in Britain and Opel on the continent.

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A key issue in the talks between GM and PSA is how the companies will manage the pension plan for Opel and Vauxhall retirees, people familiar with the discussions said. French rival Renault made less than 60% of its sales in the region, and Germany's Volkswagen, less than half.

The economy ministers of Germany and France are expected to discuss the deal at a meeting in Paris on Thursday.

Together, Opel and Peugeot would leapfrog domestic rival Renault SA to become the second-biggest auto maker in Europe after world leader Volkswagen. Turnover for the full year fell to 54 billion euros, down from 56.3 billion a year earlier, a fall of 4.1 percent which was largely accounted for by last year's sale of the bumper arm of Faurecia, a vehicle parts manufacturer partly owned by PSA. Lower restructuring costs and taxes also benefited the company's bottom line.

He said a combined company, which would be Europe's No. 2 carmaker behind Volkswagen, could have volumes of five million cars.

Having taken over in 2014, Mr. Tavares swiftly slashed costs by reducing the number of cars it makes and cutting the workforce, while preaching the dangers of expanding too quickly or chasing sales with discounts.

Regarding PSA's attempt to buy Malaysian automaker Proton Holdings, Tavares said he will know the answer by April.

Peugeot boss: we can turn around ailing Vauxhall owner