The French PSA Group, the manufacturer of Peugeot and Citroen cars, increased sales and profits in the first half of the year, surprising analysts with a new profitability record in its key automotive division.
The automaker said on Wednesday that net profit increased 3.6% to 1.26 billion euro ($ 1.46 billion), with a 5% increase in revenue to 29.17 billion, as price increases offset the decline in sales in Europe and China.
The operating margin of the automobile division jumped from 6.8% to 7.3%, reaching a "new historic high," said chief financial officer Jean-Baptiste de Chatillon.
"We are now in a position to ensure continued profitability," he said. "There are always obstacles, but we will be able to resist them, while maintaining a high level of profitability."
The decline in the volume of semi-annual car sales in Europe and the sharp slowdown in China caused concern about the pace of recovery of the PSA, which is preparing to acquire Opel from General Motors (NYSE: GM) as part of a deal to be completed later this year.
However, the company's financial results exceeded the expectations of the analysts polled by Reuters, who forecasted revenues of 28.92 billion euro, car division profit of 1.3 billion euros, and a net profit of 1.06 billion euros,
PSA has improved the outlook for the European car market and now expects a growth of 3% this year instead of the previously forecast at 1%. Growth forecasts for Latin America and Russia were raised to 5%, whereas earlier in these regions, 2% growth and zero demand were forecasted, respectively.
In the US, the net profit of Ford Motor Co (NYSE: F) in the second quarter of 2017 increased by 3.7% - to $ 2.042 billion, or $ 0.51 per share, compared to $ 1.97 billion, or $ 0.49 per share, for the same period a year earlier.