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Peugeot pays price for dated models

Profits at PSA Peugeot Citroën fell 22% in the first half of the financial year, blamed on a lack of new models and fierce pricing competition.

Peugeot claimed it would see stronger growth in the rest of the year leading to a flat operating margin for the whole year as it starts to replace its ageing fleet of cars with models such as the small Peugeot 1007, the FT reports today.

The carmaker was battered last year by a combination of the strong euro and a lack of new models to entice consumers. This led to it posting its first profits warning and fall in earnings since Jean-Martin Folz became chief executive in 1997.

Folz has said that 2004 would be a "transition year" before a return to growth next year as more new vehicles come to market.

Its fate is expected to contrast with that of its French rival, Renault, which tomorrow is expected to announce a rise in net profit.

Peugeot's net profit fell to €681m (£450m).

Operating profit at its automotive division fell 37% as it cut prices but its banking, car parts and logistics units all rose. Group operating profit fell 17% to €1.07bn (£71m).

Group sales rose 4.2% to €28.9bn (£19.1bn).

Source: ft.com

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