French car maker PSA Peugeot Citroen swung back to profitability in the first half of this year on Wednesday thanks to a recovery in the automobile market, gains in market share and the launch of new models.
The company posted a net profit of €680 million ($884.2 million) in the six months ended June 30, compared with a loss of €962 million a year before. Revenue for the whole group surged 21% to €28.39 billion from €23.5 billion, and recurring operating income—which excludes restructuring costs, provisions and one-time gains—swung to €1.14 billion from a loss of €826 million a year before.
The company hardened its outlook for the full year, saying it expects to report a recurring operating income of "around €1.5 billion." In April, it had said it anticipated "significant" operating profit for the 12 months.
Peugeot-Citroen added it expects its automobile division will be close to break-even in the second half of this year following a €525 million operating profit in the first half, representing an operating margin of 2.5%, compared with an operating loss of €904 million in the first half of 2009.
It said it now expects the European automobile market to contract by 8% this year. That is slightly more optimistic than the 9% decline that the company had predicted previously.
Peugeot-Citroen said a cost-reduction program introduced last year aimed at trimming overheads by €3.3 billion through 2012 contributed €854 million toward the improvement in operating profitability. A sharp recovery at automotive supplier subsidiary Faurecia SA also made a significant contribution to the bottom line.
"The group is now well on track to rebuilding sustainable profitability with strong first-half results driven by market share gains and the benefits of the performance plan," Chief Executive Philippe Varin said in a statement.
