Peugeot Annual Meeting Kills Dividend. Q1 Revenues Drop

GM now owns 7% of Peugeot. Neither firm has downsized yet in Europe to meet declining demand.

The annual shareholders meeting of Peugeot S.A. today agreed with a management recommendation that no dividend be paid for 2011, given the Group’s disappointing 2011 results where operating income declined to €1,315 million from €1,796 million in 2010. Group operating income came to only €158 million in the second half or 2011, because of the Automotive Division’s €497 million loss during the period.

Europe’s Number Two automaker, behind Volkswagen Group, also released Q1 2012 results that showed Group revenues of €14.3 billion, down 7% compared with the previous year, with Automotive Division revenues down 14% year-on-year because of an 8% contraction in the European market compared to Q1 2011. The European vehicle market is heading for its fifth straight year of declining sales.

The Q1 downturn comes as Peugeot is in the process of establishing a global alliance with General Motors, which is also losing money in Europe for more than a decade – $700 million in 2011 alone.

The total synergies expected from the alliance are estimated at approximately $2 billion annually within about five years. The synergies will not come until new vehicle programs are implemented in so-called low CO2 platforms, as well as additional products in the B small car and D mid-size segments, with limited results predicted during the first two years. It is expected the synergies will be shared about evenly between the two companies.

PSA worldwide Q1 sales totaled 790,100 vehicles, down 14.2%, with sales of assembled vehicles 15.1% lower at 691,500 units. The decrease reflected sharp contractions in Europe and Latin America, partly offset by higher unit sales in Russia and China.

About Ken Zino

Ken Zino is an auto industry veteran with global experience in print, broadcast and electronic media. He has auto testing, marketing, public relations and communications expertise garnered while working in Asia, Europe and the U.S.
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