The PSA Group's Push To Pass Plan is really working with improved profits, sales and cash flow.

For the third year in a row, the Group achieved growth on three fronts:

• Growth of the Automotive division operating margin to 6%^[1] versus 5% in 2015
• Growth of sales : 3.15 million vehicles sold^[2], up 5.8%
• Growth of the net financial position thanks to a positive €2.7 billion Free Cash Flow^[3] in 2016

The Group is improving its medium-term operational outlook.

For the first time since 2011^[4], a dividend of €0.48 per share will be submitted for approval at the next Shareholders’ Meeting.

Carlos Tavares, Chairman of PSA Group Managing Board, comments: “These results demonstrate our ability to consistently deliver an excellent performance in an adverse environment. 

They are the outcome of the Group’s operating efficiency improvement and our competitive teams’ focus on the execution of the Push to Pass plan. 

Day after day, the Group is building the conditions for profitable and sustainable growth, reinforced by the success of the first launches in its product offensive.”

In 2016, Group revenues were €54,030 million compared to €54,676 million in 2015 and Automotive revenues were €37,066 million, compared to €37,514 million in 2015 which represent respectively a growth of 2.1% and 2.7%, at constant exchange rates, driven notably by the success of recently launched models and the Group’s pricing power strategy. Net of adverse change in exchange rates, both Group and Automotive revenues were down 1.2%.

The Group recurring operating income was €3,235 million, up 18% compared to 2015. The Automotive recurring operating income was €2,225 million, up 19% compared to 2015. In an environment characterised by adverse exchange rates, this growth was driven by higher volumes, positive price and mix effects, and lower fixed and production costs.

The Group non-recurring operating income and expense was a charge of €624 million, compared to a charge of €757 million in 2015. 

Net financial income and expense was a charge of €268 million versus a charge of €642 million in 2015. 

Net income reached €2,149 million, an increase of €947 million compared to 2015. Net income, Group share, reached €1,730 million compared to €899 million in 2015. 

Banque PSA Finance reported recurring operating income of €571 million^[5], up 11% versus 2015.

Faurecia recurring operating income was €970 million, up 17%.

The free cash flow of manufacturing and sales companies was €2,698 million.

Total inventory, including independent dealers, stood at 406,000 vehicles at 31 December 2016, an increase of 56,000 units year on year.

The net financial position of manufacturing and sales companies was €6,813 million at 31 December 2016, compared to €4,560 million at 31 December 2015.

A dividend of €0.48 per share will be submitted for approval at the next Shareholders’ Meeting with an ex-dividend date considered to be on 15 May 2017, and the payment date on 17 May 2017. 

Market outlook

In 2017, the Group anticipates a stable automotive market in Europe, Latin America and Russia, and growth of 5% in China. 

Operational outlook improved

The new objectives of the Push to Pass plan are to:

-   deliver over 4.5% Automotive recurring operating margin^[6] on average in 2016-2018, and target 6% by 2021;

-   deliver 10% Group revenue growth by 2018^[7] vs 2015, and target additional 15% by 2021⁷.

^[1] Recurring operating income related to revenue

^[2] Of which 233,000 vehicles produced in Iran under Peugeot license in 2016, following the final JV agreement signed with Iran Khodro on 21 June 2016

^[3] Sales and Manufacturing companies

^[4] Dividend in respect of 2010, paid on 7 June 2011.  

^[5] 100% of the result of Banque PSA Finance. In the financial statements of the PSA Group, joint ventures are consolidated using the equity method and other activities covered by the agreement with Santander are reclassified as “Operations held for sale or to be continued in partnership.”

^[6] Recurring operating income as a proportion of revenue

^[7] At constant (2015) exchange rates

PSA Group announces its third quarter statement with an over growth, but certain global area's show decreases.

• 2016 Group cumulated revenue up 1.3% at €39.2 billion^[1] at constant exchange rate
• Continued improvement of pricing power in Europe
• Start of the product offensive: launch of Peugeot Expert and Citroën Jumpy in June, Peugeot 3008 in October and Citroën C3 in November
• Faster international expansion: partnerships signed in Iran with Iran Khodro for Peugeot and Saipa for Citroën
• Enlarge customer base: online multi-brand used vehicle sales and rollout of mobility services

Group Q3 2016 revenue totalled €11,404 million, compared with €12,016 million in Q3 2015. In the first nine months, Group revenue reached €39,183 million, compared with €40,052 million in 2015, up 1.3% at constant exchange rates.

Automotive division revenue was €7,542 million, compared with €8,052 million in Q3 2015. Negative exchange rate effects (-4.7%) were partially offset by the positive price impact (+1.8%), reflecting the policy of improving the price positioning of the three brands, Peugeot, Citroën and DS.

Consolidated worldwide sales were up 10.6%². Ahead of major product launches in the fourth quarter, which are not yet visible in registrations, sales volumes declined in Europe (-4.3%) and China (-16.5%). In Latin America, they were up 22.6%. In Africa Middle East, volumes increased, driven by sales of vehicles manufactured in Iran under Peugeot licence^[2].

As of end-September 2016, inventories totalled 400,000 vehicles^[3] (382,000 in the same period last year).

Jean-Baptiste de Chatillon, Chief Financial Officer of the PSA Group and member of the Managing Board, said:“The levers of the Back in the Race plan, especially pricing power and cost reduction, make us confident that we will achieve the objectives of the Push to Pass plan, despite a more challenging external environment, particularly in respect of exchange rates.”

Market outlook

For 2016, the Group expects the automotive market to grow by about 6% in Europe and 15% in China, and to shrink by around 6% in Latin America and 15% in Russia.

Operational targets

The Push to Pass plan, has set the following targets:

• Reach an average 4% automotive recurring operating margin in 2016-2018, and target 6% by 2021;
• Deliver 10% Group revenue growth by 2018⁴ vs 2015, and target additional 15% by 2021^[4].

Financial Calendar – 23 February 2017: 2016 Annual Results

Appendix

Revenue YTD September 2016 versus YTD September 2015

In million euros	9M 2015*	9M  2016	Change
Automotive	27,461	26,732	-729
Faurecia	13,811	13,773	-38
Other businesses and eliminations**	(1,220)	(1,322)	-102
Group revenue	40,052	39,183	-869

Revenue Q3 2016 versus Q3 2015

In million euros	Q3 2015*	Q3 2016	Change
Automotive	8,052	7,542	-510
Faurecia	4,323	4,241	-82
Other businesses and eliminations**	(359)	(379)	-20
Group revenue	12,016	11,404	-612

* restated according to IFRS5 (Faurecia Exteriors division)

** Including remaining activities of PSA Finance

PSA Group and SAIPA, have signed a joint-venture agreement to produce and sell Citroën vehicles in Iran.

PSA Group and SAIPA, Citroën's historic partner in Iran since 1966, have signed today a joint-venture agreement to produce and sell Citroën vehicles in Iran.

This 50/50 joint-venture lays the foundations for a strategic partnership between the two companies. It will cover the entire value chain, from the design stage right through to vehicle marketing, including purchasing. 

Manufacturing will take place at the Kashan plant in Iran, which will be 50%‑owned by PSA Group. This industrial site is the most modern of Iran with a flexible industrial process at the highest level of environmental standards (water-soluble paints for example).

The joint-venture will invest more than €300 million in manufacturing and R&D capacity over the next five years. The agreement will be backed up by technology transfers and a significant level of local content.

Consistent with the core model strategy deployed in the Push to Pass plan, the production in Kashan of three vehicles adapted to the heart of Iranian market will start in 2018. From early 2017, imported vehicles will be staging Citroën’s comeback in the country.

Citroën models will be sold throughout the country via a network dedicated exclusively to the brand. No less than 150 Citroën outlets will open in the next 5 years.

Commenting on the new agreement, Carlos Tavares, Chairman of the PSA Group Managing Board, said: "With more than 50 years of presence in Iran, PSA Group through this new strategic partnership is clearly committed to the deployment of a rich product plan that meets the expectations of Iranian clients."

Production of an All-New new Citroën vehicle will be produced at the Rennes Production facility in France.

• Production of the new Citroën vehicle was initially set to be assigned to a plant outside Europe
• Final decision made possible by stakeholders commitment to work together to secure the plant's future
• €100 million to be invested to increase output in Rennes by 60% by 2018

As part of the product offensive included in the ‘Push to Pass’ plan, which includes 34 new models, the Rennes plant will start manufacturing a new market-winning vehicle for Citroën by 2018. The ‘C84’ project is part of a dynamic product strategy that will see four new models launched by the brand in less than 18 months.

Pictures used for illustrative purposes only and are not to be confused 

with the actual production models from 2018.

Based on the EMP2 platform, the new Crossover will be manufactured alongside the future Peugeot 5008 and the Citroën E-Mehari.

With these three models, output at the plant will ultimately reach 100,000 vehicles per year compared with 60,000 currently.

The Rennes plant was chosen after a study carried out by the PSA Group over several months, reflecting the performance measures taken by the plant and the commitments made to upgrade operations.

The plant upgrade plan puts forward several ground-breaking solutions, with the introduction of modern, agile manufacturing processes. Work will begin in early 2017 and is scheduled to be completed in 2018. The upgrade represents a €100 million investment, which will also benefit other automotive industry players in Brittany.

The decision to manufacture the new vehicle in Rennes was made possible by the commitment of the entire workforce and the shared drive by management and the signatory trade unions to come together to secure the plant's future.

On 29 April, an agreement called the "Contract for the Future of Rennes" was signed at the plant, with the support of five of the Group’s six trade unions (CFDT, CFE/CGC, CFTC, FO and SIA/GSEA), representing more than 80% of employees. The decision to manufacture the new vehicle in Rennes was subject to this agreement, which will come into force on 1 January 2017.

Commenting on the announcement, Carlos Tavares, Chairman of the Managing Board of the PSA Group, said: "The decision to manufacture this new vehicle in Rennes shows that, when stakeholders are committed to working together to secure the future of a manufacturing plant, they can create the performance conditions necessary in a continuous efficiency improvement process."