Economy

Profitable Again, PSA Peugeot Citroën Sets Its Sights On India

Profitable Again, PSA Peugeot Citroën Sets Its Sights On India

Europe's No. 2 automaker is confident that it can expand sales and production in the developing world, though analysts say the French carmaker is still too reliant on European demand.

(em2me)

PARIS - With the auto industry crisis finally behind them, executives at PSA Peugeot Citroën, Europe's second largest carmaker, are now focusing their attention on growth opportunities in emerging markets.

But first, the numbers: after two years of heavy losses, the French automaker posted net profits of 1.1 billion euros for 2010, while sales grew by 15.8% to 56.1 billion euros. The fiscal year "is an excellent starting point for restoring our ongoing profitability," says PSA Peugeot Citroën CEO Philippe Varin.

Car sales have set new records (3.6 million units) and the automotive branch itself is now turning a profit margin of 1.5%, bolstering other generally more profitable business sectors, including transportation and auto financing. The group strengthened its cash flow position, managing to free up available cash to the order of $ 1.1 billion.

With this extra cash, PSA -- like rival Renault -- plans on paying off the remaining 2 billion euros of a three-billion-euro bailout loan issued by the government during the crisis. The two groups, which had already paid off one billion euros last year, will each pay another billion in both February and April to avoid paying heavy interests.

Now more than ever, the real opportunities for development are found on international markets. After signing its second partnership in China and launching a new factory in Russia, PSA is now turning its attention to India. After some research, the group has decided to build a new manufacturing plant for its future economy sedan there, with orders already promised to the Vigo plant in Spain starting in 2012, as well as one in China.

It is a risky bet, after Renault's failed attempt to launch the Logan, a car far too big for the "super-economy" market. And PSA has not forgotten its own failure in India, when in the mid-1990s, it started a short-lived local production for the 309 model. Much remains to be decided about PSA's future venture, including the location and the production capacity of the plant.

Philippe Varin is reluctant to commit to a timetable. As far as the targets of his "performance plan" for 2010-2012 are concerned though, PSA's CEO is more than confident. Varin now anticipates an improvement in pre-tax earnings of 3.7 billion euros, versus the 3.3 billion previously estimated. A number of different strategies (including purchasing policies for components, upgrading of vehicles, and sales strategies) had already contributed to an improvement of 1.5 billion euros in pre-tax earnings last year, over the expected 1.1 billion.

But this good news did little to boost stock prices, which instead dropped 4.46% after the report. Analysts like Bernstein and Merrill Lynch say they're disappointed by the automotive division's performance. And they consider prospects for 2011, which include an increase in pre-tax earnings for each division, to be too vague.

According to Barclays Capital, the real problem is that Peugeot and Citroen are still far too reliant on a Western European market that is expected to suffer this year. "We expect the French market to contract about 13% in 2011, which we fear will escalate price wars and prevent PSA from reaping the benefits of its upscale products," said a Barclays statement. The bank also predicts an annual decline in the small-car sector. PSA dismisses these doubts as baseless. The company is satisfied with its push towards globalization, as car sales outside of Europe have already increased from 32% to 39%. The next goal is to reach 50% by 2015.

Read the original article in French

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Art installation "Greetings From Giza" by French artist and photographer JR faces the pyramids of Giza in Egypt

Anne-Sophie Goninet, Jane Herbelin and Bertrand Hauger

👋 你好*

Welcome to Tuesday, where violence erupts after Sudan's military coup, Australia finally gets onboard with climate change goals, and Harrison Ford stars in Raiders of the Lost Credit Card. From Bogota, we also see what the capture of drug kingpin Otoniel means for Colombia, a country long stained by cocaine trafficking.

[*Nĭhǎo - Mandarin Chinese]

💡  SPOTLIGHT

Saving the planet is really a question of dopamine

The elite of the ecologically minded are set to descend on Glasgow next week for the Cop 26 conference on climate change. But beyond debating policy prescriptions, French daily Les Echos explores the role our own brains have on making the right choices for the planet:

Almost every week, a new scientific study alerts us to the degradation of the environment. And yet, we continue not to change anything fundamental in our systems of production and habits of consumption. Are we all suffering from blindness, or poisoned by denial?

In his popular books Le Bug humain (The Human Bug) and Où est le sens? (Where is the Sense?), Sébastien Bohler, a journalist in neuroscience and psychology, provides a much more rational explanation: The mechanism responsible for our propensity to destroy our natural environment is in fact a small, very deep and very primitive structure of our brain called the striatum.

This regulator of human motivation seems to have been programmed to favor behaviors that ensure the survival of the species.

Since the dawn of humanity, gathering information about our environment, feeding ourselves, ensuring the transmission of our genes through sexual intercourse and asserting our social status have all been rewarded with a shot of dopamine, the "pleasure hormone."

Nothing has changed since then; except that, in our society of excess, there is no limit to the satisfaction of these needs. This leads to the overconsumption of food and addictions to everything from sex to social media — which together account for much of the world's destructive agricultural and energy practices.

No matter how much we realize that this is leading to our downfall, we can't help but relapse because we are prisoners of the dopamine pump in the striatum, which cannot be switched off.

According to Bohler, the only way out is to encourage the emergence of new values of sobriety, altruism and slowness. If adopted, these more sustainable notions could be recognized by the striatum as new sources of dopamine reward. But there's the challenge of promoting inspiring stories that infuse them with value.

Take the photo-collage exhibition "J'agis ici... et je m'y colle" ("I'm taking action here... and I'm sticking to it"), a collection of life-size portraits of residents committed to the energy transition, displayed on the walls of the French coastal city of La Rochelle.

Backed by the French National Center for Street Arts, photographer Martin Charpentier may be employing artistic techniques, but he's also tinkering with neuroscience in the process.

Stefano Lupieri / Les Echos

🌎  7 THINGS TO KNOW RIGHT NOW

• Sudan in chaos following military coup: After Sudan's military seized power from the transitional government, defiant anti-coup protesters have returned to the streets of the capital city Khartoum, for a second consecutive day. At least seven people have been killed and 140 injured. Coup leader General Al-Burhan has announced a state of emergency across the country, while the military cut off access to the internet and closed roads, bridges, and Khartoum's airport. Washington condemned the coup and suspended aid, and the U.N. Security Council was expected to discuss Sudan behind closed doors later today.

• Egypt lifts state of emergency in force since 2017: Egyptian President Abdel Fattah el-Sisi, announced the end of a four-year-old state of emergency, undoing powers that had given the government sweeping authority to quash protests, make arrests, search people's homes without warrants, and control everyday life in the most populous Arab country.

• Platforms take down Bolsonaro video linking vaccine and AIDS: Facebook, Instagram and YouTube have removed an anti-vaccine video from their respective platforms posted by Brazilian President Jair Bolsonaro. Beyond blocking the video, in which Bolsonaro falsely linked the COVID-19 vaccine with developing AIDS, YouTube went further and suspended the far-right leader for a week.

• COVID update: The U.S. will launch a new travel system on November 8, imposing new vaccine requirements for most foreign national travellers and lifting severe travel restrictions over China, India and much of Europe. Meanwhile, authorities in northern China are reimposing lockdown, and other emergency measures as COVID-19 infections spread to 11 provinces.

• Australia pledges net zero emissions by 2050: As one of the world's largest emitters of greenhouse gases per capita and a major exporter of fossil fuels such as coal, Australia has finally committed to becoming carbon-neutral by 2050. This is a target already adopted by most nations heading to next week's COP26 international climate conference, but that Australia had so far refused to pledge.

• Japanese princess loses royal status over wedding: Japan's Princess Mako married her boyfriend Kei Komuro, giving up her royal status. Under Japanese law, female imperial family members lose their status upon marriage to a "commoner" although male members do not.

Raiders of the Lost Credit Card: A tourist returned the credit card of American actor Harrison Ford, who had lost it in Sicily while shooting scenes for the latest Indiana Jones movie.

🗞️  FRONT PAGE

"Out of control," titles German daily Süddeutsche Zeitung, reporting on the release of a series of articles by a consortium of 17 U.S. news outlets, called the "Facebook Papers," that reinforce whistleblower Frances Haugen's claims that the social media giant is prioritizing profits over the well being of its users and society.

#️⃣  BY THE NUMBERS

$1.01 trillion

After striking a deal to sell 100,000 electric vehicles to car rental firm Hertz, Elon Musk's Tesla has joined Apple, Microsoft, Amazon and Google's Alphabet in the club of companies that have reached a $1 trillion valuation.

📰  STORY OF THE DAY

What the capture of a drug kingpin means for Colombia

While the capture of Otoniel, Colombia's most wanted drug trafficker, made global headlines, Bogotá daily El Espectador writes about the significance of the news for a country that has battled narcotrafficking for decades.

👮 The arrest of the Colombian mobster Dairo Antonio Úsuga David, a.k.a. "Otoniel," is a victory for Colombian intelligence, law-and-order forces and the broader fight against crime. Details of the eight-year-long pursuit of the head of the Gulf Clan, of the tireless and meticulous work, testify to the capabilities that the police and army have managed to develop in the fight against the narco-trafficking that has long been a stain on Colombia.

🇨🇴🇲🇽 Otoniel is responsible for a criminal organization with more than 3,800 members and influence on 12 departments and 128 districts in Colombia (though data from the Bogotá-based Peace and Reconciliation Foundation counts 211 districts). The Gulf Clan sends half the drugs going out of Colombia, and is the main exporter to Mexico. Its ties to the Mexican cartel chief Joaquín "el Chapo" Guzmán are well-documented — and Otoniel had aspired to fill the power vacuum left by Guzmán's capture.

⚖️ Some have observed that the ensuing power vacuum will engender more violence, which is true. But we are, in any case, far from eliminating drug trafficking in Colombia or cutting its tentacles across public life. That shows the limitations of the hard-line response to drugs, when we have seen it is not enough. Still, it is essential in any fight against crime for the state to show its operational capabilities. The message is clear: not even drug overlords are above the law in Colombia.

➡️ Read more on Worldcrunch.com

📣 VERBATIM

"I love Mako. I would like to spend my one life with the person I love."

— Kei Komuro said during a news conference after his wedding with Japan's Princess Mako, the niece of the current emperor and the sister of the likely future sovereign. The princess lost her royal status as a result of her marriage with Komuro, a "commoner."

📸  PHOTO DU JOUR

An art installation "Greetings From Giza" by French artist and photographer JR faces the pyramids of Giza in Egypt, as part of the 2021 exhibition "'Forever Is Now," the first international art exhibition to take place there — Photo: Balkis Press/Abaca/ZUMA

✍️ Newsletter by Anne-Sophie Goninet, Jane Herbelin and Bertrand Hauger

Send all commoner and royal well wishes to Mako and Kei — and let us know what the news looks like from your corner of the world! info@worldcrunch.com

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