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French carmakers to beat gloom
PARIS, France (Reuters) -- French carmaking duo PSA Peugeot Citroen and Renault look set to post a rise in 2002 profits next week, with PSA cruising past stuttering European rivals and Renault gearing up for a comeback this year. Analysts polled by Reuters expect PSA to post 2002 net profit of 1.801 billion euros compared to 1.691 billion the previous year and operating profit of 2.85 billion versus 2.652. They bet Renault will post operating profit of 1.394 billion euros and net profit of 1.996 billion euros after weaker sales in the second half, with no comparable figures due to new accounting rules. But it will likely cheer with good news for 2003 as it waits for sales of snazzy new models to kick in. Both firms are expected to comfortably meet their own profitability targets and to give upbeat outlooks for the year ahead, flouting a shaky car market that has hit European rivals like Germany's Volkswagen. "We're expecting both of them to do well,'' said J.P. Morgan autos analyst Himanshu Patel. "The French carmakers are safer than the Germans, partly because they have limited U.S. exposure and partly thanks to a fairly robust home market,'' he added. Other European maufacturers have been hurt by a weakening U.S. dollar that has bitten into export revenue. PSA speeds aheadAnalysts are banking on PSA meeting and possibly swerving past its own target of a five percent operating margin in its autos division as it swells profits thanks to a string of hit designs, aggressive moves into lucrative new markets like China and Latin America and sweeping cost-cutting measures. "We are expecting PSA to beat their forecasts and to reaffirm fairly upbeat guidance for 2003,'' said Patel. "Their key markets of Britain and France are holding up well and their market share is reasonably healthy.'' PSA bucked a faltering western European market to post another year of record sales in 2002 and has vowed to do the same again this year despite an elusive economic recovery and tough competition from Renault and Volkswagen, who both launch new models that could prove a hit with motorists. But while 2003 will not be a breeze, PSA is seen meeting lofty targets to sell some four million cars in 2006. "PSA are already targeting higher sales and margins which is pretty ambitious, but with their cost-cutting measures in place, the market would have to be very very weak for them to fail,'' said Gianluca Pediconi, auto analyst at CSFB. Renault eyes comeback
Renault has been hit by several years of fading profits as its lineup began to tire, and likely suffered in the second half of 2002 as it rolled out its new Megane car, which it hopes will revive its fortunes, analysts say. But complex new accounting methods will hoist its operating profit higher and Europe's fourth biggest carmaker will get a boost at net income level thanks to a 1.335 billion euro contribution from its Japanese partner Nissan. Analysts are focusing on Renault's outlook for this year and looking for hints on how orders of the much-heralded Megane II and its six spinoffs are going. "The key issue for Renault is their 2003 outlook. Last year was the trough and people have their hopes pinned on things picking up this year with the Megane effect,'' said Pediconi. Renault has vowed the love-it-or-hate-it Megane, with its curved back window and quirky coupe styling, will boost profits help it grab market share. As one of France's only blue chip stocks to end 2002 higher than it started the year, Renault has already won round the market with the promise of its flash new models, and analysts say that once its new Scenic and Clio models hit showrooms in the second half of 2003, the hype will start to translate into profits.
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