Peugeot-owner PSA Group has revealed a near doubling of profits, as it ponders move to take over General Motors Company (NYSE:GM)’s Opel and Vauxhall brands.
According to the figures, Net income at PSA Group, jumped 92% last year to 1.73 billion Euros.
PSA’s potential buyout of GM’s European brands has increased fears of job losses at Vauxhall in the UK.
The giant which also owns Citroen, recently said it had assured Theresa May it would “develop” the Vauxhall brand if the deal goes ahead. however there was no further commitments to guard the 4,500 jobs making cars at Ellesmere Port and vans in Luton.
Both firms are aiming to sign a statement of intent during the next fortnight.
Meanwhile General Motors also said last week it was considering selling its European brands, Opel and Vauxhall, to PSA. That prompted assumption that the French company would cut capacity by closing plants.
PSA chief executive Carlos Tavares during the announcement “expressed his willingness to develop further the iconic Vauxhall brand for the benefit of its faithful customers”, PSA said in a statement.
Furthermore PSA revealed its operating margin had surged from 5% in 2015 to 6% in 2016. It is the third year in a row that operating margin, sales and net profit have upbeat results at the group, which flirted with bankruptcy in 2014.
Following company’s upbeat performance, chief financial officer Jean-Baptiste de Chatillon said PSA was in a position to make “profitable investments in the interest of our shareholders”.
Moreover Mr. Tavares said, Opel needs help, as it has been on constant loss for the last decade and burning 1 billion euros in cash per annum.
In spite of the statement, Analysts think merging the two firms would help cut costs. So there’s logic in the planned deal, and even with the vows to honour current labour agreements, analysts believe job cuts at some point are unavoidable.