Peugeot profits rise after revamp

Peugeot has cut more than 4,000 jobs since April

Profits have risen at carmaker Peugeot Citroen, signalling a turnaround at the French company after a troubled 2006.

Europe's second largest carmaker said that half-year operating profit rose 22% to 842m euros ($1.2bn; £664m).

Margins improved in the six months to June to 2.7%, thanks to rising sales and cost cutting, which helped offset rising raw materials prices.

Peugeot began its shake-up after weak global sales led it to post a sharp drop in full-year profits.

Challenges

At the time, the company blamed an ageing line-up of models which had left it battling competition from German and Asian rivals.

As a result, new chief executive Christian Streiff instigated a round of factory closures and job losses, as well as a target of unveiling 41 new models by 2010.

But while profits and market share have improved since the start of the year, Mr Streiff said that hurdles remain.

"The two major challenges for the second half of the year are to continue to successfully launch new models and to accelerate the drive to greater competitiveness," he said in a statement.

Follow European manufacturer Mercedes Car Group also unveiled a sharp surge in profits to 1.2bn euros, up from 690m a year earlier.

Mercedes' owner, German-American carmaker DaimlerChrysler, did not post results from Chrysler Group as the division is set to be sold off to US private equity firm Cerberus Capital Management.

Honda record

Meanwhile in Asia, Honda said it was on track to post record annual profits thanks to brisk overseas sales which helped it offset a weak domestic market.

The Japanese firm said the weaker yen had boosted exports, with 946,000 vehicles sold in the first quarter - up 5.6% on last year.

As a result, operating profits for the three months to June were up 8.9% at 221.7bn yen ($1.8bn; £896m).

But, elsewhere, earnings news from Swedish truck maker Volvo was not as positive.

Surging costs and a tough North American market had led to pre-tax profits for the three months to June slipping to 5.97bn kronor ($891m; £434m) from 6.46bn kronor at the same time last year, despite a rise in sales.

The company blamed the drop on lower-than-expected income from its Japanese Nissan Diesel unit which it bought earlier this year. The subsidiary has been battling against a stagnating domestic market in Japan.