Cost cuts boost Peugeot profits

Peugeot is predicting a slowdown

Cost cuts have helped Peugeot report a near 50% rise in half-year profits, but the French car maker has warned that the rest of the year will be tougher.

Net profits hit 733m euros ($1.16bn; £580m) in the first six months of the year, up from 492m euros a year before.

Peugeot has cut 10,000 jobs since June 2007, and this has helped to offset the impact of higher energy costs.

However, Peugeot warned that European car sales were set to slow as rising fuel costs hit consumers.

Morgan Stanley has reduced its earnings outlook for European car makers by 10% for 2008, with a larger 25-30% reduction in 2009 and 2010, as the sector is hit by high raw material costs.

However, Peugeot, which is the second-largest European car maker by sales, is keeping its full-year target of sales of between 3.55 million vehicles and 3.65 million vehicles, or volume growth of 5%.

Looking ahead to 2010, chief executive Christian Streiff is aiming for sales of 4 million vehicles, with markets beyond Europe being a major driver.