PARIS—French automotive group PSA Peugeot-Citroën on Wednesday upgraded its earnings guidance for the first half of 2010 following a 27% rise in revenue for the first quarter of this year.

Revenue at Europe's second-largest car maker by sales behind Volkswagen AG was €13.99 billion ($18.8 billion) from €10.97 billion a year earlier, boosted by increased automobile production. The rise outpaced by a wide margin the 18% increase that financial analysts had anticipated and underpins an improving industry trend as witnessed by earnings guidance upgrades earlier this week at German auto maker Daimler AG and Peugeot-Citroën's auto-parts subsidiary Faurecia.
Peugeot-Citroën had said it expects to report “significant” recurring operating income for the first half of this year, and said its automobile division will make a positive contribution. The adjective was absent from the company's outlook in February.
Car makers across the world have been hard-hit by one of the worst downturns the industry has experienced during the past two years as the credit crunch and resulting economic downturn hit consumer spending. European car makers benefited in the second half of last year from car-scrapping schemes that helped prop up sales, but first-quarter results from car makers around the world suggest the wider industry is now starting a recovery, although Europe is expected to remain weak.
Peugeot-Citroën warned that it still expects a 9% contraction of the European automobile market in 2010, and said its business environment risks being “difficult” in the second half of this year.
The company said its inventories have levelled off at 62 days of sales after the sharp reduction in 2009.
Revenue at Peugeot-Citroën's automobile division climbed 22% in the first quarter to €10.62 billion. The company managed to increase its European sales by 17% in the first three months of the year, faster than the 9% growth of the overall market, allowing the company to boost its market share in the region to 14.6% from 13.5%.
It said it expects market share for the full year will continue to grow thanks to new product launches such as the up-market Citroën DS3 mini car and the sporty Peugeot RCZ. It also expects to see sales growth in fast-growing markets outside Europe.
(Source: The WSJ)