PSA - 2019 Universal Registration Document

ANALYSIS OF THE BUSINESS AND GROUP OPERATING RESULTS IN 2019 AND OUTLOOK Analysis of consolidated interim operating results

Group Adjusted Operating Income* (loss) 4.1.3.

The following table shows AdjustedOperating Income by businesssegment:

31 December 2018 31 December 2019

Change

(in million euros)

Automotive

4,466 1,263

5,037 1,227

571

Faurecia

(36)

Other businesses and eliminations** ADJUSTED OPERATING INCOME

(40)

60

100

5,689 635 Adjusted operating income (loss) excludes from Operating income certain adjustments comprising Restructuring costs, Impairment of * CGU’s and Other operating income (expense) considered rare or discrete events and are infrequent in nature. Including the activities of Banque PSA Finance not covered by the partnerships signed with Santander Consumer Finance and BNPP. ** 6,324

In 2019, the Automotive adjusted operating margin , which correspondsto the ratio of the Automotive adjusted operating income to the Automotiverevenues,stood at 8.5% comparedto 7.6%in 2018. PACE! plan target (6% adjusted operating margin in 2026) is achieved with Opel Vauxhall reaching a 6.5% adjusted operating marginas earlyas 2019. Groupadjustedoperatingmargin stoodat 8.5%comparedto 7.7% in 2018. The 12.8% increasein the Automotiveadjustedoperatingincome was due to the Company’simprovedperformance(+€1,057 million), despite an unfavourable operating environment (€(486) million).

The negative effect of the n environment stemmed from a €(42) millioneffect of weaker markets and from a €(243) millioneffect of “foreign exchange and others”, associated essentially with the weakening of the Argentinianpesoand the Turkishlira andhigherrawmaterialand otherexternalcosts amounting to€(201) million. The improved performanceof theAutomotivebusiness wasdue n essentially to a positive effect of product mix amounting to +€818 millionand pricing amountingto +€102 million,as well as lower productionand fixed costs amountingto +€540 million, partiallyoffset by the loss of market share and countrymix for €(253) million. Faurecia’s adjusted operating income was €1,227 million,down €36 million. Automotive division’s operating In November 2019, Groupe PSA and Chongqing Changan Automobilessignedan agreementwith a Chinesecompanyfor the disposalof shares.The agreementdefinesthe termsof financingfor the joint venture. In December 2019, all of the Group’s commitments, not conditionalon closing,were taken into account. The contribution of the joint ventures under the partnership between Banque PSA Finance and SantanderConsumerFinance amounted to €280 million, up €39 million. See Note 11.3 to the ConsolidatedFinancial Statements at 31 December 2019. The contribution of the joint ventures under the partnership between Banque PSA Finance and BNP Paribas covering the financing activity of OV amounted to €76 million in 2019, down €30 million.See Note 11.3to the ConsolidatedFinancialStatements at 31 December 2019. The net income,Groupshare of €3,201 millionwas up €374 million. Basic earnings per share were €3.58 versus €3.16 in 2018. And diluted earnings per share were€3.40up from€3.01in 2018. A dividend of €1.23per share (1) will be submittedfor approvalat the next Shareholders’Meetingwith an ex-dividenddate consideredto be on 21 May 2020, and thepaymentdateon 25 May2020.

Other items contributing to Group profit (loss) for the period 4.1.4.

Other operatingincomeand expenses representeda net expense of €(1,656) million compared to €(1,289) million in 2018. They primarily included restructuringcosts totalling €(1,531) million,up €480 millionand of which the Automotive division represented €(1,335) million andFaureciaGroup€(194) million. The Group’s net financial expenses stood at €(344) million,an improvement of €102 million compared to 2018. Net financial income and expenses are set out in Note 12 to the Consolidated Financial Statements at 31 December 2019. The Income tax expense amounted to €(716) million in 2019 compared with €(615) million in 2018. See Note 14 to the ConsolidatedFinancial Statements at 31 December 2019. The sharein net earningsof companiesat equity totalleda loss of (€24) million in 2019,comparedto a lossof (€44) million in 2018. The contributionof the Dongfengjoint ventures(DPCAand DPCS) representeda lossof €(383) million, down€149 millionand including impairments for a total impactof €(249) million.The contributionof ChanganPSA AutomobilesCo., Ltd (CAPSA)was €(50) millionin 2019 compared to €(68) million in 2018. See Note 11.3 to the ConsolidatedFinancialStatementsat 31 December 2019.

Dividend per share calculated on the basis of the total number of outstanding shares of the Company minus the treasury shares of the (1) Company as of 25 February 2020. The actual dividend per share will depend on the number of treasury shares held at the ex-dividend date and any shares issued or cancelled prior to this date.

153

GROUPE PSA - 2019 UNIVERSAL REGISTRATION DOCUMENT