PSA - 2019 Universal Registration Document

GROUPE PSA Risk factors DPEF.B

Strategy-related risks

1.5.1.

RISKS RELATEDTO THE GROUP’S ECONOMIC, HEALTH AND GEOPOLITICAL

1.5.1.1. ENVIRONMENT HIGHRISK

Riskfactors

Riskmanagement andcontrolprocesses

The Groupoperateson an industrialand/orcommercialevel in a large number of countries,some of which may present specific risks:GDPvolatility,economicandpoliticalinstability,socialunrest, regulatorychanges,rise of nationalismand populism,introduction of protectionistmeasures, recovery issues,interestrateandforeign exchange rate fluctuations,foreign currency liquidity gap and foreign exchange controls. On the other hand, the Group is exposed to the risk of pandemicsand epidemicswhich could partially or completely paralyze its operations. Risks associated with the Covid-19 pandemic The Covid-19 coronavirus pandemic that has been raging worldwidehas significantlyaffectedall production facilities,supply chains and commercial activities of Groupe PSA. The high health risk posed by this threat puts the group's personnelon the front line and could have an impact on their health and availability.We are doing everythingin our power to ensurethe safetyof Groupemployeesas a priorityin thecountries affected by thishealth crisis. The developmentof the Covid-19 epidemic, particularly from March 2020, increasesthe uncertaintiesof the global economic contextand the markets.Its consequences for GroupePSA are currentlydifficultto assessandwill dependon the scale,duration and geographic extent of the Covid-19 crisis, as well as the measures taken by the countries concerned. Afterclosingits production sitesin China,theGroupannouncedon March16 the gradualclosureof all its Europeanproductionsites andthenin therestof theworld.All Europeansiteswereclosedon March19. The productionsites remainclosedto this day with the exceptionof Chinawhereproductionhas resumedgraduallysince the end ofMarch. The Covid-19impacteddemandsignificantlyin the first quarter with a sharpdrop in the globalautomotivemarket.The European marketnotablyexperienced a significantdropof morethan26%in the first quarter comparedto the first quarter of 2019 with in particulara monthof Marchdownby morethan50%.Globalsales of GroupePSAfellby 29%in thefirstquarterof 2020compared to the first quarter of 2019, including a drop ofalmost 30% in Europe. Given this uncertaincontext,GroupePSA has strengthenedthe financialsecurityof its Automotivedivisionwitha newsyndicated line of € 3 billionsignedin earlyApril2020,whichis in additionto a € 3 billionconfirmedundrawnback-upline for a totalamountof € 6 billion;Faureciahas also strengthened its financialsecurityby signingon April10, 2020a ClubDeal of € 800million,whichis in addition to the € 600 million not drawn from the € 1.2 billion syndicatedcreditlineof whichhalfwasrecentlydrawn..At theend of 2019, the net financial positionof the Group's industrialand commercialactivities (includingFaurecia)amountedto € 7,914 million and its net financialsecurity to € 23,405 million with € 19,205millionin cash and cash equivalents,financialinvestments, current and non-currentfinancial assets and € 4,200 million of undrawn linesof credit.

With the aim of limitingsuch risks, the strategy involves: protecting itselffromprotectionist policiesputin placeby some > countries to boost the growth of a domestic automotive industrybyoptimising local operations; implementingwarningprocedures, security plans and business > continuity tailored to the nature of the threat. Warning procedures consist of a permanent watch on the political,socialandhealth,as wellas the regulatorysituationin all countries. The GlobalExecutiveCommitteesteersand controlsthe Group’s activitiesthroughthe “Pushto Pass”planand the progressof its action plans. To respond specifically to the threat of the spread of the coronavirus,GroupePSA has implementedan exceptionalcrisis managementsystem.This cell has decided,amongother things, on temporarypublic securityemergencymeasuressuch as the generalization of teleworkfor all tertiarypositionsandtheclosure of its Europeanfactories.However,thegroupis unableto predict the criticalimpactson its resultsif this epidemicwere to persist beyonda short-term returnto normal.TheGrouphasalsodefined a reinforcedhealth and safety protocolin the variousbusiness sectors of the company. A progressiveand secure recovery scheduleshouldbe establishedaccordingto the contextof the healthcrisisand the resultsof auditsof implementation of health measures reinforced and adapted to each site.

27

GROUPE PSA - 2019 UNIVERSAL REGISTRATION DOCUMENT