Peugeot maker PSA Group turned its recently acquired Opel-Vauxhall business sharply back into the black while achieving record first-half profitability at its French car brands.
This sent its shares to a 10-year high today.
PSA said its net income rose 18% to €1.481 billion from January to June, as revenues jumped 40% to €38.6 billion.
PSA is benefiting from runaway sales of its Peugeot 3008 and 5008 SUVs enhanced by years of cost savings under chief executive Carlos Tavares, who pulled the group from near-bankruptcy in 2014.
Tavares is now applying the same medicine at Opel, acquired from General Motors barely a year ago and which last turned a profit for GM in 1999.
"The turnaround of Opel-Vauxhall is now clearly under way," the company's chief financial officer Jean-Baptiste de Chatillon said.
Cost-cutting at Opel, which had lost $1 billion a year under GM ownership, helped the division record a €500,000 profit for a 5% operating margin.
The profitability of the French brands, which also include Citroen, topped 8.5%, overshooting PSA's 6% goal for 2021.
Overall recurring group operating profit rose by almost half to €3.02 billion, PSA said, for a 7.8% margin.
The results soundly beat analyst expectations of €1.35 billion in net income and €2.33 billion in operating profit on revenue of €38.49 billion, based on the median estimates.
Opel's better than expected performance and return to profit could signal readiness for further consolidation moves.
CFO Chatillon stressed the company's €8.2 billion net cash position, up by one-third since December.
But it could also complicate talks with German unions, as PSA seeks to offload engineering departments at the carmaker's Ruesselsheim headquarters near Frankfurt.
PSA, which is already cutting 3,700 Opel manufacturing jobs, enraged unions last month when it confirmed it was seeking a buyer for research and development activities that currently employ another 4,000 staff.
"We have overcapacity over time at this R&D centre," Chatillon said.
Talks are ongoing with "partners that could bring in work", he said, declining to identify potential buyers understood to include engineering consultant Altran.
Opel's improvement was helped by purchase accounting that slashed some asset values and resulting depreciation costs.
The group also today reiterated its full-year global auto market outlooks and said it would update investors on its mid-term goals early next year.
