The Group's new targets for 2000 call for sales of 2,700,000 vehicles, an Automobile Division operating margin of 4% and consolidated operating margin of euros 1,900 million (FF 12.5 billion).

Sales

Consolidated sales totaled euros 37,807 million (FF 247,999 million), up 12% on 1998, or 10.6% at comparable scope of consolidation. Sales of Peugeot and Citroën vehicles and CKD units rose 10.4% from the previous year to 2,519,600. During the period, the European passenger car and light commercial vehicle market expanded by 5.2%. At the same time, registrations of Peugeot and Citroën vehicles grew by 11.2%, confirming the Group's position as Europe's second largest automobile manufacturer, with an aggregate market share of 12.7% versus 12% in 1998.

Income

Consolidated operating margin increased 53% to euros 1,674 million (FF 10,978 million), representing 4.4% of sales compared with 3.2% in 1998.

In the Automobile Division, operating margin rose 84% to euros 1,131 million (FF 7,410 million), making for a margin of 3.5% versus 2.1% in 1998. This improvement reflects a sharp increase in unit sales and a continued decrease in production costs.

The Automotive Equipment business contributed euros 198 million (FF 1,302 million) to consolidated operating margin, while the Transportation business provided euros 92 million (FF 604 million) and the finance companies euros 242 million (FF 1,589 million).

Following the corporate agreement of March 4, 1999 and the industry-wide agreement of July 26, 1999, the Group is anticipating some 13,200 early retirements over the next five years. Around one-third of these employees will be replaced by new hires. A reserve of euros 431 million (FF 2,825 million) was booked in the 1999 accounts to cover the cost of this program.

Income before income taxes totaled euros 1,149 million (FF 7,535 million). Goodwill amortization connected to the acquisition of all the outstanding shares of Crédipar came to euros 60 million (FF 397 million). Net interest expense amounted to euros 21 million (FF 135 million) and reflects the interest expense incurred by Sevel Argentina. Other income and expense corresponds primarily to the change in presentation for statutory profit-shares paid to employees, now deducted from operating margin, and the capital gain booked on the sale of SAMM.

After income tax of euros 375 million (FF 2,461 million), net income before minority interests totaled euros 774 million (FF 5,074 million) and net income came to euros 729 million (FF 4,780 million). This represents net earnings per share of euros 15.40 (FF 101) compared with euros 9.60 (FF 63) in 1998.

Finances

Working capital provided by operations rose 36.3% to euros 2,896 million (FF 18,995 million), representing 7.7% of sales. Gross capital expenditure stood at euros 2,010 million (FF 13,186 million), an increase of 20.6% from the euros 1,667 million (FF 10,937 million) recorded in 1998.

During the year, the Group acquired 6,039,692 Peugeot S.A. shares at an average price of euros 159.92 per share, making for a total payment of euros 953 million (FF 6,250 million). On November 2, 1999, it cancelled 4,650,000 shares representing 9.3% of the capital. Peugeot S.A. held 1,751,991 of its own shares at the end of February 2000.

At the beginning of 2000, the Group acquired 1,755,410 1994-2001 2% convertible debentures at an average price of euros 234.59. The bonds, which correspond to 44% of the outstanding total, were immediately cancelled.

Following the acquisition of KN Elan by Gefco and of AP Automotive Holding Inc. by Faurecia, the industrial and commercial companies ended the year with a net cash surplus of euros 1,711 million (FF 11,222 million), compared with euros 817 million (FF 5,359 million) in 1998. This reflects the surplus in working capital provided by operations over capital expenditure and a further decrease in working capital requirement.

Stockholders' equity totaled euros 8,332 million (FF 54,655 million) on December 31, 1999, or euros 183 (FF 1,201) per share. This represents an increase of 8% from the euros 170 (FF 1,113) per share recorded at year-end 1998.

Despite an increase in investments, Group capital employed declined to euros 12 billion (FF 78.4 billion) at December 31, 1999 thanks to an exceptionally strong decrease in working capital requirement led by high demand. Return on capital employed came to 14.2% in 1999, compared with 9.2% in 1998 and 2.6% in 1997. This performance exceeds the minimum profitability target of 12.5% set for 2001.

Outlook

With demand expected to remain strong in the European automobile market, PSA Peugeot Citroën has set a number of targets for 2000.

Sales are projected to rise 7% to 2,700,000 units thanks to the full impact of increased production capacity for the Peugeot 206 and HDI diesel engines. New model launches, including the Citroën Xsara Picasso in January and the Peugeot 607 in the spring, should also contribute to sales growth.

Gross capital expenditure and Automobile Division research and development spending should increase further, allowing the Group to speed the pace of new model launches, renew the diesel and gasoline engine ranges and pursue its international strategy.

The Automobile Division is expected to achieve an operating margin of 4% driven by higher unit sales and a continued decrease in production costs. The Group as a whole has set a consolidated operating margin target of euros 1,900 million (FF 12,500 million).

PSA PEUGEOT CITROEN

SUMMARY CONSOLIDATED STATEMENT OF INCOME

(Feb. 23, 2000)