Profits at Peugeot Citroën surged nearly fivefold in 2007, the first year under the leadership of Christian Streiff. The French carmaker also announced plans to return 25 per cent of future profits to shareholders in dividends.

However, Mr Streiff, who became chief executive last February, gave warning that he was not as confident of the outlook for the market as he was a year ago. But he said that growth in the emerging markets and a launch of 20 new products next year enabled the company to maintain its growth estimates.

Although it expects the market in Western Europe to decline, Peugeot Citroën believes that double-digit growth in Eastern Europe, South America, China and Russia will compensate for that. It is sticking to sales targets of between 3.5 million and 3.6 million this year — a 5 per cent increase on last year.

The jump in profits from €183 million (£136.5 million) to €885 million was put down to cost reductions, improved sales and a better product mix. However, it also faced higher raw materials costs and an impact from currency exchange rates. Cost reductions gained the business €932 million over the year and growth added a further €355 million. But the increase in raw materials costs dented those improvements by €285 million and adverse exchange rates cost €68 million.

Peugeot has been cutting costs across its operations and reducing its number of suppliers. Mr Streiff, who joined Peugeot after a brief spell as chief executive of Airbus, mounted a radical cost-cutting programme soon after he took over. However, unlike his attempts to overhaul Airbus, where he was accused of acting without consensus, he carried out the operation by involving 100 of the carmaker’s top managers.

Peugeot’s operating margin rose to 2.9 per cent last year from a record low of 2 per cent in 2006. Mr Strieff has set a margin target of 5.5 per cent to 6 per cent by 2010.

A voluntary redundancy scheme and a writedown at its parts division Faurecia left the carmaker with a €632 million one-off charge. This decreased from €808 million in the previous year, when a redundancy plan and cutbacks in production were implemented. Last year 6,200 people left the business, leaving the total workforce at 113,700.

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