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Peugeot pledges sales drive in new mid-term plan

By Laurence Frost and Gilles Guillaume

PARIS (Reuters) - PSA Peugeot Citroen outlined plans on Tuesday to return to consistent sales growth as the French carmaker seeks to build on its recovery from near-bankruptcy to healthy profit.

In what Chief Executive Carlos Tavares described as a "global product and technology offensive", Peugeot aims to step up model launches to introduce a new vehicle each year for each of its three brands - Peugeot, Citroen and DS - including 11 hybrids and all-electric cars.

Peugeot also plans production in Southeast Asia and is seeking a manufacturing partner in India, the company said.

The mid-term plan unveiled on Tuesday builds on a two-year turnaround that brought the company back from the brink to its highest profitability in 14 years, with the help of a government-led bailout.

Despite its improved fortunes - and the planned resumption of dividend payments in 2017 - Peugeot is determined not to let up on the cost-cutting that drove its turnaround.

The company stressed that the so-called "Push to Pass" strategy unveiled on Tuesday would be underpinned by "frugal research and development expenditure, and rigorous control over production costs".

Peugeot returned to a net profit of 1.2 billion euros ($1.37 billion) in 2015 after three consecutive years of losses. Its operating margin, just positive a year earlier, surged to 5 percent of sales, a target Tavares had pledged to achieve only after 2019.

Peugeot said on Tuesday it aims to maintain a slightly lower average margin of 4 percent over the next three years, reflecting stiffer currency and market headwinds, before lifting profitability to 6 percent of sales by 2021.

The carmaker also pledged a 10 percent increase in group revenue by 2018 and a further 15 percent by 2021.

"The operative word here is the enlargement of our customer base," Chief Financial Officer Jean-Baptiste de Chatillon told reporters on a conference call.

Under Tavares, former second-in-command to Carlos Ghosn at Renault, Peugeot cut 211 euros in costs per vehicle last year. The company has raised its savings goal to 700 euros per vehicle from 500 euros, Chatillon said on Tuesday.

A prolonged European sales slump left Peugeot in need of a 3 billion euro rescue that saw the French government and China's Dongfeng Motor Group Co Ltd take 14 percent stakes in the carmaker in 2014, matching the Peugeot family's reduced holding.

Tavares took over from outgoing CEO Philippe Varin the same year and made immediate headway through tighter control of working capital, particularly excess inventories of materials, parts and unsold vehicles.

(Reporting by Laurence Frost and Gilles Guillaume; Editing by James Regan and Christopher Cushing)