Peugeot signs rescue package with Dongfeng

 
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FRENCH car group PSA Peugeot Citreon has sealed a €3bn (£2.5bn) rescue deal with Chinese group Dongfeng, which the firm hopes will steady its finances and open up expansion in Asian markets.

Dongfeng and the French state will each pay €800m for 14 per cent of the carmaker to match the Peugeot family’s reduced holding.

Peugeot also reported that its annual revenues fell 2.4 per cent to €54.1bn while net losses came in at €2.3bn, including a €1.1bn impairment charge on its car division. The company does not expect to post a profit until 2016.

However, the firm said its operations burned through €426m in cash during the year, narrowed from €3bn a year ago and taking Peugeot closer to positive cash flow.

Dongfeng, which already has a joint venture with Peugeot, will set up a development centre in China and help the French firm sell more cars across Asia.

“We have gone through some very challenging years for the European automotive industry, which have added to the group’s structural difficulties, notably its over-dependence on Europe,” said outgoing chief executive Philippe Varin. “We vigorously implemented difficult restructuring measures which are now starting to bear fruit. We also launched core models this year that have exceeded their initial sales targets.”

Yesterday’s overhaul also brings in Carlos Tavares as chief executive.

Peugeot shares closed down 1.5 per cent at €12.31.