Peugeot cuts jobs as it issues profit alert

 
City A.M. Reporter
FRANCE’S PSA Peugeot Citroen plans to cut 6,000 jobs in a bid to slash costs after warning yesterday that pricing pressure meant its core car making business would barely make a profit this year.

PSA pledged to reduce costs by €800m (£697m) next year, including the job cuts. It also expects 2011 free cash flow to be negative.

Recurring operating income at its automotive division will be close to break-even for the full year “in a more difficult European market environment”, compared with a previous target for “clearly positive” profit, the company said in a statement.

“The competitive environment has become more challenging due to pricing pressure, which has intensified in Europe since September, and the unfavourable impact on the country mix of the fall-off in demand in southern Europe,” PSA said, setting a gloomy tone for a slew of earnings reports from European car makers this week.

Third-quarter sales slipped 1.6 per cent to €9.31bn at the division, PSA said. Group sales rose 3.5 per cent to €13.4bn, helped by its majority stake in car parts group Faurecia.