City A.M. Reporter
PEUGEOT Citroen said it expected to lose as much as €2bn (£1.7bn) in 2009 as it launched a convertible bond to raise €575m yesterday – but its European sales will fall less sharply than feared.<br /><br />Peugeot Citroen said that while the European car market was still down compared with 2008, the company’s “best current estimate” was for a decline of 12 per cent in European unit sales instead of the 20 per cent previously forecast.<br /><br />The group forecast a recurring operating loss of between €1bn and €2bn, citing uncertainties over whether governments would continue supporting the sector next year, and volatile raw material prices and exchange rates.<br /><br />“One to two billion is in line with market expectations,” said Credit Suisse analyst Stuart Pearson. “We were expecting something to strengthen their balance sheets from all the mass makers.”<br /><br />Carmakers need to prepare for the end of scrapping schemes -- whereby drivers get cash incentives for trading in old cars for newer, greener models -- which could make for a tough 2010, Pearson said. Peugeot Citroen said in February it expected to remain in the red until 2010 after reporting an unexpected net loss for 2008.<br /><br />The offering of bonds convertible into new or existing Peugeot Citroen shares is intended to raise between €500m and €575m. The offer runs from 23 to 25 June and the bonds are due on 1 January 2016.<br /><br />“The funds...will provide the general financing needs of the group as well as...its existing and future development projects in the automobile business,” the group said in a statement, not ruling out more bond issues. It added it was not exposed to any liquidity risk for the next 12 months.<br /><br />For its future plans, it cited the development of the Peugeot 5008 in the second half of this year, engine efficiency and electric motors and expansion in Russia and China.