Peugeot plots cuts as profits dive
PSA Peugeot Citroen pledged additional savings and asset sales including its Gefco trucking unit as it struggles to cut debt amid mounting losses at its core auto division.
PSA’s automotive operating loss was 92 million euros (£77m) last year, after a 621m profit the previous year excluding one-time items, Europe’s second-biggest automaker said on Wednesday.
“These poor results do not undermine the strategy we’ve been following,” Chief Financial Officer Jean-Baptiste de Chatillon said. “We’re giving ourselves the resources to pursue it.”
PSA, the car maker worst hit by Europe’s autos slump, is struggling to finance an overseas expansion needed to reduce dependence on its stagnating home region.
As well as pulling out of the Le Mans 24 Hours endurance racing to save costs, Chief Executive Philippe Varin last month put a planned India factory on hold.
Net income plunged 48 per cent to 588m euros last year as operating income fell 27 per cent to 1.32bn, trimming the group operating margin by 1 percentage point to 2.2 per cent. Sales rose 6.9 per cent to 59.91bn euros.
The company gave no earnings guidance for 2012 but pledged to raise a total of 1.5bn euros from asset sales including Gefco. PSA does not rule out selling a majority stake in the wholly owned business while remaining a “strategic shareholder,” Chatillon said.
In addition to the previously announced 440m-euro sale of car rental business Citer, PSA aims to raise 500 million from property disposals and at least 560m from the sale of a Gefco stake, the CFO said.
PSA also raised this year’s savings target to 1 billion euros, with cuts in research and development, marketing and general expenses to be achieved without additional job losses, Chatillon said.
With the latest of several profit warnings in October, CEO Varin had announced 800 million euros in savings including 6,000 job cuts across Europe.
Thanks to the asset disposals, net industrial debt will decline this year after spiralling to 3.36 billion euros as of 31 December from 1.24bn a year earlier, PSA said.