Peugeot Citroen loses $990 million in first half
PARIS (AP) — Carmaker PSA Peugeot Citroen posted a net loss of €819 million ($990 million) for the first half of the year, underscoring the difficulties the company faces with the French government over its restructuring plan.
The maker of two-thirds of France's cars is in a tailspin as a deepening recession in many markets in Europe takes its toll on its business — Europe is Peugeot's main market. The company's share price has more than halved since March.
The first-half loss contrasts starkly with a profit of €805 million in the same period last year and came on the back of a 5.1 percent fall in revenue to €29.6 billion.
The company doesn't expect Europe to pick up anytime soon, saying Wednesday that it expects its European market to contract by 8 percent this year.
In response, Peugeot announced earlier this month that it would close a major factory in France and cut 8,000 jobs — part of a plan to save €2.5 billion by 2015. Those savings will also come from efficiencies gained by an alliance with General Motors. About half — €1 billion — of those savings will come this year alone.
"The group is facing a difficult time," Chairman Philippe Varin said. "The depth and persistence of the crisis impacting our business in Europe requires the launch of the reorganization of our French production and a reduction in our structural costs."
But the company's cost-cutting plans have run afoul of President Francois Hollande's Socialist administration, which has said the restructuring is unacceptable and that it will force Peugeot to save some of the jobs it wants to eliminate.
On Wednesday, the government will unveil a plan to support the auto industry — part of its carrot-and-stick strategy with Peugeot. It's expected to give incentives to French consumers to buy French cars and to support the clean-energy vehicles that the company excels at.
But much of Peugeot's problems stem from an over-supplied European car market, and it's unclear how much the government can do for the company. France's car industry was already given a bailout under former President Nicolas Sarkozy.
