PSA Peugeot Citroen To Write Down Assets By £3.5 Billion
2013 is so far proving to be an unlucky year for French car maker PSA Peugeot Citroen. The company is writing down the value of its assets by £3.5 billion to reflect lower asset values due to the declining European car market.
2013 is so far proving to be an unlucky year for French car maker PSA Peugeot Citroen. The company is writing down the value of its assets by £3.5 billion to reflect lower asset values due to the declining European car market. The move comes after the French government instructed companies to be more realistic in such asset valuations. Indeed the same guidelines have caused France's third largest bank, Credit Agricole, to also make substantial write downs amounting to £2.3 billion. PSA Peugeot Citroen experienced a 16% fall in sales during 2012 and is expected to announce substantial losses later this month.
In response to last year's declining sales, the French company has announced a plan to shed 8,000 jobs and close a factory in an effort to cut costs. A French court however has halted the plans after a union successfully argued that the carmaker had failed to properly consult some of its employees. The action by the CGT union at parts subsidiary Faurecia means that Peugeot Citroen will have to open negotiations with the workers which will obviously delay the plans. Peugeot Citroen had hoped to complete the redundancies and closures by March although that now looks unlikely. The proposed job losses have been controversial in France and the French government has already called on the car giant to scale back its plans.
A measure of the seriousness of the company's woes comes with further news that their banking division has sought and received temporary authorisation from the European Commission (EC) for the French government to guarantee just over £1 billion of liabilities to prevent a "contagion" of the country's banking system from Peugeot Citroen debt. A French newspaper has made further claims that the French government is considering purchasing a stake in Peugeot Citroen in order to prop up the ailing company.
The plan initially seemed to be confirmed by French Budget Minister, Jerome Cahuzac, who admitted that it was 'possible.' This was later contradicted by Economy and Finance Minister, Pierre Moscovici, who said that the move, although a technical possibility, was not 'envisaged or necessary.' In more news the company, which was a founding member of the main French stock market index, the Cac-40, was demoted in 2012 due to its falling share price. It is clear that 2013 is going to be an extremely tough year for Peugeot Citroen and industry watchers will be keeping a close eye on the upcoming results statement for 2012.
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