5 Billion Euro Loss Reported At PSA
After a difficult start to the year, PSA Peugeot Citroën (PSA) has announced its figures for 2012. The company lost €5 billion compared to a €588 million profit in 2011.
After a difficult start to the year, PSA Peugeot Citroën (PSA) has announced its figures for 2012. The company lost €5 billion compared to a €588 million profit in 2011. Although the figures appear depressing for the French manufacturer, the vast majority of these losses were due to a write down of asset values due to changes in French government regulations. These write downs were finalised for the year at around €4.7 billion and account for more than 90% of losses. The underlying picture, though not quite as grim as the headline figures initially suggest, is however still far from rosy.
Revenues for the group as a whole were down 5.2% to €55.4 billion while the car making business saw an even steeper decline of 10.3%. As we reported earlier, PSA's plans for cost reduction were hit when unions successfully halted the company's plan to shed jobs and close a factory but PSA management still claim that they are on track to exceed the company's own target of €1.2 billion cost reductions. In further measures the company also plans to dispose of non-core assets worth around €2 billion and reduce inventory levels across the organisation.
PSA managing board chairman, Philippe Varin, commented: "The Group's 2012 results reflect the deteriorated environment in the automotive sector in Europe. In this context we have taken the difficult but necessary measures to reorganise our manufacturing base in France." Varin went on to claim that the foundations of the building blocks of recovery were already in place, stating: "We are going to build on the strong identity of our brands and differentiate their customer territories. We are going to focus our investments, actively restore our profitability in Europe and reap the benefits from our investments in growing markets."
In better news for PSA, the company as a whole reduced net debt by €211m to €3.1bn, with the car manufacturing business seeing debt fall by €712m to €1.25bn. The company has also been buoyed by the early sales of its new 208 model. The car competes in a sector where PSA has enjoyed much success since the incredibly successful 205 model was introduced in the 80s. The new 208 model became the biggest seller in Europe in its class in December and the company expects that performance to continue into 2013. As a mark of PSA's strong traditions of innovation, the French car maker has also achieved second top spot in the growing and strategically important European hybrid sector.
Back to February 2013