Moody’s downgrades PSA Peugeot Citroen to Ba2 after losses image

Rating agency Moody’s Investors Service on Thursday downgraded PSA Peugeot Citroen S.A. a notch to Ba2 and said it remains on review for future downgrade.

The reduction brings it into line with Standard & Poor’s and Fitch Ratings, which both cut their grades on Peugeot yesterday.

The news came the day after France’s biggest carmaker announced that it had suffered a first half net loss of 819 million euros ($989 million), more than reversing a year-earlier net profit of 806 million euros.

The company doesn’t expect demand in Europe to pick up anytime soon, saying Wednesday that it expects its market to contract by 8 percent this year.

The cost cutting plan, dubbed “Rebound 2015“, that was announced yesterday by the company , will include 600 million euros in savings from reorganising French production, which includes the previously announced job cuts.

In addition, PSA aims to cut 550 million euros from investment and generate a further 350 million through cooperation with alliance partner General Motors.

The carmaker, which employs 100,000 people in France, is a key symbol of the country’s industry and its problems highlight France’s difficulty in competing with rivals with lower labour costs.