New 308 could help Peugeot reach cash-burn goal image

New vehicles such as the 308 hatchback and 2008 crossover could help the company boost prices and PSA Peugeot Citroen, Europe’s second-largest carmaker, may beat its internal goal of reducing cash consumption this year.

The up-market model strategy “will help us to do better than halving our cash burn this year,” Maxime Picat, head of the Peugeot brand, said today in a Bloomberg interview at the company’s car plant in Sochaux, France. “The global situation is improving, and it’s a good time to launch the 308.” The stock climbed to the highest in almost 17 months.

Peugeot reported a 576 million-euro ($771 million) operating loss in 2012 as deliveries fell faster than the European car market contracted. The Paris-based company pledged in February to cut its cash-consumption rate 50% in 2013 after burning through 3 billion euros last year. The strategy includes closing a factory and cutting about 11,200 jobs by 2015 as well as adding more expensive models.

“Restructuring is coming through faster than expected, with almost 60 percent of planned headcount reduction already achieved,” David Lesne, a London-based analyst at UBS AG, said today in a research report.

Peugeot’s carmaking operations “could achieve break-even” in the second half, said Lesne, who raised his recommendation on the stock to buy from neutral. Peugeot rose as much as 4 percent to 11.80 euros, the highest intraday price since April 2, 2012, and was trading up 0.3 percent at 11:33 a.m. in Paris. The stock has more than doubled this year, valuing the company at 4.04 billion euros.

The new 308, scheduled to reach French dealerships on Sept. 12 as part of a “fast launch” throughout Europe, will be “ a very strategic model” targeted at the region’s mid-size vehicle segment, Picat said today.

Via Bloomberg