PSA Peugeot Citroën, Europe’s second-largest automotive group said Wednesday net profit fell 48% as the automaker felt the brunt of a price war still raging in Europe, supply-chain disruptions and higher raw-material costs.
The downbeat forecast came as the maker of the popular Peugeot 207 hatchback and Citroen C4 Picasso minivan reported that its automotive division made a €439 million ($578 million) loss at the operating level last year, as restructuring costs more than offset slightly higher revenue.
“The significant deterioration of our environment, from the end of the first half, led to very disappointing results of our Automotive Division.
Other divisions, Faurecia, Gefco and Banque PSA Finance has contributed positively to results…”
“These poor results do not undermine the strategy we’ve been following,” Chief Financial Officer Jean-Baptiste de Chatillon said. “We’re giving ourselves the resources to pursue it.”
PSA, the carmaker worst hit by Europe’s autos slump, is struggling to finance an overseas expansion needed to reduce dependence on its stagnating home region.
Now the French giant plans the sale of about 1.5 billion euros ($1.98 billion) in assets. The disposals include the Citer vehicle-rental unit that Peugeot sold to St. Louis-based Enterprise Holdings Inc. on Feb. 1, as well as “the opening” of its Gefco trucking unit’s “capital.”
“We are a long-term strategic partner in Gefco and as yet have made no decision on the size of our continuing stake in Gefco,” Chief Financial Officer Jean-Baptiste de Chatillon said in a conference call with journalists, declining to rule out Peugeot becoming a minority shareholder.
Peugeot’s deliveries fell 1.5 percent to 3.5 million vehicles in 2011. The decline was led by a drop in Europe, where industry figures show Germany was the only country to expand among the region’s top five car markets.
Rival Volkswagen in the meantime is expected to exceed the record profits of 2010 when it presents the 2011 balance sheet on March 10.