PSA Peugeot Citroen announced its first operating loss over the past three years due to the contraction of the European auto market.
PSA reported a loss before interest of 576 million euro ($774 million) for 2012 compared with a profit of 1.09 billion euro in 2011, while the revenue dropped 5.2% to 55.4 billion euro. The loss was smaller than the analysts’ estimates of about 647 million euro. Peugeot plans to reduce its consumption rate by 50% this year and breakeven next year.
PSA Peugeot Citroen plans to reduce its workforce in France by 17% in the following two years, as the European auto market continues to drop and shrink for the sixth consecutive year in 2013.
“It looks not as quite catastrophic as the market in general expected” because of cost reductions and sales fell less than estimated, said Juergen Pieper, a Frankfurt-based analyst at Bankhaus Metzler.
“The outlook is certainly not great, but it seems that maybe the most negative points have been passed.”
Last year the French automaker managed to cut costs by 1.18 billion euro, surpassing the target of 1 billion euro, by selling some of its assets, such as the Gefco trucking unit, for 2 billion euro. The automaker also made an alliance with GM, closed deals for 11.5 billion euro in refinancing and the French government guaranteed the selling of 7 billion euro in bonds.