Philippe Varin, the CEO of French automaker PSA Peugeot Citroen, expressed concerns about the company’s financial results in the second half of the year.
The executive said he expected the auto division to post a second-half operating loss of more than €405 million ($530 million) as Europe’s economic crisis affects consumer demand.
Varin told France’s National Assembly on Wednesday that the company would also see negative free cash flow in the second half of 2011. “We expect to lose what we made in the first half and more,” Varin was quoted as saying by Reuters. After the news Peugeot shares initially dropped, but later recovered and settled at €12.12, outperforming a 2 percent drop in the European sector index.
“This does not come as a surprise. Some of the comments look quite negative, but a lot of this is already baked in the cake at current levels, and Peugeot is clearly already a consensus short,” said one Paris-based trader.
It is not the first time the automaker has warned about its auto unit’s financial results. At the end of July PSA Peugeot Citroen cited the Japanese earthquake and higher raw material prices as causes for lowering its second-half forecast.