Report: Peugeot expected to announce multi-billion euro writedown

PSA Peugeot Citroen is set to announce a multi-billion euro writedown on its non-performing assets, according to a report from Reuters citing two people familiar with the situation.

The French carmaker has net tangible assets worth 14 billion euros ($18.75 billion) and is expected to write down a significant part of it on Thursday, the unnamed source said.

Traders said the company had called a surprise conference call for analysts on Thursday night, but Peugeot declined to comment.
If the company will operate a writedown that would add to operational problems at Peugeot, which has been hit by overcapacity and falling sales.

Analysts are forecasting a full-year 2012 loss of 1.52 billion euros for Peugeot, with the carmaker due to report results next Wednesday (February 13). PSA Peugeot-Citroen’s auto unit, has been burning cash at a rate of roughly 200 million euros a month. The auto unit was removed last year from France’s benchmark CAC 40 index because of its declining market capitalization.

Peugeot was granted by the French government a 7 billion euro ($9.3 billion) state loan guarantee in October for its lending arm, Banque PSA Finance. The move was challenged by the European Union, who labeled it as a state aid.