The chief executive of PSA Peugeot Citroen insisted yesterday he had laid the “foundations for a recovery” at the ailing French carmaker even as he unveiled a record €5 billion net loss for 2012.
Lifted by the expectation that he will receive a fresh mandate in May from Peugeot family shareholders to remain in his post, Philippe Varin said the idea of the French state buying a Peugeot stake was “not a subject for today”.
Speculation about a government intervention intensified last week after the carmaker wrote down the value of its automotive assets by €3.9 billion because of the steep decline in its European markets. Peugeot has already been forced to seek a €7 billion state aid rescue package from France for its financing arm.
Mr Varin said Peugeot remained on target to halve its rate of operational cash burn this year and to return to positive operational cash flow by the end of 2014.
Peugeot is pinning its hopes on a cost-saving alliance with General Motors of the US and revitalising the Peugeot and Citroen brands. The carmaker’s shares rose 7 per cent to €6.37 even though analysts were sceptical about its cash flow targets and recovery plan. Peugeot’s automotive division burnt through €200 million cash each month in 2012.
Philip Watkins at Citi said: “I accept they can reduce burn some of the way. But assuming the pricing environment is getting worse it feels like it will be 2014 or 2015 before a real improvement.”
David Arnold at Credit Suisse said there were doubts about a recovery plan “built around a stable market at the 2012 level and a 13 per cent market share for PSA. Both look unlikely.”
The net loss was slightly less bad than feared, though operating losses were €576 million, compared with a €1.1 billion profit in 2011. Sales fell 5 per cent year on year to €55.4 billion. – (Copyright The Financial Times Limited 2013)
