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Last updated: February 13, 2013 5:40 pm
The chief executive of PSA Peugeot Citroën insisted he had laid the “foundations for a recovery” at the ailing French carmaker even as he unveiled a record €5bn 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 €3.9bn because of the steep decline in its European markets. Peugeot has already been forced to seek a €7bn state aid rescue package from France for its financing arm.
However, 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. “We have €10bn in liquidity, which is more than a year ago,” he said. “I have complete confidence in our ability to meet our guidance.”
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 €200m 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 €576m, compared with a €1.1bn profit in 2011. Sales fell 5 per cent year on year to €55.4bn.
Peugeot has struggled because it is heavily exposed to France, Spain and Italy. The company forecast a further decline in the European car market of 3-5 per cent this year. Executives concede privately that this will probably be closer to 5 per cent. Peugeot hopes this will be balanced by faster-growing markets, with a forecast of 8 per cent growth in China, 2 per cent in Latin America and 2 per cent in Russia.
Mr Varin said a cost-cutting and asset disposal plan had “exceeded targets”. The company, which is cutting thousands of jobs in France, said it reduced costs in 2012 by €1.2bn and sold €2bn of assets. Net debt was €3.15bn at the end of December.
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