Peugeot Citroen switches into profit, warns of trouble ahead

28th July 2010, Comments 0 comments

French auto giant PSA Peugeot Citroen on Wednesday reported a return to net profit in the first half but warned that the economic climate would be less favourable to the company in the second.

The company announced net earnings of 680 million euros (884 million dollars), after a loss of 962 million euros for the same period last year.

It said it expected a current operating profit of about 1.5 billion euros for the whole year.

Sales shot up 20.8 percent to 28.39 billion euros.

The group said the gain came despite the phasing out of government subsidies for new cars in exchange for old, introduced at the height of the economic crisis to support the industry.

Peugeot attributed the strong performance to the success of new models and firm global demand and said it had gained market share.

But Peugeot head Philippe Varin also warned that for the rest of the year "the economic context is clearly going to be less favourable than in the first half.

"Market volumes will show a significant decline in Europe," he predicted, adding that prices of raw materials were also expected to rise.

Peugeot foresees a 7.0 percent contraction in the European auto market this year.

The company plans to cut 6,000 jobs through voluntary departures between 2010 and 2012, which it said should boost competitiveness by 20 percent.

The CGT, the leading trade union at Peugeot, insisted that in light of the company's "flourishing results," it should implement "a true hiring plan ... to put an end to the abusive precariousness that prevails at present."

The CGT also called for salary hikes and an easier workload in order to protect employee health.

© 2010 AFP

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