Peugeot halves loss, sees signs of recovery, shares soar
French carmaker PSA Peugeot Citroen narrowed its losses by almost half in the first six months of 2013, the struggling firm said on Wednesday giving a big boost to its share price.
The group also signalled that a recapitalisation was not on the cards for now.
Analysts have frequently expressed concern at the speed with which the group has been using up cash resources.
The PSA Peugeot Citroen is in the midst of a huge restructuring drive that includes more than 11,200 job cuts in France as it tries to fight against sluggish demand in crisis-hit Europe, its main market and broaden its international operations.
In an indication that the restructuring was bearing fruit, the carmaker said it had lost 426 million euros ($566 million) in the first half of the year, narrowing its deficit from 818 million euros in losses during the same period in 2012.
The shares soared more than 7.0 percent on the news, as investors lauded what they said were the first signs of recovery, with good performances in emerging economies such as China.
Turnover was nevertheless down 3.8 percent at 27.7 billion euros, amid sluggish demand in the European market where the group makes more than half of its sales.
PSA said it had performed particularly well in other parts of the world, such as China -- the world's largest auto market -- and Argentina. It aims to make half of its sales outside Europe by 2015.
"We are seeing the first signs of recovery," Philippe Varin, chairman of the board, told analysts.
He pointed to the good performance in China, as well as the successful, recent launch of new vehicles which he said would continue into the second half of the year.
"We have taken sometimes difficult measures to return to the path of profitability in Europe," Varin said.
Last year, PSA launched a series of measures to try and improve the situation, with the more than 11,200 job cuts due to be finalised by May next year.
"By the end of December, we think that 3,500 people will have left the firm," Varin said.
The group also made the controversial decision of closing its Aulnay-sous-Bois factory near Paris, provoking a huge outcry among workers and unions.
It is also negotiating deals with French unions for more flexible work hours and conditions, which it hopes will make the group more competitive and preserve jobs.
Varin said on Wednesday that PSA was going to suggest freezing wages, as well as more flexibility among employees such as greater mobility or part-time work.
This measure, he said, would hopefully help save 81 million euros over a full year.
Media had speculated that the embattled group would have to seek a capital increase to help stay afloat, but Varin said Wednesday this "was not on the agenda for the moment".
The business has been effectively rescued by government guarantees for its credit arm.
© 2013 AFP