Renault, Peugeot to repay 2 billion euro of state loan early

10th September 2010, Comments 0 comments

French carmakers Renault and PSA Peugeot Citroen said Friday they each plan to pay back a third of their three-billion-euro (3.8-billion-dollar) state loans ahead of time.

The state provided six billion euros in loans to the carmakers in April 2009 to help them survive the economic crisis. The carmakers had been due to start repayment next year, with the final instalment due in 2014.

But the two groups said in separate statements Friday that by paying off one billion euros each now they would be able to reduce gross debt and lower interest expenses.

Both Peugeot and Renault in July reported a return to net profit in the first half.

Peugeot made 680 million euros -- after a loss of 962 million euros for the same period last year -- but warned that the economic climate would be less favourable to the company in the second.

It 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.

Renault made a net profit of 780 million euros in the first six months of this year from a loss over the same period last year of 2.732 billion euros.

© 2010 AFP

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