FRANCE: PSA posts second profits warning in three months - report
French car maker PSA Peugeot Citroen warned on profits for the second time in three months on Monday and posted a dip in quarterly turnover as it battles a rocky car market and the impact of a strong euro, Reuters reported.
The news agency said PSA cut its full-year operating margin target for its core car making unit to around 3%, bringing it into line with analysts' expectations compared with its prior target of 3.7% or more.
It also said it would sell fewer cars than previously forecast, Reuters noted.
Reuters noted that former sector star PSA is struggling with a slide in demand for cars in western Europe - particularly in France - and a strong euro, which the company said would take at least a €600 million euro ($US700 million) bite out of group core profits this year.
PSA is also facing tough competition as some rivals wow motorists with flashy new designs, while others boost sales by slashing prices and offering profit-eroding incentives - a tactic PSA has said it avoids, the report added.
Chief financial officer Yann Delabriere reportedly said it was too early to give forecasts for 2004 but told a conference call the western European car market had touched bottom and that PSA, which has been slashing output to match waning demand, had also seen the worst in terms of production cuts, Reuters said.
"(The shortfall in sales) is due to a weak European market and particularly the worryingly weak French market," Delabriere reportedly said, shrugging off suggestions PSA was losing out to rivals, and adding: "In terms of profit, the euro is the main factor."
Reuters said some analysts reckoned PSA was well positioned to ride a recovery thanks to new cars next year and stringent cost control but others noted it was suffering from a model line-up that is starting to look dowdy against smart new offerings from rivals like Renault and Volkswagen.
According to Reuters, the company said in a statement 2003 unit sales would total between the 3,267,500 reported in 2002 and 3.3 million units - short of an earlier target for 3.35 million units.
Group operating profit would be over €2.1 billion euros in 2003, compared with €2.91 billion last year, mainly due to currency effects, the report added.
Turnover in the nine months to the end of September fell 0.1% to €40.1 billion and third quarter sales fell 3.5% to €12.36 billion, below analysts' expectations of around €12.55 billion, Reuters said.