PSA half year group revenues fell 5.1% year-on-year to EUR29.6bn with automotive division revenues down 10.5%. Group recurring operating income was break even at EUR4m, versus EUR1,157m in first half 2011. Recurring operating income for the automotive division was a loss of EUR662m, the net loss was EUR819m.
Chairman Philippe Varin said: “The group is facing difficult times. The depth and persistence of the crisis impacting our business in Europe requires the launch of the reorganisation of our French production base and a reduction in our structural costs.”
Outlook
PSA expects the ‘Europe 30’ automotive market to contract further by about 8% while the other key markets will grow: 7% in China, 2% in Latin America and 9% in Russia.
A cost saving plan of EUR1.5bn by 2015 was presented today will supplement cost reduction and cash management plans implemented at the beginning of 2012 which will continue. It will lead to breakeven in operational free cash flow by end 2014. This plan includes:
• EUR600m from reorganising the French production base and dimensioning the structural costs of the group, as announced on 12 July. This project is based on ceasing production at the Aulnay plant, the adjustment of the production facilities in Rennes, revitalizating of the sites of Aulnay and Rennes, and the redeployment of the corporate overheads;
• EUR550m reduction in capital expenditure, following the ramp up capacities in Russia, Latin America and China. This reduction will already be significant in 2013;
• Optimising product cost, including the alliance with General Motors, for EUR350m. Half of these gains will come from the alliance initial purchasing synergies and the other half from action plans to reduce design and production unit costs.
These measures will contribute to restore the automotive division’s performance, by increasing capacity utilisation in Europe and reducing the cost base in Europe, ahead of the full effects of the Alliance with General Motors. They will be supported by the continuing upscaling of the brands and by the drive towards increased globalisation, with newly installed production capacities.
