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Peugeot Pressure Lessens As Sales Fall Less Than Expected

But Peugeot Will Still Lose More Than €1 Billion In 2009

Peugeot is feeling a little better about its prospects and said its losses in 2009 will probably be closer to €1 billion than €2 billion, but still feels less than ecstatic about the prospects for 2010.

Peugeot-Citroen CEO Philippe Varin told a meeting at the Frankfurt show that thanks to the scrapping incentives, sales in 2009 were going to be less bad than previously feared, with company market share boosted by the new Peugeot 3008, 206 and Citroen C3 Picasso, according to Bank of America Merrill Lynch (BAML).

After reporting first half results, Peugeot-Citroen said it expected to lose between €1 billion and €2 billion in 2009. It recorded a net loss of €962 million in the first half, compared with a net profit of €733 million in the same period last year before the industry was engulfed in a sales crisis. The value of sales was down by a fifth.

According to BAML, Varin said European sales would are now likely to fall less than 10 per cent in 2009, after previously expecting a 12 per cent dive. A single digit fall is expected in 2010.

“Varin mentioned that recurring operating loss for the year should therefore be at the low end of the €1 billion to €2 billion range indicated in late July,” BAML said.

Citigroup Global Markets analyst John Lawson concurred with the conclusion that Peugeot losses will be smaller than feared in 2009, but 2010 wouldn’t be an earth shaker.

“Peugeot offered no extra comfort that 2010 challenges were looking incrementally more manageable,” Lawson said.

Neil Winton – October 1, 2009

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