Peugeot accepts terms for state support
By Laure Fillon, AFP
October 25, 2012, 12:10 am TWN
PARIS -- French auto group PSA Peugeot Citroen reported weak sales and rising debt, and waived dividends in return for state support on Wednesday, causing its shares to slump 7.48 percent.
The group, the second-biggest auto maker in Europe behind booming German group Volkswagen, has already announced 8,000 job cuts and a plant closure which the government wants pruned back.
The firm reported that sales had fallen by 3.9 percent in the third quarter and that it was waiving dividends for three years, the duration of a 7-billion-euro state guarantee for its credit arm.
The group also announced joint venture projects with its strategic partner GM of the United States.
The financial support for its credit arm BPF is intended in part to enable the group to leverage its assets, but the condition that dividends must be waived hit the group's capitalization hard.
In mid morning trading, shares in PSA Peugeot Citroen were showing a fall of 7.48 percent to 5.38 euros, the lowest for 26 years.
The group said that sales fell to 12.9 billion euros (US$16.7 billion) in the quarter amid increasing competition and a weakening of the European market.
It warned that it now expected sales in Europe, its main market, to fall by 9 percent instead of 8 percent forecast previously.
And it expected its net debt to rise to 3 billion euros at the end of the year instead of 2.4 billion euros.
The group's financial arm BPF announced that it would receive state guarantees totaling 7 billion euros over three years.
BPF said it had also obtained cash facilities from banks amounting to 11.5 billion euros of which 1 billion euros was an additional sum.
Group finance director Jean-Baptiste de Chatillon said that most of these credit lines had already been negotiated for 2013-15.
"The state has announced its intention to provide its guarantee for refinancing in respect of new bond issues in the next three years, up to 7 billion euros," he said.
This would enable BPF to leverage its assets and to launch a savings plan for savers in France, as the financial arm of French rival automaker Renault had done recently, he said.