PARIS--French carmaker PSA Peugeot Citroen (UG.FR) Wednesday
confirmed a wide-reaching plan to shore up its balance sheet that
will see the entry of China's Dongfeng Motor Group Co. (0489.HK)
and the French state as key shareholders, and disclosed that 2013
losses had narrowed despite a fall in vehicle sales.
Peugeot Citroen, badly mauled by the six-year slump in
automobile sales in Europe, is embarking on a new era in its
development as it seeks to escape from Europe's stagnating market
and expand its operations in Asia and other faster-growing emerging
markets.
Europe's second-largest automotive group plans to raise 3
billion euros (US$4 billion) in fresh capital that will allow
Dongfeng and the French state to acquire shareholdings of 14% in
the company, it said in a statement. At the same time, the Peugeot
family that has been at the helm of the company in its various
forms for two centuries will no longer have a blocking minority and
will see its stake reduced to the same level as the state and
Dongfeng.
Peugeot Citroen also confirmed reports that its in-house banking
unit Banque PSA Finance and Spain's Banco Santander have entered
into exclusive negotiations to form a 50-50 partnership to develop
the French bank's activities in Europe.
Peugeot Citroen, which has been consuming cash at an
unsustainable rate in recent years, said it had managed to reduce
its cash burn in 2013 to EUR426 million, a much better performance
than the company's original guidance that it would at least halve
the EUR3 billion cash burn recorded in 2012. It said it is aiming
to become cash-positive by 2016 "at the latest."
The company posted a net loss of EUR2.32 billion for 2013, less
than half the EUR5.01 billion loss in 2012 that was chiefly due to
a EUR3 billion charge for asset impairments. Recurring operating
losses shrunk to EUR177 million last year from EUR560 million in
2012, despite a 2.4% fall in revenue to EUR54.09 billion.
Commenting on the results, Chief Executive Philippe Varin, who
will be replaced by Carlos Tavares at the end of March, said in a
statement: "We have gone through some very challenging years for
the European automotive industry, which have added to the Group's
structural difficulties, notably its over-dependence on Europe. We
vigorously implemented difficult restructuring measures which are
now starting to bear fruit. We also launched core models this year
that have exceeded their initial sales targets. The globalisation
process is proceeding apace, with in particular an excellent
performance in China."
Peugeot's Wednesday statement confirms a Wall Street Journal
report that the French firm would be getting a capital infusion
from China's second-biggest domestic auto maker, Dongfeng.
Write to David Pearson at david.pearson@wsj.com
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