Peugeot records largest ever loss

peugeotPeugeot Citroen recorded a historic 5 billion euro (£4.3 billion) loss last year after Europe's slumping car market forced France's largest manufacturer to take a 3 billion euro (£2.6 billion) financial charge in its annual accounts.

The Paris-based group says its annual loss, the largest in its history, "reflects the deteriorated environment in the automotive sector in Europe".
Revenue from new vehicle sales slumped 12.4% last year to 27.8 billion euros (£23.9 billion).

The company said falling demand and rising cost of steel and other materials led to an operating loss of 1.5 billion euros (£1.3 billion) for its car making operations last year.

Europe's car market contracted 8.2% last year to the lowest level since 1995, according to Brussels-based car industry group ACEA, but the figure in France reached 13.9%.

Peugeot Citroen, which makes two-thirds of France's cars, is being hit by a deepening recession in many markets in Europe, its main area.

The company's share price has sunk nearly 60% over the last year. With news of the massive 2012 charge unveiled by the company last week, investors were not taken by surprise with today's announcement.

Peugeot's troubles have drawn concern at the highest levels of the French government. Last week the budget minister openly floated the idea of the government taking a stake in Peugeot, but the idea was immediately batted down by the finance minister.

"I don't want there to be any panic," finance minister Pierre Moscovici said in a radio interview on France Info. He said the government has "done what needed to be done" in terms of helping the company, and he categorically denied the government was considering a partial nationalisation of the car maker.

Last year the French government pledged 7 billion euros (£6 billion) in guarantees for the car maker's financing arm, Banque PSA Finance. The first 1.2 billion euro (£1 billion) instalment was cleared by European Union authorities on Monday. The EU gave Peugeot management six months to come up with a restructuring plan for its car business as a condition for receiving the government lifeline.

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