Peugeot defends job cut plan after slumping to H1 loss

Wed Jul 25, 2012 3:20am EDT
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By Laurence Frost

PARIS (Reuters) - PSA Peugeot Citroen (PEUP.PA: Quote) vowed to press ahead with politically fraught restructuring plans as the troubled French automaker detailed mounting losses it has described as a threat to its future.

Europe's second-largest car maker posted a 662 million euro ($800 million) first-half loss in its auto division, dragging its group bottom line into the red - as it had warned earlier this month when announcing 8,000 French job cuts and a plant closure.

"The depth and persistence of the crisis impacting our business in Europe requires the launch of the reorganization," Chief Executive Philippe Varin said in a statement on Wednesday. "We have a clear understanding of how hard this project is for a large number of our employees."

Presenting the results as executives sought to push through a 10 percent French workforce reduction in talks with unions, Peugeot said the cutbacks would help generate 1.5 billion euros in savings by 2015.

The company said it burned through 954 million euros of operating cash in the first six months as sales fell 5.1 percent to 29.55 billion.

Its net loss of 819 million euros compared with a year-earlier profit of 806 million. Asset sales reduced net debt to 2.4 billion euros from 3.4 billion at the end of December.

The redundancies, combined with the closure of the Aulnay plant near Paris and 6,000 European job cuts announced last year, will generate 600 million euros in savings for 2015, Peugeot said.

The company also pledged to cut 550 million euros of investment and generate a further 350 million through cooperation with alliance partner General Motors Co (GM.N: Quote).   Continued...

Visitors walk on the Peugeot booth during the second media day of the 82nd Geneva Auto Show at the Palexpo Arena in Geneva March 7, 2012. REUTERS/Denis Balibouse