THE CHIEF executive of PSA Peugeot Citroën has insisted the French carmaker is “not on the verge of bankruptcy” after unveiling €819 million of net losses for the first six months of 2012, prompting a further €1.5 billion of cost cuts.
Philippe Varin’s comments were an attempt to calm fears about the speed at which his company was burning through cash.
Peugeot said it had €954 million negative cash flow during the period, though this reduced to €449 million after exceptional gains from its financing arm, disposals and investments.
The carmaker is struggling because of its heavy exposure to France, Italy and Spain, which are all suffering from the euro zone crisis. The heavy losses prompted Fitch to lower Peugeot’s credit rating to BB from BB+, two levels below investment grade. The shares fell 2 per cent to €6.11, meaning they have dropped 77 per cent in the past year.
Some analysts are concerned that Peugeot’s recovery target relies on the European car market not getting worse and fear the company may need deeper spending cuts.