|Loss-making Peugeot takes 1b euro hit, confirms talks with Dongfeng
Ailing French car-maker PSA Peugeot Citroen said it would have to write off about 1.1 billion euros from full year earnings. The company is facing weakening overseas markets and unfavorable exchange rates in Russia and Latin America.
“The impairment charges, which may represent around 1.1 billion euros, will reduce consolidated results by the same amount but will not involve any cash-out,'' said the company, AFP reports.
Peugeot lost 426 million euros in the first half of the year alone as sales in its biggest market Europe collapsed.
It had been exploring other parts of the world, such as China and Argentina, for growth.
But the group said Thursday current exchange rates were unfavorable.
A one percentage point change in the euro against other currencies, including the Brazilian real, the Argentine peso and the Russian ruble, will have “an impact of around 80 million euros on Automotive Division recurring operating income based on current market conditions.’’
Peugeot confirmed that it was in talks with China's second-biggest car-maker Dongfeng Motor about a potential capital injection, but noted that there was no agreement on a transaction.
Dongfeng operates a joint venture with Peugeot in China, and rumors have been swirling for months that the two were in talks about a possible cash injection into the loss-making French group.
Late October, Dongfeng said it was studying the “rationality'' of coming to the aid of Peugeot.
In a separate statement, Peugeot said GM was ready to back the entrant of a new shareholder in the French group.
GM, which holds about 7 percent of the French group, would “vote any PSA shares it would hold in favor of any such transaction,’’ it said.
About a quarter of PSA shares are held by the Peugeot family.