Peugeot Citroen says government scrappage schemes helped reduce losses

PARIS, France - French car maker PSA Peugeot Citroen SA said Wednesday that it significantly reduced losses in the second half of last year because of government scrappage plans and predicted an operating profit in the first half of 2010.

The maker of the popular Peugeot 207 and Citroen C4 Picasso said it lost C199 million ($274 million) in the second half of 2009 compared to a loss of C962 million in the first half.

Over the full year, Peugeot Citroen lost C1.16 billion - in line with analyst expectations - compared with a net loss of C363 million in 2008.

Revenue fell 10.9 per cent to euro48.4 billion.

"Our financial results for 2009 show a much improved performance in the second half, but still reflect the severity of the crisis affecting the automotive industry," CEO Philippe Varin said.

"In 2010, we expect the market conditions to be challenging."

France's largest car maker said that it expects one measure of underlying profitability - recurring operating income - to be positive in the first half of this year.

In the second half, Peugeot Citroen returned to positive recurring operating income of C137 million after a loss in the first half.

In 2010, the French car maker predicts that the European market will shrink by 9 per cent and that Peugeot Citroen's European market share will grow.

The Paris-based company is planning a host of new models as part of a three-year plan to boost earnings and gain market share.

EU carmakers' association ACEA said car buyers are increasingly favouring smaller, lighter and more fuel-efficient cars over heavier and more expensive models.

Peugeot Citroen's new models included the new Citroen DS series of high-end small cars designed for monied urban customers, and the electric C-Zero.

The company also reduced net debt by C913 million to C1.99 billion at the end of last year after cutting stocks. Inventory was reduced 30 per cent to 440,000 vehicles.