French car manufacturer PSA Peugeot Citroën SA (PEUGF.PK) Wednesday reported a 7 percent decline in first-quarter revenues, citing pricing pressure in a difficult competitive environment. The company expects the environment to last throughout the first half of the year.
Peugeot noted that markets in Southern Europe worsened considerably, which had an unfavorable impact on its country mix. European automotive markets contracted about 8 percent in the first quarter.
For 2012, Peugeot continues to expect the Europe 30 market to contract by about 5 percent and France by nearly 10 percent. Regarding countries outside Europe, the company anticipates about 7 percent growth in China, nearly 6 percent in Latin America and around 5 percent in Russia.
Revenues for the quarter declined to 14.29 billion euros from 15.41 billion euros last year. Automotive division revenues dropped 14 percent from a year ago.
Worldwide sales totaled 790,100 vehicles, down 14.2 percent, with sales of assembled vehicles 15.1 percent lower at 691,500 units. The decrease reflected sharp contractions in Europe and Latin America, partly offset by higher unit sales in Russia and China. Revenues from new vehicle sales dropped 16.9 percent from last year.
The company also said its 1 billion euro cost reduction action plan is ongoing. It expects net debt to reduce significantly, helped by the cost reduction plan and cash management program, by asset disposals and new model launches.
Peugeot stated its global strategic alliance with US automaker General Motors Co. (GM: Quote) is underway. It has attained first key milestones during the quarter, with the successful completion of a 1 billion euro share issue on March 27. The offering saw GM acquire a 7 percent stake in Peugeot Citroën.
The capital increase paved the way for GM to become the second largest shareholder of PSA Peugeot Citroën. The Europe's second largest car maker intends to use the proceeds from the capital increase mainly to fund strategic investments related to core projects of the GM alliance.
In mid-February, Peugeot reported a sharp decline in profit for 2011 and had announced a new asset sale program.
Peugeot shares closed in Paris on Tuesday at 8.93 euros, up 0.26 euros or 3.04 percent, on a volume of 34 thousand shares.
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by RTT Staff Writer
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