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PSA sales drop, might close plant ahead of schedule

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(Globalpost/GlobalPost)

French automaker PSA Peugeot Citroen said Wednesday that it would launch talks with what is known here as social partners to make the group more competitive, and possibly close a plant earlier than expected, after posting an annualised 6.5 percent drop in first quarter sales.

The quarterly sales figure of 13.03 billion euros ($16.9 billion) amidst a chronically weak European auto market led Peugeot to focus on a "strong increase in sales in China," and to confirm a decision to cut its operational cash consumption by half this year to reach a breakeven point in its cash flow by the end of 2014.

Sales by the group's purely auto units plunged by 10.3 percent to 8.7 billion euros as key markets such as France, Spain and Italy continued to suffer from a poor economic climate.

PSA emphasised that European auto markets "could be worse than previously expected" next year as well, but said that it had begun the execution phase of an alliance with US giant General Motors, and highlighted a 31 percent jump in unit sales in China in the first three months of 2013, compared with the same period a year earlier, to give the French company a 3.9 percent share of the world's biggest auto market.

It said that "operational initiatives" to offset a potential 2014 slump were "under review," and finance director Jean-Baptiste de Chatillon told a telephone news conference that the group did not rule out closing its iconic but strike-plagued Aulnay plant north of Paris this year, a year ahead of schedule.

"The fact that a small number of people keep disrupting our factory might oblige us to do so," he warned.

De Chatillon added that another "operational measure that we are studying is the launch of negotiations... on the group's competitiveness. We will discuss that with social partners starting in the second quarter."

The French term social partners most often refers to trade unions.

PSA must finalise a recovery plan dubbed Rebound 2015 that concerns more than 11,200 workers in France.

It could also raise around 200 million euros via property sales this year.

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PSA PEUGEOT CITROEN

http://www.globalpost.com/dispatch/news/afp/130424/psa-sales-drop-might-close-plant-ahead-schedule