PSA/Peugeot-Citroen posted a 7.3 percent drop in revenue for the first three months of 2012 to EUR14.29 billion ($18.9 billion). The company automotive division suffered the biggest drop in sales for the three-month period, at 14 percent to EUR9.72 billion. In a statement released by PSA, the company blamed the still difficult sales environment, with similar pricing pressure as in the last quarter of 2011.
PSA also blamed the worsening markets in southern Europe that have negatively affected the company’s country mix.PSA said they expect this environment to last throughout the first half of 2012. To address its overcapacity and plug its withering profitability, PSA signed a vehicle-development alliance in February with General Motors Co., whose European operations are also bleeding from losses.
Kristina Church, an analyst at Barclays Bank Plc in London, said that although PSA’s first quarter results were bad, they are not worse than expected as the market had been assuming that the pricing would be worse.
According to Church, PSA’s management sounded like they are on top of the situation as they expressed their confidence for the rest of 2012. In its report, PSA said it has completed about half of its EUR1.5 billion asset-sale plan, and has made progress towards achieving its EUR1 billion spending- reduction program. PSA said that this program is expected to cut the company’s net debt significantly.
According to automakers association ACEA, the first quarter car sales in Europe across the industry dipped 7.3 percent to 3.43 million vehicles, with PSA being the third-worst performer among the continent's major carmakers. PSA’s European sales dropped 17 percent to 407,792 cars, in contrast with first quarter performance of Volkswagen Group, which managed to post a sales increase of 0.5 percent to 813,522 vehicles.