Having posted biggest net loss in 20 years for 2009, PSA/Peugeot-Citroen SA declined to provide a 2010 forecast beyond mid-year. The group expects conditions to continue to be tough. More specifically, it predicts that the European market will drop 9% this year.
For the first half of 2010, the group believes that its efforts to drive sales, cut costs and improve capacity utilization as well as new model launches would lead to a positive recurring operating income.
In a news conference held recently, CEO Philippe Varin said that the group chose to limit its commitment to the first half because it believes that the first signs of economic recovery will be seen at the end of 2010.
He also pointed to the uncertainties over the timing of the termination of the different incentive schemes, which are being gradually phased out.
Last year, European new-car sales dropped only 1.6% to 14.48 million units even as the global economy was struggling because of the government subsidies that swooped in to provide incentives for people who traded in old cars for newer models. PSA's full-year net loss rose to 1.161 billion euros, its biggest loss in 20 years.
Societe Generale analyst Eric-Alain Michelis said that PSA's forecast for only the first half of the year indicates that it is "playing it safe."
Another analyst agrees with this statement, saying that the company doesn't want to risk disappointing the market. [via autonews - sub. required]