PSA/Peugeot-Citroen shares slump on second-half

Article by Christian A., on August 26, 2010

PSA/Peugeot-Citroen may have posted a profit in the first half but the carmaker warns that its performance in the second-half would be obstructed by a tougher economic environment. This report sent its shares even lower.

By 13:00 GMT, PSA shares traded 5.35% lower at 23.55 euros, underperforming a 0.85% drop in the Stoxx 600 European Autos index. Before the plunge last Wednesday, the shares had risen 24% in July.

As the car demand in Europe has fallen due to the fading scrappage schemes, carmakers have become increasingly dependent on growth in emerging regions like China and Latin America.

PSA expects that in the second half, its automotive division will be "close to break-even" despite seasonality and "more difficult market conditions" for the rest of the year in Europe.

In a news conference, CEO Philippe Varin said that PSA will have to deal with a tougher economic environment in the second half.

Varin said that in the first half, the economic context had a positive impact but then, a negative impact is expected in the second half. Barclays Capital analysts said that the "second half outlook is over optimistic."

In a research note, Varin stated that even as PSA has had a good model lineup and has accelerated cost-savings compared to the old plan, the carmaker aims to remain more cautious than the company on the outlook for H2 2010. [via autonews - sub. required]

Topics: psa, peugeot, citroen, shares

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