PSA Group Reports Q1 Revenue, Sales Slump—Outlook "Uncertain"

France's number-one carmaker, PSA Peugeot-Citroën, has reported that its sales revenues in the first quarter of this year fell by 24.9% year-on-year (y/y) to 10.97 billion euro (US$14.19 billion). This figure relates to the whole group and includes the revenues of component manufacturer Faurecia, as well as the company's finance arm, Banque PSA Finance. Taken in isolation, the company's automotive sales fell at a slightly slower rate of 23% y/y to 8.68 billion euro, in comparison to 11.27 billion euro in the same period last year. PSA said in a press release publishing its revenue figures that its own full-year forecast for the European passenger car market takes into account a 20% fall. As a result, as PSA had already announced in February, the company expects to make a substantial loss for the full year in 2009 and incur negative cash flow (see France: 11 February 2009: PSA Peugeot-Citroën Reports FY 2008 Net Loss, Seeking 11,000 Voluntary Departures in 2009). In response, PSA has already taken what it describes as proactive measures to shore up its capital base and ensure that it has sufficient liquidity to survive the hostile environment in its most important market. The French government has already offered PSA (as well as rival Renault) 3 billion euro in low-interest loans, as well as a further 400 million euro from the European Investment Bank (EIB). However, the group still needs to source a further 600 million euro in order to fulfil its own stated 2009 funding requirement of 4 billion euro. PSA stated that it is making progress on its previously announced CASH 2009 programme, which is aimed at reducing the company's large vehicle inventory and cutting costs as much as possible.

In terms of its market activity, PSA remains strongly dependent on the European market and the strong decline in the company's first-quarter revenues can be attributed to the wide-scale slump in demand in this market over the past six months following the advent of the global banking and financial crisis. In its press release PSA stated that the combined Western European market fell by 18.5% during the first quarter, although the scrappage incentives in Germany and France had had a positive effect on the company's sales. The company's sales in Germany rose by 21.3% y/y during the first quarter, according to IHS Global Insight's data, to 554,794 units, with the company saying that this equated to an increase in market share in Germany from 5.7% to 6.0%. However, given PSA's strong representation in the lower vehicle segments, with the A-segment Peugeot 107 and Citroën C1 and the B-segment Peugeot 207 and Citroën C2, this actually represents a somewhat disappointing result given the large gains experienced by other small-car manufacturers such as Fiat as a result of the German market's 2,500-euro scrappage incentive. In France the company also claimed an increase in market share, from 32.6% to 33.3%, but this was in the context of an overall market that declined by 7.3% in the first quarter, according to PSA's data. In terms of the overall European market, PSA claimed that it maintained a share of 13.8%, recording sales of 452,000 units. In Central and Eastern Europe, where the market declined by 38.5% y/y as a whole, the group managed a 1.2-percentage-point gain in market share to 8.2%, thanks to an improved presence in Turkey, although this represented only a small overall sales total of 30,000 units. In China the company suffered a highly disappointing performance, with sales actually falling by 3.9% to 52,000 units, despite a rise in the overall market of 3.9% during the same period. The company recorded a 32.7% rise in sales in Russia to 13,000 units despite a collapse of 40.3% in the overall market, but this figure also reflects the low base of comparison for the company in this market.

Outlook and Implications