PSA Peugeot Citroen, Europe's second-biggest car maker, reported a second-half loss as Christian Streiff, the new chief executive officer, wrote down assets and initiated a new plan to increase earnings and quality.
The net loss was 127 million euros (US$165 million), compared with a 348 million-euro profit in the year-earlier period, spokesman Jean-Hugues Duban said. Revenue rose 0.9 percent in the second half to 27.5 billion euros.
"They needed to take the charges and are managing the company well," said Philippe Houchois, an analyst at JP Morgan in London who has an "underweight" rating on the stock.
Streiff already reorganized top management and said yesterday he'd formed study groups to come up with a new three-year plan to increase profit. Streiff, a former Airbus chief, said his priority will be to boost quality to compete with Toyota Motor Corp and other Asian car makers, which have won sales with new models.
Shares of Peugeot surged as much as 2.7 euros, or 5.2 percent, and were up 1.9 percent on investors' enthusiasm for Streiff's turnaround effort. The stock has gained 5.9 percent this year.
Peugeot had a total of 855 million euros of costs from cutting the value of assets, including the closure of its plant in England and other measures. Of that amount, 580 million euros were taken in the second half, Duban said.
"The slump in net income was linked to two asset writedowns, one at Faurecia for 234 million euros and the other on two programs in the automobile division for 194 million euros," said Duban. He didn't specify the two models affected. Sales of Peugeot's 1007 subcompact have been far below initial plans.
The French car maker had begun a program introduced in September by the former CEO, Jean-Martin Folz, to reduce spending. Under the plan, the company cut 10,000 jobs last year. Streiff said the job cuts may have to be "accelerated" beyond the attrition achieved with a hiring freeze, which he will maintain.
The company was expected to report net income of 269 million euros for the second half, according to the median estimate of 11 analysts surveyed by Bloomberg.
For the full year, revenue rose 0.6 percent to 56.6 billion euros while profit dropped 83 percent to 176 million euros, or 0.77 euro a share, from 1.03 billion euros, or 4.47 euros. Full-year operating profit was 1.12 billion euros, or two percent of sales.
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