French car maker PSA Peugeot-Citroen's (UG.FR) chief executive officer Wednesday said there will be no material impact on the company's earnings from the recall of 97,000 cars at the start of February.
Peugeot said Feb. 1 it would recall Peugeot 107 and Citroen C1 sub-compact models made at a plant it shares with Toyota Motor Corp.'s (TM) in the Czech Republic.
"This will have no material impact" on Peugeot's earnings, Philippe Varin told a group of journalists in Paris after the company published its 2009 results.
The actual cost of recalling the cars would be less than EUR10 million, Varin said.
Varin wouldn't expand on ongoing discussions between Peugeot-Citroen and Japan's Mitsubishi Motors Co (7211.TO) about deepening their existing cooperation apart from noting that expanding its presence in Asia is a priority for his company and that there are potential geographical and product synergies for increased collaboration between the two companies.
He said that Peugeot-Citroen is also looking for cooperation partners in China to boost its presence there.
Chief financial officer Frederic Saint-Geours told journalists the company had "abundant" financing capability to draw on if necessary to finance external growth opportunities. "We had EUR8.6 billion in liquidity at the end of 2009 and EUR1.99 billion of debt, and we have no major debt repayments before 2014," he said.
Varin said a priority this year will be to restore the company's credit rating in order to improve its borrowing terms.
Some analysts expressed disappointment with the size of the EUR353 million operating loss of Peugeot-Citroen's automobile division. Saint-Geours observed that the division had incurred about EUR100 million of non-recurring costs in the second half as it tried to reduce inventories of parts and used cars and gave financial support to some of its suppliers. These costs won't be repeated in 2010, he noted.
Peugeot-Citroen is projecting a recurring operating profit in the first half of this year for the group after a EUR137 million profit in the second half of 2009.
Varin said Peugeot-Citroen wants to remain the reference shareholder in its automotive supplier subsidiary Faurecia SA (EO.FR), but stressed that there is "no magic figure" for the size of its shareholding. Peugeot-Citroen recently reduced its stake in Faurecia to 57.4% from 71% and Faurecia chief executive said on Tuesday there is "no limit" to how the parent company's stake can go.
