French carmaker PSA Peugeot Citroen has unveiled a large-scale write-down at its ailing overseas operations. It also received support from GM for its capital increase plans involving a Chinese partner.
Being one of the carmakers worst hit by the European slump, PSA announced a 1.1-billion-euro ($1.52-billion) write-down Thursday, seeing its shares fall over 8 percent in early trading in Paris.
The move reflected weaker currency and sales outlooks in Latin America and Russia. Chief Financial Officer Jean-Baptiste de Chatillon told reporters Peugeot's plant in Kaluga, Russia, was among production investments "whole book value no longer covered by future cash flows."
The company's manufacturing division logged a 510-million-euro operating loss in the first half of the current year before one-off adjustments.
Weighing business prospects
Reuters news agency reported PSA had confirmed earlier media reports it was pursuing a capital increase scheme that would see its Chinese partner Dongfeng take a 20-percent stake in the ailing carmaker, further weakening the position of the founding Peugeot family.
In a statement Thursday, PSA said discussions with Dongfeng were at a preliminary stage with no guarantee they'd be concluded successfully. "There's no agreement on the terms of a potential operation," the company commented.
Dongfeng for its part confirmed that feasibility studies were under way, but indicated PSA's outlook would be analyzed thoroughly. "Any fresh sign of a worsening financial situation at the company would add to our prudence," investor relations official Song Hefeng remarked.
hg/kms (Reuters, dpa)