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French auto maker warns about losing money in 2009 as sales slump deepens

PSA Peugeot Citroen, France's biggest car maker, yesterday reported a net loss for 2008 after analysts predicted a profit and said it will lose money again this year as the auto-sales slump deepens in its home market.

Peugeot fell the most in almost three months in Paris trading after posting a loss of 343 million euros (US$443 million) compared with net income of 885 million euros a year earlier. Analysts had anticipated a 74.5-million-euro profit.

Peugeot will concentrate on "reducing inventory and minimizing our cash consumption," Chief Executive Officer Christian Streiff said in a statement yesterday. Cost cutting this year "will not be enough to compensate for the collapse of markets and the cash costs of restructuring," Streiff said.

Peugeot and other European car makers ordered shutdowns and layoffs at the end of 2008 to combat a buildup of vehicles after the worst sales slump in 15 years.

After outperforming the market for much of the year, French registrations fell 14 percent in November and 16 percent in December.

Peugeot fell as much as 1.38 euros, or 9.6 percent, to 13 euros, the most since November 19, and was down 5.6 percent at 13.58 euros as of 9:12am in the French capital yesterday. That pares the stock's gains this year to 11 percent.

"The cash burn was more substantial than expected," said Thierry Huon, a Paris-based analyst with Exane BNP Paribas, which has an "outperform" rating on the shares.

Full-year revenue at the company, Europe's second-biggest car maker after Volkswagen AG, declined 7.4 percent to 54.4 billion euros, Streiff said, falling short of the 57.8 billion euros estimated in a Bloomberg News survey of eight analysts.

Recurring operating income fell 69 percent to 550 million euros, or 1 percent of sales, missing the car maker's 1.3 percent margin target announced in October.


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