Wednesday, 07 June 2023 01:40 GMT

Peugeot shares plunge, then rally on bailout talk

(MENAFN- AFP) Shares in PSA Peugeot Citroen fell by more than four percent on Friday after the embattled French auto group announced a writedown of 4.7 billion euros ($6.3 billion) for 2012, but then rallied for a net gain on talk of further state support.Six minutes into trading shares in the carmaker were down 4.29 percent to 5.62 euros, but within forty minutes the share price had rebounded to show a net gain of 3.64 percent to 6.09 euros.Later, at 0850 GMT PSA Peugeot Citroen shares were showing a gain of 2.50 percent to 6.00 euros while the Paris CAC 40 index was up 0.66 percent.The company said on Thursday that most of the charge concerned the group's auto business to reflect that the crisis in the European car market was likely to last longer than previously thought.Global sales by PSA Peugoet Citroen, France's bigest auto company and Europe's second-biggest, dropped 16 percent last year to below 3 million units, as the firm fell victim to slumping demand in Europe where the company makes about 60 percent of its turnover.Commenting on press speculation that the state could come to the company's rescue by taking an equity stake, Budget Minister Jerome Cahuzac said it was possible."It's possible, isn't that why the FSI exists?" the minister said in an interview on BFMTV and RMC radio early on Friday, referring to the French state's Strategic Investment Fund."If the Strategic Investment Fund takes a stake in the company, it is the state which is doing so in one manner or another," said Cahuzac."Let's be clear, the company shouldn't, must not disappear," he added. "Thus we have to do what is needed so this company" survives.PSA Peugeot Citroen, which has announced a production tie-up with US auto giant General Motors, was rescued last year with state guarantees of about 7.0 billion euros ($9.3 billion) for the group's banking and credit arm.The leftist daily Liberation reported on Friday that the French state was examining closely the possibility of taking a stake in the company."If an increase in capital turns out to be indispensable the state could participate," the newspaper wrote citing sources in the president's office.While PSA Peugeot Citroen's situation wasn't yet dire, the newspaper reported government officials said the French state would not let the company collapse.With politically-sensitive unemployment climbing over 3.0 million, plans announced by PSA Peugeot Citroen to close a plant near Paris and axe about 8,000 jobs have provoked a national controversy.

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