Peugeot Citroen narrows losses

(AP) — French car maker PSA Peugeot Citroen SA said Wednesday that it reduced losses in the second half of last year because of government scrappage plans but predicted that 2010 will remain challenging.

The maker of the popular Peugeot 207 and Citroen C4 Picasso said it lost euro199 million ($274 million) in the second half of 2009 compared to a loss of euro962 million in the first half.

Over the full year, Peugeot Citroen lost a record euro1.16 billion — in line with analyst expectations — compared with a net loss of euro363 million in 2008.

Revenue fell 11 percent to euro48.4 billion over the full year. The figures mask a return to revenue growth in the second half after a collapse in the first six months.

"2009 was a year of contrasts," CEO Philippe Varin said at a press conference in Paris. "In 2010, we expect the market conditions to be challenging."

Shares fell 1.7 percent to euro21.94 in Paris morning trade after the report.

This year, the company predicts that the European market will shrink by 9 percent.

France's largest car maker said that it expects one measure of underlying profitability — recurring operating income — to be positive in the first half of this year.

In the second half of last year, Peugeot Citroen returned to positive recurring operating income of euro137 million after a loss in the first half.

The Paris-based company is planning a host of new models as part of a three-year plan to boost earnings and gain market share.

EU carmakers' association ACEA said car buyers are increasingly favoring smaller, lighter and more fuel-efficient cars over heavier and more expensive models.

Peugeot Citroen's new models included the new Citroen DS series of high-end small cars designed for monied urban customers, and the electric C-Zero.

The company also reduced net debt by euro913 million to euro1.99 billion at the end of last year after cutting stocks. Inventory was reduced 30 percent to 440,000 vehicles.

Varin said Peugeot Citroen is still talking with Mitsubishi Motors Corp. over a possible joint venture and said relations are "very positive." In December the French carmaker said it was in talks that could lead to a "strategic partnership."

Peugeot Citroen wants to expand in Asia, he said.