The French carmaker has posted a net loss of €5.01bn ($6.74bn) for 2012, down from a €588 million profit in 2011. This is more than four times its previous record loss of €1.9bn in 2009, a year after the recession hit. Analysts had predicted a difficult year for the carmaker, but no one anticipated losses of this magnitude. At last count, the average forecast stood at a loss of €1.58bn.
The global economic downturn and resultant depressed consumer spending continues has been a huge problem for Peugeot Citroen: no one is buying new cars, and Peugeot is particularly vulnerable as its customer base is located slap bang in the moddle of the eurozone. In a European market that contracted by 8.6%, Peugeot's sales dropped 15%.
Revenues last year fell 5.2% to €55.45bn and the automotive division reported an operating loss of €1.50 billion, compared with a €92 million loss a year earlier.
Overall in 2012, the company managed to burn through cash at a monthly average of €200 million, including splurging €2.5 billion on the automobile division. But all those new models were launched in vain: its world-wide sales of vehicles plunged 17% to 2.97 million units in 2012. Ever-falling sales, fixed costs and rising overheads forced Peugeot to write down €4.13bn on February 7, taking the firm deeply into the red.
And yet, somehow, Peugeot Citroen CEO Philippe Varin has managed to remain upbeat in his company statement. 'The foundations for our rebound have been laid,' he says. Apparently, his extensive restructuring strategy and asset sales are soon to bear fruit. Peugeot also expects to start making some real money from its alliance with US partner General Motors, a deal which is still only a year old.
But, despite Varin's optimism, it doesn't look like things are going to get much better for Peugeot any time soon. Industry analysts reckon that the European market could contract by another 5% this year, and some have stated that a return to the pre-crisis levels of 2007 is unlikely before the end of the decade. The French government has offered to step in and provide up to €1.2bn ($1.6bn) in loans over a maximum of three years. Peugeot insists that this will not be necessary.
The markets are sceptical, however. Shares in the carmaker plunged by nearly 5% in early morning trading.