A better day for Peugeot
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  1. #1
    1000+ Posts gerry freed's Avatar
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    Default A better day for Peugeot

    PSA confirm the rescue package of its finance arm. It will have available 11,5 billion euros, of which 1 billion is a new facility. This will enable them to refinance their notes that fall due from 2013-2015, some 7 billion.
    A committee to overlook the government guaratee will be set up with representatives of the State and the Group.
    They note that sales were down 3,9% for the last quarter.

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    Now that their solvency is assured you may get an announcement soon of the Australian marketing strategy.
    Last edited by gerry freed; 24th October 2012 at 08:03 PM. Reason: spelling
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    1000+ Posts gerry freed's Avatar
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    Not such a good day. On the news and the general concern about their competitive position the shares dropped to 5.48 during this morning, their lowest for 26 years and a daily drop of 5.6%.
    While the government guarantee is in place they are not allowed to pay any dividends or buy back shares and so the existing shareholders are are riding out the risk of their rebuilding a competitive position that earns profits.
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  3. #3
    1000+ Posts gerry freed's Avatar
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    Commentators on the industry, the politics and the Bourse are saying that the fall in share price is due to concern that the government might seek to interfere with the cost reduction programme and restructuring necessary in a falling European car market. PSA announced that there will be 4 common platforms for a new generation of cars from both Opel and Peugeot/CitroŽn but as the announcement contained no detail it was taken in a neutral to negative way. The expect to be another billion in debt by the end of the year. The Bourse opened this morning without much more enthusiasm for Peugeot stock and it dropped another 2.9% to 5.4 euros

    Ford is losing money heavily in Europe along with GM, all for the same reasons - overcapacity and market resistance in the B segment.
    They are about to close their last factory in the UK and want to close one in Belgium which with subcontractors will cost 10,000 jobs to a small community.
    BMW and Mercedes, seeing their large engined car market under threat are moving down into the French territory. The new A class Mercedes, the BMW Minis and fwd range and soon the low cost VW's show the product trend.
    Conspicuous consumption is very much out at the moment. With rising unemployment and low morale in the poorer districts, ostentatious cars are vulnerable. I also read of fears of purges on tax evaders, which in the Mediterranean basin countries are usually done by audits of assets rather than income.
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    1000+ Posts gerry freed's Avatar
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    Mid afternoon the shares have further dropped to about 4% for the day and are around 5.34.
    The UBS investment research team say that they estimate the value of PSA car operations at negative 9,1 billion euros
    They predict it will lose 3.49 euros per share in 2012 and another six cents in 2013 and should come back into the black with 1.52 euro in 2014. They consider the government involvement a negative.

    It seems to me that PSA need to hire some good corporate turnaround experts and we all need to help, if we want to see CitroŽns and Peugots in the future, by buying their cars and enjoying them. The galling aspect or gauling if you prefer, is that the cars are better than ever and the Peugeot family got into this mess by being perhaps too patriotic.
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    sans witticism SLC206's Avatar
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    The galling aspect for me is that the French Government appears destined to continue the trend.
    Regards,

    Simon

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  6. #6
    1000+ Posts gerry freed's Avatar
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    The daily reports of arm wrestling with the government show the extent of management distraction when they should be out there selling cars.
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    1000+ Posts gerry freed's Avatar
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    The shares still haven't found a floor. They are at 5.244 at the moment, another 2%+ drop for the day while the CAC40 the market index picked up 0.6 %

    The unconfirmed reports about the GM/PSA alliance and its 4 product project for sale in 2016 are

    A common programme for a compact people carrier branded Opel and Vauxhall with a compact Crossover Utility Vehicle branded Peugeot.

    Another small people carrier for the small car segment to be branded Vauxhall, Opel and CitroŽn


    A state of the art platform for the small car segment with low emission and consumption to be sold under all four brands, world wide

    A common programme for a D segment car to be sold under all four brands.

    I should point out that while all this is going on under GM control of Opel, GM are, in parallel, promoting heavily Chevrolet models in Europe and doing brand image advertising of Cadillac
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    1000+ Posts gerry freed's Avatar
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    They need a better day. The Bourse still seems unable to find a confidence level in the shares and they dropped another 6.3% today and are now at 4.94 euros. The negotiations are going with the unions concerning the closure of Aulnay and other cut backs. The long delays in these negotiations are yet another demonstration of the inflexibility of the labour market in France, one of the major points that industrialists are hammering the government with.
    Ford Germany are spreading stories that France will be taken to the EU for anti-competitive behaviour, guaranteeing the PSA debt.
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    gerry, what do you think is an appropriate role for the french government in this situation? i would be interested to know your opinion.
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    1000+ Posts gerry freed's Avatar
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    Quote Originally Posted by andrethx View Post
    gerry, what do you think is an appropriate role for the french government in this situation? i would be interested to know your opinion.
    The PSA issue is just a symptom of the problems facing France. It is not at a cross roads as some might say but forced to climb a rocky mountain path to escape the lava of a volcano of globalisation that is swallowing up its historic social and economic base.
    I certainly have views as to what should be done but they are probably best discussed outside a car forum. So I am just trying to get the software up to create a blog in which I can put up some of the work I have done on the subject and create discussion. I will post the address as soon as my server host is up and running.
    Meanwhile the Peugeot shares carried on falling yesterday but today have found support and are at 4.95. Hopefully, they have bottomed out and and the market will wait out the management efforts to retrieve some value.
    Last edited by gerry freed; 31st October 2012 at 11:47 PM.
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    1000+ Posts gerry freed's Avatar
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    The software is in place and by my tomorrow lunchtime the discussion will be open. To stop it getting over-run by cockroaches you will have to register with me from the Discussion page.

    Go to
    http://www.globalfreed.net
    my home page and click on the Red Discussion Tile
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    1000+ Posts gerry freed's Avatar
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    The software is in place and by my tomorrow lunchtime the discussion will be open. To stop it getting over-run by cockroaches you will have to register with me from the Discussion page.

    Go to
    http://www.globalfreed.net
    my home page and click on the Red Discussion Tile
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  13. #13
    1000+ Posts gerry freed's Avatar
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    The Discussion Centre is now operational and ready for a strong debate on France and its politics.

    PSA shares struugled up towards 5 euros and then slipped back as news about the french market in October were published in
    http://www.ccfa.fr/Le-marche-francais-a-recule-de-7-8
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    1000+ Posts gerry freed's Avatar
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    Even with Hollande's back flip yesterday the shares continued to drift down and closed at 4.754 euros. The 5% drop in sales by volume in October in France is less serious than it might seem as the sales of the CitroŽn DS series were strong and they are much more profitable than the smaller cars. At the moment, in spite of the 208, they are doing better under the CitroŽn badge then Peugeot.

    For registration on my discussion page (limited to this subject)
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  15. #15
    1000+ Posts gerry freed's Avatar
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    Quote Originally Posted by gerry freed View Post
    Even with Hollande's back flip yesterday the shares continued to drift down and closed at 4.754 euros. The 5% drop in sales by volume in October in France is less serious than it might seem as the sales of the CitroŽn DS series were strong and they are much more profitable than the smaller cars. At the moment, in spite of the 208, they are doing better under the CitroŽn badge then Peugeot.

    For registration on my discussion page (limited to this subject)
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    The meetings opened today beween the government, the unions and PSA regarding the future of Aulnay and employment in the group.
    Meanwhile the stock market seems unenthusiastic and the shares dropped another 4% this morning and now are quoted at 4.568 euros.
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  16. #16
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    and a not so good day..

    02:49 14Nov12 RTRS-EXCLUSIVE-GENERAL MOTORS <GM.N>, PSA PEUGEOT CITROEN <PEUP.PA> HALT TALKS ON DEEPER TIE-UP -SOURCES
    02:49 14Nov12 RTRS-DEEPER GM, PEUGEOT TIE-UP RULED OUT BY CONDITIONS OF PEUGEOT'S STATE BAILOUT -SOURCES
    02:50 14Nov12 RTRS-EXCLUSIVE-Peugeot and Opel halt tie-up talks
    02:51 14Nov12 RTRS-PSA PEUGEOT CITROEN <PEUP.PA> SHARES FALL MORE THAN 2 PCT
    * Peugeot-Opel tie-up talks halted -sources
    * Peugeot finances, bailout stir GM doubts -sources
    * Peugeot spokesman says no talks in progress
    By Sophie Sassard and Arno Schuetze and Laurence Frost
    LONDON/FRANKFURT/PARIS, Nov 13 (Reuters) - General Motors <GM.N> and alliance partner PSA Peugeot Citroen <PEUP.PA> have halted talks on a deeper tie-up amid misgivings about the French carmaker's worsening finances and government-backed bailout, people familiar with the matter said.
    The companies, already pursuing an operational partnership announced in February, had also been exploring a full combination of Peugeot with GM's European unit Opel, which is based in Germany. [ID:nL5E8LCN9O]
    But two sources with direct knowledge of those discussions said they were broken off after Peugeot accepted a state guarantee for its lending arm last month and announced a further deterioration of its cash position.
    The automakers have agreed to a "pause" in early-stage talks on a Peugeot-Opel deal, said one of the sources. The government bailout is "sabotaging the plan", he added.
    "They now consider that any deeper tie-up is unlikely before 2014, when the market picks up," another source said.
    "The government bailout conditions rule out French job cuts, which means a deal can't happen any faster," he said. "It would be politically impossible to have all the cuts falling on the German side."
    A Peugeot spokesman said there were no Opel tie-up talks currently in progress, breaking a month of silence since they were first reported.
    "There are no such discussions underway," the spokesman said, declining to comment on past conversations. GM had no comment, a Detroit-based company spokesman said.
    With their costly French and German plants and exposure to austerity-strapped southern markets, Peugeot and Opel are major casualties of Europe's protracted slump in auto sales, which has left the industry struggling with surplus capacity.
    Peugeot, which is burning though 160 million euros ($200 million) of cash a month, is scrapping 10,000 jobs and a domestic plant. GM, which predicts European losses of $1.5-1.8 billion this year, is in union talks to close an Opel factory in Bochum, Germany.
    An imminent tie-up would have required deeper plant and workforce cuts on both sides, the same sources said.
    One option discussed would have seen GM transfer Opel to the new combined entity along with a $5 billion cheque to offset future losses and restructuring, according to one of the people. That could have allowed the U.S. automaker to expunge the underperforming division from its own accounts.
    Unlike Renault, which is still 15 percent state-owned, the government has no stake in Peugeot, but political influence has grown as its finances weakened, leading to the 18.5 billion euro refinancing deal that put a government representative on the board. [ID:nL5E8LO20C]
    Unveiling the bailout, including a 7 billion euro state guarantee, ministers said they would expect to be consulted on strategy and sounded a cautious note on the GM alliance.
    "Peugeot needs to build alliances," Industry Minister Arnaud Montebourg said in an Oct. 23 interview with daily Liberation.
    "But we need to ... measure their consequences for our country and obtain Peugeot's commitment to preserve all its French sites," he told the newspaper.
    Montebourg's office did not return calls and messages seeking comment for this story.
    The French bailout stirred doubts in Detroit, which further deepened with Peugeot's warning that net debt would rise in 2012 as the group consumes cash faster than it can sell assets.
    Peugeot shares have plunged 57 percent this year, compared with a 25 percent gain by GM, which last month posted $1.48 billion in third-quarter profit on strong U.S. sales.
    "GM is looking at this and saying, 'What the heck are we doing here?'" said a person familiar with the company's thinking.
    "Peugeot's incentives to cooperate may have changed because the French government is at the table," he said. "They're not going to want to have Opel building Peugeot product."
    GM and Peugeot announced plans in February and March to pool European purchasing, logistics and vehicle programmes including a future small car for Brazil, a project that was dropped last month.
    The deal also saw GM pay $400 million for a 7 percent stake in its troubled French partner.
    The decision to shelve a deeper tie-up may renew critical scrutiny of the existing alliance plan, already questioned by some investors.
    The dropped car programme in Brazil, where Peugeot needs a partner to cut costs, hurts the company "in the area where they needed help the most", Credit Suisse analyst Erich Hauser said.

    Peugeot has sacrificed other relationships and markets to pursue the broader GM alliance, which is now falling short of early expectations.
    Ford <F.N>, a longstanding engine partner, said in April it would stop making larger diesels with Peugeot, and BMW <BMWG.DE> dissolved their hybrid parts venture to team up with Toyota <7203.T> instead. [ID:nL6E8F5A9M][ID:nL6E8HT98B]
    The French automaker blamed financing problems for its February decision to halt sales to Iran - the Peugeot brand's second-biggest market - but GM told investors its new partner had promised to exit the country. [ID:nL6E8F5AZ3]
    Peugeot had also flagged plans to build cars with GM in India and seek a partner to develop rechargeable hybrids, but GM said it had no interest in either project. [ID:nL3E8FO71T][ID:nL6E8IC5T3]
    Setbacks aside, the depth of Europe's slump is making the alliance and its promise of eventual gains seem irrelevant, according to Credit Suisse's Hauser.
    "It's become obvious that the plan announced in February is just inadequate," he said. "For it to make sense there would have to be a plan B." ($1 = 0.7867 euros)

  17. #17
    1000+ Posts gerry freed's Avatar
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    The shares were picking up a bit and then dropped back today on that news which had been expected by the market. They were at 4.471 at the close. It has been suggested that the share price which is on relatively small trades is being juggled by hedge funds who will profit when the shares pick up. As a result of the government deal and the cash outflows, there really isn't much shareholder value at the moment. The Group is in the hands of its bankers and the government until the car market picks up. When it does, we should see some rapid improvement in the share price. If it doesn't and they run out of cash, then I don't see a line of industry buyers waiting there in view of the overcapacity in the European industry, which the French government is reluctant to face. Someone could pick up the brands without the production resources. Don't buy or sell and shares based on my opinions. I am no longer a qualified financial advisor.

    Meanwhile the Renault-Nissan management is putting a lot of pressure on their negotiations with the French Unions. They are demanding productivity comparable to the Group's best factories in Europe - Nissan in Sunderland and Renault in Spain where the quality is better, the costs are lower and the hold-ups less frequent.
    Last edited by gerry freed; 14th November 2012 at 05:33 PM. Reason: typo
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  18. #18
    1000+ Posts gerry freed's Avatar
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    European car sales slipped back in October, the 13th month in sucession. VW actually improved sales and the second best performance came from Peugeot who lost less sales than the market average. Renault did badly but they have sales growth elsewhere and their Nissan partner picked up market share in Europe. The other Germans wern't too happy.
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    1000+ Posts gerry freed's Avatar
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    The last couple of days have seen a small upturn in the share price which is now above 4,7 euros. The screen jockeys are taking profit position from previous calls and so this has more to do with stock market games, the scene chez Peugeot hasn't changed much. The Russian anti- monopoly regultator (yes, even they have one) has approved the purchase of their logistics company by the Russian railways and so that cash should be on the way.
    Meanwhile France's credit rating is slipping as the rating agencies don't have much faith in the economic policy. Moody's dropped it back to AA+ from AAA this week. S&P had already done so.
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  20. #20
    Member andrethx's Avatar
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    Quote Originally Posted by gerry freed View Post
    Meanwhile France's credit rating is slipping as the rating agencies don't have much faith in the economic policy. Moody's dropped it back to AA+ from AAA this week. S&P had already done so.
    France-bashers here in the US were quick to seize on this news ("France surrenders its AAA credit rating" -- get it, surrenders? ), but wiser heads reminded them that the US surrendered its own AAA-rating over a year ago...

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