Renault and PSA 2012 financial results will put turnaround strategies in spotlight
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Renault, whose 2012 Paris auto show stand is pictured, is likely to report a profit decline for 2012. Photo credit: Bloomberg |
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PARIS (Reuters) -- The gravity of the French auto industry's crisis will be underlined this week by weak results at PSA/Peugeot-Citroen and Renault, boosting pressure on both for tougher cost-cutting moves.
PSA and Renault report full-year results for 2012 on Wednesday and Thursday, respectively. PSA is expected to report a full-year loss of 1.47 billion euros, according to an average of estimates by analysts polled by Thomson Reuters, although those figures do not include last week's writedowns. Renault's profit is expected to decline to 1.78 billion euros from 2.09 billion.
France's mass-market car brands are suffering more than most from Europe's deep car sales slump, punished by their exposure to austerity-hit southern markets.
"After the catastrophe of 2012, the companies will all make caution the order of the day," said Societe Generale auto analyst Philippe Barrier. "But the key to the medium-term outcome is how the industry is going to adapt to the low level of the market and prepare for the future."
Further cost-cutting, even to the point of politically sensitive layoffs, may loom as options for all four French industrial heavyweights as they struggle to adjust to an expected long-term slump in European demand.
PSA lost business to rivals such as Hyundai and Volkswagen last year, while Renault's regional market share also dipped 1.1 percentage points to 8.4 percent, registrations data from Brussels-based industry body ACEA showed.
With productivity a key issue, Renault, which plans to eliminate 8,200 jobs over the next four years through attrition, wants to strike a deal on factory "flexibility" with unions on Tuesday, wrapping up thorny talks which kicked off last autumn.
Renault has promised not to close any French plants if workers accept a salary freeze, longer working hours and measures including compulsory transfers between sites.
The French government, while generally critical of profitable companies which cut jobs, has encouraged unions to sign a deal out of fear that their refusal to do so could provoke the kind of tensions caused by the closing of Peugeot's Aulnay plant on the outskirts of Paris, announced last year.
Renault's main union, the CFE-CGC, has said its signature on any deal would come only in return for concrete assurances on numerical production targets for each factory involved.
PSA, Europe's No. 2 automaker after Volkswagen, last Thursday said it was taking a 4.1 billion euro writedown on its industrial assets on top of an expected net loss for 2012.
The companies' results will underscore the French auto industry's dire state, but many of the losses have already been flagged.
Tiremaker Michelin and parts maker Faurecia publish results on Tuesday. Faurecia said last month its full-year results would show a 62 percent slump in net profit and an unexpected hike in debt. Faurecia is seen reporting net income of 160 million, less than half the year-ago figure. Michelin, on the other hand, is seen reporting a rise in net profit to 1.64 billion euros.
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