PARIS -- PSA/Peugeot-Citroen on Wednesday said its automotive unit may post a loss in the second half because of disruption from the Japanese earthquake in March and rising material costs.
The company confirmed it expected the European market to remain stable for the full year. It reduced its forecast for growth in China, the world's largest auto market, to around 7 percent, from a previous forecast of 10 percent growth.
PSA boosted its forecast for the Latin American market to about 6 percent growth from 4 percent and said the Russian market would increase about 30 percent compared with a previous 15 percent forecast.
The automaker's shares fell the most in more than two years in Paris trading on Wednesday after the automaker abandoned a goal of increasing second-half operating profit at the car-manufacturing division while maintaining a pledge to increase group earnings in 2011.
"We're encountering much stronger headwinds than we expected at the start of the year," Chief Financial Officer Frederic Saint-Geours said on a call with reporters as he presented results for the first six months.
First-half operating profit rose 1.8 percent, held back by a 23 percent earnings drop at PSA's carmaking operation. PSA said Japanese parts shortages will hurt second-half profit after reducing earnings in the first six months of the year.
"What's new here is that the Japan impact isn't limited to the first half," Erich Hauser, a London-based analyst at Credit Suisse Group, told Bloomberg News.