Page last updated at 12:56 GMT, Wednesday, 11 February 2009

Peugeot Citroen cuts 11,000 jobs

Peugeot
Peugeot Citroen has been hard hit by the global car slowdown

France's biggest carmaker, Peugeot Citroen, has announced it will slash more than 11,000 jobs in 2009, starting with European plants outside France.

The news comes just days after French President Nicolas Sarkozy unveiled a three-billion-euro (2.7bn; $3.9bn)loan for the company.

Peugeot Citroen cut 2,700 jobs worldwide at the end of last year.

On Wednesday the company reported an unexpected 2008 net loss of 343m euros ($433m; 308m) after its sales slumped.

Peugeot Citroen has said it will make the job cuts through a series of voluntary redundancies and and non-renewal of contracts, starting in its non-French European plants.

Not in France

"France is, of course, our biggest country in terms of employment," said Peugeot Citroen chairman Christian Streiff, "but we have lots of staff in other countries which we are currently reducing quickly."

The news will further fan flames of discontent in the Czech Republic and Slovakia, which have accused President Sarkozy of protectionism.

Mr Sarkozy's loan to Peugeot Citroen and Renault is dependent on assurances they will not shut French plants or cut French jobs. The car manufacturing sector is a stronghold of French industry.

FROM THE BBC WORLD SERVICE

"We want to stop factories from relocating abroad and, if possible, bring them back home," said Mr Sarkozy last week.

"If we give money to the auto industry to restructure itself, it's not so we can hear about a new plant moving to the Czech Republic or wherever," he said.

The loan to the carmaker, along with a similar one for Renault, is yet to be approved by the European Commission and the body has already warned it could violate EU laws against protectionism.

Dwindling demand

The European car market has been hit by a slump as consumers cut spending to beat the economic crisis and recession.

On Wednesday, Peugeot Citroen said sales revenues across its Peugeot and Citroen brands declined 7.4% last year to 54.4bn euros.

The firm warned it expected to make a similar loss in 2009, but said it aimed to return to profit in 2010.

Next year was supposed to have seen the conclusion of a profit recovery programme and the group had set its sights on a 6% operating margin for 2010.

Mr Steiff warned the European car market was in for further tough times and forecast a 20% decline this year. He said the company was continuing efforts to reduce levels of unsold cars and maintain cost-cutting.

The unexpected 343m-euro net loss compares with a profit of 885m euros in 2007. Analysts had forecast a net profit of 180m euros at Europe's second-biggest carmaker.



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