Peugeot Citroen losses mount in H1

PARIS (AP) — PSA Peugeot Citroen says its losses mounted in the first half as Europe’s recession ate into car sales just as it attempts to battle back from last year’s record 5 billion euros ($6.6 billion) loss.

The maker of Peugeot and Citroen sedans, hatchbacks and light trucks says it lost 426 million euros in the first half amid a continued slide in car sales and disruption at a key car plant near Paris where workers went on strike over the group’s plans to shut factories and shed up to 8,000 jobs.

In a statement Wednesday Peugeot Citroen boss Philippe Varin said he “sees the first signs of the group’s recovery,” with the automotive division trimming its operating loss even as sales continue to shrink.

Investors were encouraged by the progress Peugeot had made in controlling costs with shares in the company up 6.5 percent at 9.59 euros in morning trading.

News of Peugeot Citroen’s continuing push to contain losses comes a day after European authorities OK’d the French government’s 572 million euros aid package meant to prop up the troubled automaker.

The European Union Commission’s competition regulator said Tuesday that the plan will help return Peugeot to profitability while keeping damage to competitors who aren’t receiving government money to a minimum.

Peugeot Citroen is being forced to sell assets to help fund a restructuring program that will see the company cut 8,000 jobs and close its Aulnay-sous-Bois plant as it struggles to compete in Europe’s morose car market.

While unions and the government have called the plan unacceptable, the plant looks likely to shut next year. In May workers at the plant ended a four-month walkout.

Earlier this month, the European automakers’ association ACEA said the car industry had its worst June in 17 years, with demand falling 5.6 percent from a year earlier to 1.1134 million cars. Over the entire first half Europe’s car sales sank 6.6 percent.

Peugeot Citroen forecasts the European market to shrink by 5 percent this year.

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