Finance

Finance

Peugeot fires chief executive

30 March 2009 07:11 (UTC +04:00)

Bakuâ€“ APA-Economics. Peugeot on Sunday ousted chief executive Christian Streiff as France’s biggest carmaker struggles in the international economic crisis, AFP reports.
"Given the extraordinary difficulties currently faced by the automotive industry, the supervisory board decided unanimously that a change in the senior leadership position was necessary," PSA Peugeot-Citroen supervisory board chairman Thierry Peugeot said in a statement.
The company said Streiff will be replaced by Philippe Varin, 56, current chief executive of the Anglo-Dutch steel group Corus, who will take over as Peugeot chief on June 1.
Streiff, who had headed the company for two years, denounced the board’s decision as "incomprehensible."
"The decision of PSA’s supervisory board comes as results of the policy that was planned and put in place with the teams for two years allow PSA group to be well armed amid the crisis," Streiff said in a statement.
But Peugeot last month announced a 343 million euro (454 million dollar) loss for last year, after 885 million euros in profits in 2007, and is forecasting more losses this year as the crisis leave carmakers around the world reeling.
It said last month it would reduce its workforce by about 11,000, warning that European car sales could slump by a fifth this year.
In February the French government gave Peugeot and Renault three billion euros (four billion dollars) each in loans to shore them up and billions more to their many suppliers to help them weather the storm.
In return, Peugeot promised President Nicolas Sarkozy that it would not sack staff or close plants in France this year.
One in 10 workers in France is employed by the car industry and Sarkozy has made clear he will not allow carmakers to fail as consumer demand for cars collapses.
Recent press reports had cited tension between the Peugeot family, which owns just over 30 percent of the firm and has majority voting rights, and Streiff over strategy.
After taking over in February 2007, Streiff tried to make the giant auto maker more profitable by controlling costs and boosting its international presence.
The ousted executive said the plan he launched in 2007 allowed the group to save up 2.4 billion euros in two years, while several new models have been a success and Peugeot has reinforced its "environmental leadership."
"The economic and financial community has welcomed these results," he said in his statement. "The board’s decision therefore appears incomprehensible to me."
The company statement credited his replacement, Varin, with turning round Corus’s fortunes after taking overe that company in 2003. He notably oversaw Corus’s merger of India’s Tata Steel in 2007.
Roland Vardanega, a member of the managing board, will fill in as interim chief until Varin takes over.
"I am confident that under the leadership of Philippe Varin, the group will be able, with all the teams, to unlock its potential," Thierry Peugeot said.
Ratings agency Moody’s last month downgraded Peugeot’s credit rating and gave a negative outlook for the company, saying demand for its cars had dropped by a fifth.
"The French state’s support (through the loan)... has been a positive development, serving to give some room for Peugeot to address its immediate operating issues and to improve its refinancing profile," analysts at European HG Research wrote at the time.
But they added: "The group’s cash flow generation and profitability remains sorely vulnerable to the fragile demand environment."
While regarded national champion, Peugeot produces only about 40 percent of its vehicles in its five French plants, and maintains European sites in Spain, Czech Republic, Slovakia, Italy and Portugal.
Outside the European Union, it also produces cars and vans in Turkey, China, Argentina and Brazil. PSA Peugeot Citroen employed 207,850 people worldwide in 2007.