July 21 (Bloomberg) -- Faurecia SA, Europe’s largest maker of car interiors, said its first-half loss surged 16-fold on production cuts by customers including PSA Peugeot Citroen, its 71 percent owner.

The net loss was 364.6 million euros ($518 million) compared with a loss of 22.2 million euros a year earlier, the Nanterre, France-based company said in an e-mailed statement today. Sales dropped 30 percent to 4.38 billion euros.

Component makers suffered from a plunge in auto production as manufacturers such as Peugeot and Renault SA shuttered factories to cut vehicle inventories. While government-backed incentives halted Europe’s auto-sales decline last month, the market was 11 percent lower in the first half.

Faurecia had an operating loss of 187.3 million euros compared with an operating profit of 90.3 million euros a year earlier. The company forecast sales will drop 10 percent in Europe and 35 percent in North America.

Chief Executive Officer Yann Delabriere said in May the company’s sales had probably bottomed out, three months after he predicted a 2009 revenue decline of 20 percent in Europe and 30 percent in North America.

In the last three months, Faurecia also renegotiated covenants on 1.17 billion euros of bank debt and raised 455 million euros in a capital increase guaranteed by Peugeot.

Faurecia rose 13 cents, or 1.9 percent, to 6.89 euros in Paris trading yesterday. The stock has declined 8.8 percent this year, valuing the company at 616 million euros.

To contact the reporter on this story: Laurence Frost in Paris at lfrost4@bloomberg.net

Last Updated: July 20, 2009 23:02 EDT