Peugeot Cuts Two Executives From Board in Turnaround PushChris Reiter and Mathieu Rosemain
PSA Peugeot Citroen, Europe’s second-largest carmaker, cut its management board to four executives from six as Chief Executive Officer Philippe Varin streamlines management in a push to end auto losses.
“To ensure the efficient implementation of the group’s strategy, a leaner management board has been set up” around Varin, the Paris-based company said today in a statement. The changes, which come with Varin up for a contract extension, will take effect April 2.
Frederic Saint Geours, a board member since June 2009 who most recently led sales, will leave the carmaker’s top executive body and continue as a special adviser, the company said. Guillaume Faury, Peugeot’s development chief who also joined the board in June 2009, will leave the manufacturer.
Peugeot last month pledged to cut its cash-consumption rate 50 percent in 2013 and reach the break-even level by 2014 after burning through 3 billion euros ($3.9 billion) last year. The carmaker plans to reduce its French automotive workforce 17 percent in the next two years as the European car market, already at almost a two-decade low, shrinks in 2013 for a sixth consecutive year.
“It’s not a bad thing that they streamlined the top management,” said Jens Schattner, an analyst at Macquarie Europe Ltd. in Frankfurt. “But this is just a reshuffling.”
Peugeot gained 13 cents, or 2 percent, to 6.67 euros in Paris trading today. The stock has surged 22 percent this year, valuing the company at 2.37 billion euros.
Peugeot is betting its turnaround on a sharper differentiation between the Peugeot and Citroen brands, including an expansion of Citroen’s upscale DS line. The French manufacturer is also seeking cost savings from a development and purchasing alliance with General Motors Co.
As part of Peugeot’s management restructuring, the heads of the Peugeot and Citroen brands will report directly to Varin and take responsibility directly for sales. The CEO also assigned the three remaining management board members with meeting strategic targets.
Jean-Baptiste de Chatillon, the finance chief, will be responsible for returning Latin American operations to profit. Gregoire Olivier, head of Asia, will push for profitable growth in Russia and expand production operations outside Europe and Latin America. Jean-Christophe Quemard, executive vice president for programs, will target lowering production costs and oversee the development of the GM cooperation.
Varin’s contract will be extended “without a doubt” when the board takes up his reappointment in May, Co-Vice Chairman Jean-Philippe Peugeot said last month. The Peugeot family, which controls the manufacturer, backs the recovery plan and understands that it may take some time to complete, he said.
Peugeot reported a loss before interest, taxes and one-time gains or costs of 576 million euros in 2012, even though targets for spending cuts and proceeds from asset sales exceeded the company’s expectations.
The company has suffered more than other caramaker’s from a decline in European auto demand because it lacks major operations outside the region. The carmaker will work toward delivering 50 percent of its vehicles outside Europe by 2015, Varin said last month.