French government report criticizes Peugeot
A French government report criticizes the family shareholders and senior management of PSA Peugeot Citroën over their stewardship of the company, the Financial Times reported. The FT article noted:
It [the government report] said strategic errors were partly responsible for the crisis at the lossmaking group and hinted that Peugeot had at times put the family's financial interests ahead of the company's development. The family owns 25 per cent of the company and 38 percent of the voting rights.
The company plans to cut thousands of French jobs, including the first closure of a French car plant in 20 years, the article said.
The report criticized the family's insistence on independence "in place of seeking a partner that would have allowed it to become a world-class player," the FT article said. It accused the company of "seeming to have lacked international ambition."
The report suggested that Peugeot and the family had favoured dividends and share buybacks over investing in new markets, in contrast to Germany's Volkswagen. It estimated that Peugeot spent close to 6 billion euros on dividends and share buybacks between 1999 and 2011.
The Wall Street Journal noted that the report, which concluded that Peugeot has no choice but to reorganize and cut jobs, "represents a continued softening in the position of the French government on Peugeot's cost-cutting plans."
Industry Minister Arnaud Montebourg had accused Peugeot of hiding the truth about its problems, and President François Hollande had said the restructuring plans was unacceptable. "But the rhetoric began to change over time, as ministers met with Peugeot management and the Peugeot family," the Journal article said.
A Peugeot spokesman responded to the report by saying that since 2009 the company has accelerated its investment strategy to address its problems in expanding globally and producing upscale cars, the Journal article noted. The spokesman also said more than 40 billion euros has been invested in the company between 2000 and 2011. (Sources: Financial Times, Sept. 11, 2012; Wall Street Journal, Sept. 11, 2012.)
Posted Wednesday, September 19, 2012 • Permalink