French auto producer PSA has announced it has managed to trim the group's deficit in the first half of the year. The firm is undergoing a state-backed restructuring process that's now been approved by the EU executive.
Struggling French carmaker PSA Peugeot Citroen reported Wednesday that it had lost 426 million euros ($564 million) in the first six month of 2013. While that might look like bad news at first glance, the company was able to narrow its deficit to about half the 819 million euros it lost during the same period a year earlier.
Sales dropped by 3.8 percent to 27.7 billion euros amid continuously sluggish demand, particularly in southern European nations hit hardest by the eurozone's protracted debt crisis.
PSA, which is the biggest French carmaker and Europe's second-largest after Germany's Volkswagen (VW), saw the turnover of its automotive segment fall by 7.5 percent in the first half year.
Sounder financial base
On Tuesday night, The European Commission said it had cleared a 7.5-billion-euro restructuring plan by PSA, which includes state aid. It said the French government's guarantee of a bond issue by the company's stricken finance arm conformed with EU competition rules.
The guarantee is worth 486 million euros, while another 85.9 million euros will go towards funding more eco-friendly vehicles.
"Peugeot will now be able to restructure in accordance with clear limits, reducing to a minimum the damaging effects for competitors who have not received support from public funding," EU Competition Commissioner Joaquin Almunia said in a statement.
hg/rc (Reuters, AFP)