PSA Peugeot Citroen introduced a draft reorganization

To restore its competitiveness and ensure its future, PSA Peugeot Citroen introduced a draft reorganization of its French industrial base and redeployment of the workforce:

Sustained contraction of european markets: -8% in 2012 (-23% between 2007 and 2012)

Worsening situation of overcapacity Group: utilization european factories 76% in H1 2012

Negative net result of the Group in H1 2012

Reorganization of industrial activities and redeployment of staff of the Group structure

Back to the balance of the cash flow from operating activities in 2014

Philippe Varin, Chairman of the Managing Board of PSA Peugeot Citroen, presented today at the Central Committee of Peugeot Citroen Automobile Company a draft reorganization of the French industrial base of the automotive division of the Group and redeployment of staff, and the device Accompanying offers salaries.

The situation has again deteriorated in the first half of 2012. Predicting of evolution of the European market (1) establishes henceforth was -8% (against 5% in the beginning of year) or 10% for PSA Peugeot Citroen, very exposed to the Southern Europe. In the first half, the Group's production fell by 18%, given the necessary inventory adjustment.

The average utilization rate of European plants has deteriorated to 76% in the first half of 2012, against 86% in 2011 (2). It is even lower for the small car segment which PSA Peugeot Citroen realized 42% of its sales models than its competitors manufacture mainly in low cost countries.

In the first half of 2012, in the continuity of the second half of 2011, the current operational result (3) estimates of the automotive division will be loss of approximately € 700 million. The cash consumption amounted to approximately € 200 million per month since mid-2011, excluding special items (additional dividend of Banque PSA Finance and real estate sales). The net result of the Group will be negative in the first half.

To cope with the sustainable reduction of activity in Europe, a project of reorganization of industrial activities and redeployment of staff is present today to restore the competitiveness of the Group and to ensure its future:

reorganization of industrial activities: stop the production Aulnay and revitalization of the site to maintain its industrial, adaptation of industrial facilities Rennes prior to future investments.

redeployment of staff of the Group structure.

(1) Europe 30

(2) Harbour Rate: 100% = 2 teams, 8 hours per day, 235 days / year.

(3) unaudited results

The projects will be accompanied Aulnay and Rennes, in respect of social dialogue, measures designed to assist all concerned salaries and support outplacement, particularly within the Group. The redeployment of staff structure will be implemented through voluntary departures of the company.

Philippe Varin, Chairman of the Management Board, said:

"I fully measure the severity of today's announcements as well as shock and emotion they cause in the company and its environment. The scale and sustainable character of the crisis affecting our activities in Europe must henceforth make this reorganization project that allows us to scale our production capacity in the future market. We have the will to implement the measures proposed in the context of an exemplary social dialogue and deep respect for our values.

The project was presented today should enable the automotive division, the heart of our business, to regain his balance and ability to implement its strategy. Thus we ensure the future of the Group and are consolidating our database automobile production in France. "

The following measures are envisaged:

The judgment in 2014 the activities of production Aulnay, which employs 3,000 salaried, refocusing production in the Paris region in Poissy and Aulnay revitalization of the site.

In the Paris region, the Group has two specialized sites in the production of small cars, both currently under load, for Aulnay and Poissy Citroen C3 for the Peugeot 208 and Citroen C3 and DS3. To ensure a satisfactory utilization rate, it is now necessary to predict the concentration of production on one site.

The Group is committed to propose a solution to the problem of employment to each employee of Aulnay. The device should identify 1,500 jobs in the interior of the Group, mainly in Poissy. A comparable number of employees would be offered positions in the labor pool Aulnay thanks to the actions of outplacement.

The Group will implement the necessary means of support in order to reach a solution reclassification identified for each employee affected, internally or in the employment area.

An outstanding feature of the site to revitalization activities that relate to the industry and the automobile, including the activities of the Group will be established with all concerned actors.

Adaptation of industrial facilities at the Rennes

Production Rennes site dedicated to the Peugeot 508 and Citroen C5 and C6 is affected by the decline in the European market for large sedans, drop that is part of a lasting trend. A reorganization in line with volumes predictable production is therefore essential before assigning a new model and investment are related.

This reorganization would lead to a redeployment of staff of 1,400 jobs out of a total of 5600 salaries. The Group will implement the necessary means of support in order to reach a solution reclassification identified for each employee affected, internally or in the employment area.

Consultation and social dialogue

At Aulnay as in Rennes, a backup plan of employment will be subject to consultation with employee representative bodies. A period of volunteering will be proposed until mid-2013. It will emphasize the outplacement of employees and the revitalization of the labor pool in conjunction with governments and local actors. The consultation will be open demarche to take account of social concerns and expectations of the social partners and careful consideration of all alternatives to respond appropriately to each to his employment problem.

Adapting Group structures

Structures PSA Peugeot Citroen must adapt to the volume of activity. The Group should continue its cost reduction and improvement of its operational efficiency, which should lead to the reduction of 3,600 jobs distributed across sites in France. A plan of voluntary departures from the company would propose to salaries.

This proposed reorganization of the French industrial base and redeployment of staff (4) should help restore balance to the cash flow from operating activities in 2014 under current conditions the motor running, until the effects of the Alliance with General Motors not be fully realized.

It strengthens the measures put in place early in 2012, during execution (EUR 1 billion cost reduction, control of inventory, prioritization of investments, asset disposals).

The measures to restore the performance and financial position of the Group will be detailed during the presentation of the interim results of the Group on July 25.

(4) Provisions for new measures of reorganization of industrial activities and redeployment of staff will be integrated into the results of the second half of 2012.

Source: PSA Peugeot Citroen