Peugeot Citroen shares sank to a 26-year low Friday on concerns that a plant closure affecting more than 8,000 jobs may not be enough to keep Europe’s second-largest automaker afloat.
Shares fell as much as 9.2 percent to €6.372 as investors feared a gloomier outlook than the French firm had previously disclosed as losses were revealed. Moody ‘s said it was considering a downgrade of Peugeot’s credit rating.
Announcing the plan to close the Aulnay plant near Paris in 2014, Peugeot on Thursday at the same time warned of losses and said the manufacturing unit was consuming €200 million a month. Operating cash flow will remain negative through 2015, it said. Workers at the factory affected by the job cuts reacted with public outrage and called on new President Francois Hollande to act to stop the layoffs. European automakers are suffering from the market slump caused by the debt crisis and downturn.
Moodys put Peugeot on “under review for downgrade” citing auto losses and falling production. Peugeot faces enormous operational stress, said Falk Frey an analyst at the credit rating agency.
Hollande, who was elected in May, was extremely concerned, he said, and urged ministers to weigh the social consequences. One of his ministers said he wanted to find alternatives with the company and unions. The company wants to create new jobs by transforming the Aulnay site for other industries and companies.