By Helen Massy-Beresford and Matthias Blamont
PARIS (Reuters) - PSA PEUGEOT (UG.PA)Citroen does not expect to return to profit until 2010 after it made an unexpected loss for 2008 following hefty writedowns as the global economic crisis puts the brakes on car sales.
The group posted a 343 million euro ($444.5 million) net loss and said it would focus on cutting stocks and minimizing cash burn in 2009, when it expects another loss.
Europe's second-biggest carmaker is, along with its peers, struggling to cut inventories of unsold vehicles in the face of sales that have slowed to a trickle as the credit crunch stifles consumer confidence.
The year 2010 would originally have been the end of a profit recovery program for the company.
PSA Peugeot Citroen
Financial analysts had expected a net profit of some 180 million euros for last year. The net loss compared to a 885 million euro net profit recorded in 2007.
The group booked non-recurring charges totaling 917 million euros in 2008 as it cut headcount and adjusted for lower expected volumes ahead, finance director Isabel Marey-Semper told a conference call.
The automotive division accounted for 473 million euros of the charges, while parts supplier Faurecia
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The company's 2008 capital expenditure amounted to 3.8 billion euros, leaving it with negative free cash flow of 3.764 billion at the end of the year.
"We must concentrate all our efforts on reducing inventory and minimizing our cash consumption," CEO Christian Streiff said on Wednesday in a statement.
On Tuesday Streiff had said the car industry downturn had turned into a global catastrophe and he expected 2009 sales to fall by at least 20 percent.
He added the group aimed to return to profit in 2010 but expected a particularly difficult first half of 2009 and a loss-making full year with negative free cash flow.
The strong euro would also be a challenge, Streiff said on a conference call.
The group's European stocks of unsold vehicles were near December 2007 levels at the year-end 2008, thanks to production cuts in the fourth quarter, the company said.
On Monday, French President Nicolas Sarkozy unveiled a controversial 3 billion euro ($3.89 billion) loan for PSA Peugeot Citroen, and a similar sum for fellow French automaker Renault
Peugeot said the loan and other financing sources would cover its funding requirements of around 4 billion euros for 2009 for its sales and manufacturing activities.
The group intends to continue investment and expenditure on automotive R&D at around 3.5 billion euros, Streiff said.
Earlier this year, the group posted an 8.7 percent fall in full-year sales of completed vehicles.
(Reporting by Helen Massy-Beresford and Matthias Blamont, editing by Marcel Michelson, John Stonestreet)
