Moody's downgrades Peugeot after losses

Moody's agency downgraded the credit rating of struggling French carmaker PSA Peugeot Citroen, warning also that it was placing the company on review for a possible further downgrade. The agency in a statement said it had downgraded Peugeot's rating, and that of its subsidiary GIE PSA Tresorerie (GIE), from Ba1 to Ba2 and left it "on review for further downgrade". The news came the day after France's biggest carmaker announced that it had suffered a first half net loss of 819 million euros ($989 million), more than reversing a year-earlier net profit of 806 million euros. The company, which has announced 8,000 job cuts in France, said it will implement a 1.5-billion-euro cost reduction plan through to 2015. Moody's said that its decision to downgrade the rating of the second-largest automaker in Europe "reflects the material deterioration in the already weak capacity utilisation of the company's European plants." "The downgrade and continuing review also take into account the fact that PSA is unlikely to return to break-even operating cash flow before late 2014," said Moody's Senior Vice President Falk Frey. Moody's move follows similar downgrades Wednesday by fellow ratings agencies Fitch and Standard and Poor's which also lowered Peugeot's ratings by one notch. Peugeot shares were down 2.50 percent at 6.08 euros at the close of trade in Paris on Wednesday.