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AUTO

Peugeot Citroen reports profit rise but shares slump

French auto group PSA Peugeot Citroen reported a first-half net profit rise of 5.0 percent on Wednesday but its outlook for the year disappointed the market and the shares fell by 6.14 percent to €27.69.

Net profit for the first half rose to €806 million ($1.17 billion) and current operating profit by 1.8 percent to €1.16 billion.

The group, which sold slightly more than 1.8 million vehicles in the first half, said that sales had risen by 9.7 percent to €31.1 billion.

Disruption caused by earthquake damage in Japan had hit the global auto industry and the negative effect for the group amounted to €147 million.

Finance director Frederic Saint-Geours said a further impact of €100 million was expected in the second half owing to problems with the supply of parts.

The group also suffered from a rise in raw materials costs, which represented an extra charge of €366 million in the first half.

“We estimate the negative repercussion of raw materials for the whole year at €700 million,” Saint-Geours said.

The group is the biggest car maker in France and the second-biggest in Europe after Volkswagen of Germany. In the first half it made 38 percent of it sales outside Europe compared with 33.0 percent 12 months ago.

Sales in China rose where its second joint venture has just been approved by the authorities.

It has not yet chosen the site where it will set up production in India.

The group maintained its forecasts for the year, counting on an increase in current operating profit. It expected the market in Europe to be stable despite the ending of government subsidy schemes for new cars when old cars were scrapped.

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INDUSTRY & TRADE

After promising to create 1,000 jobs in France… GE set to cut 1,044

US industrial conglomerate General Electric said on Tuesday that it would cut more than 1,000 jobs, mainly at its gas turbine operations in eastern France, part of a wave of European layoffs as it tries to stem losses in its power generation business.

After promising to create 1,000 jobs in France... GE set to cut 1,044
Photo: AFP
The 1,044 job cuts, long feared by unions, could become a political challenge for President Emmanuel Macron, who assured local officials this month that the government was following the matter with “the utmost vigilance”.
   
The cuts will be made mainly in Belfort, eastern France, the European headquarters for GE Energy, and in the Paris region, the company said in a statement.
   
“More than half the number of employees in the gas activities… are going to lose their jobs,” the mayor of Belfort, Damien Meslot, and other local officials said in a statement.
   
They warned of “a new hardship” for the region, which has been hit hard by the decline of mining and heavy industry over the past decades.
 
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US giant GE to pay France €50 million after creating just 25 jobs out of 1,000Photo: AFP

Overall, GE employs nearly 4,000 people in Belfort, including 1,900 in its gas turbine operations.   

The company has struggled for years with slumping demand for its gas turbines because of low oil and gas prices, and the power operations were a key factor in its massive annual loss of $22.8 billion last year.
   
In 2015 GE announced 6,500 job cuts across Europe, and two years later it revealed a further 12,000 cuts.
 
That prompted France to fine the company €50 million earlier this year, since GE had promised to create at least 1,000 new jobs when it announced the purchase of the power businesses from France's Alstom in 2014.
 
Shortly after closing that deal, GE unveiled a series of job cuts across Europe as slumping oil and gas prices crimped demand for its heavy-duty turbines and other equipment.
 
The company had already warned last year that it wouldn't meet the target, though the new CEO Larry Culp confirmed in October that GE would “fulfil its commitments.”
 
It had promised to pay €50,000 for every job not created over the three-year period.
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