Peugeot Citroen shares slump as unveils recovery plan

French auto group Peugeot Citroen, fighting to recover from crisis with a new Chinese shareholder, presented a global recovery strategy on Monday, but its shares slumped. The group is to reposition its brands in markets worldwide and notably in Asia, pursue cost cuts and put all its efforts into raising profits and building a money-making culture. But traders held that the targets for a return to profits amounted to too little, too late and PSA Peugeot Citroen shares ended the day down 6.28 percent at 12.83 euros. The group would focus overall on a culture of performance and global branding, it said in a statement. New chief executive Carlos Tavares told a conference for analysts that the group had to change mentality. "The profit culture is a point on which we are going to focus," he said. "Cash is king," he added, referring to the important business principle of paying close attention to how money is used relative to the speed with which it is earned. A crippling problem for PSA Peugeot Citroen in recent years has been the speed at which it has used up cash resources, to the point of needing huge French state guarantees for its credit arm in an effective rescue of the group. PSA Peugeot Citroen, which has made net losses of 7.2 billion euros ($10.0 billion) in the last two years, titled its programme "Back in the Race", and emphasised ambitions to grow in China and South-East Asia. "The group needs to develop a real profit-driven culture and a global approach in order to return to profit more quickly," the company said in a statement. Tavares said his basic objective was to concentrate every resource on raising profitability. The group said it aimed to generate operating cash flow, a measure of the speed with which money is earned before it is allocated, of 2.0 billion euros from 2016 to 2018. It was aiming for the car division to generate an operating margin of 2.0 percent by 2018 and then 5.0 percent under the next medium-term plan for the years 2019 to 2023.