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French carmaker Peugeot Citroen posts higher 1st half earnings, warns on rising costs
PARIS (AP) ' French carmaker PSA Peugeot Citroen SA has warned that repercussions from this year's earthquake and tsunami in Japan will weigh on its earnings in the second half of the year, sending its share price sharply lower Wednesday.
While reporting an 18.5 percent increase in first half profits from a year ago on the success of new models and market share gains outside Europe, the company said rising raw material costs and sourcing problems stemming from the disaster in Japan last March would hit the second half of the year.
Peugeot Citroen chairman Philippe Varin warned that "contracting European markets, higher raw materials costs and supplying disruptions following events in Japan" would have an up to euro300 million ($434 million) negative impact on its car division in the second half.
As recently as April the company had confirmed it was on track to hit a targeted increase in operating profit despite higher raw material costs.
By midmorning shares in Peugeot Citroen dropped 8.3 percent to euro27.11, their lowest level since April.
A more detailed look at the first half figures showed that net profit was euro806 million ($1.17 billion) compared to euro680 million a year ago, with sales from the car division up 6.7 percent to euro22.6 billion in the first half from a year earlier.
The company said most of the sales increase came not from higher volumes, which inched up 1.2 percent, but from the sale of more expensive upmarket brands such as the Peugeot 508 and Citroen DS4.