French carmaker Peugeot fires CEO to weather crisis

PARIS Sun Mar 29, 2009 6:03pm EDT

PSA Peugeot Citroen Chief Executive Christian Streiff attends the company's 2008 annual results presentation in Paris February 11, 2009. REUTERS/Gonzalo Fuentes

PSA Peugeot Citroen Chief Executive Christian Streiff attends the company's 2008 annual results presentation in Paris February 11, 2009.

Credit: Reuters/Gonzalo Fuentes

PARIS (Reuters) - The board of French carmaker PSA Peugeot Citroen (PEUP.PA) fired Chief Executive Christian Streiff on Sunday and replaced him with Philippe Varin, who will take up the position on June 1, the company said in a statement.

The decision comes after Peugeot last month posted a 343 million euro ($460 million) net loss and said it expected to stay in the red until 2010.

"The board unanimously judged that the exceptional difficulties faced by the auto industry imposed a change of management," Chairman Thierry Peugeot said in a statement.

"I am convinced that under Philippe Varin's leadership, the PSA Peugeot Citroen group will be able ... to reveal all its potential," he said.

Streiff reacted by defending his record at Peugeot, saying his policies had allowed the group to be "well equipped to face the crisis." He cited a cost-cutting plan, significant inventory reductions and the launch of several new models.

"The economic and financial community hailed these results. Thus I cannot understand the board's decision," he said.

Board member Roland Vardanega will take on the role of CEO during the interim period until Varin steps in, Peugeot said, adding that the incoming CEO would start getting to know his teams from April 15.

Peugeot said Varin, 56, had worked at French aluminum producer Pechiney for 25 years until 2003, when he took the helm at Anglo-Dutch steel group Corus (TISC.BO), which he helped turn around after a period of losses and difficulties.

HEALTH ALERT

Peugeot, number two in Europe in terms of sales behind Germany's Volkswagen (VOWG.DE), has faced a string of difficulties.

On February 11, it revealed unexpected losses for 2008 after outlays of nearly 1 billion euros to slash stocks of unsold cars. It said it would cut inventories and limit cash burn in 2009 as the global economic crisis ravages car sales.

The downturn hit Peugeot at a time when it was facing question marks over senior management.

Streiff was hospitalized at the end of May 2008 after a health incident. He returned to work in July and said at the time he had completely recovered.

But analysts, complaining that Peugeot's strategy to weather the crisis was unclear, questioned whether he was still effective as CEO.

Peugeot had already seen a number of other big changes in senior management, and analysts openly questioned whether people were leaving in anticipation of a merger.

Speculation mounted that Peugeot would seek a tie-up with one of its peers. Asked at a February 11 news conference whether the group was considering new alliances, Streiff declined to comment and said existing alliances were "extremely solid."

Industry watchers have forecast a wave of consolidation in the hard-hit sector.

Peugeot and its French competitor Renault (RENA.PA) have also both said they were worried about the financial health of their suppliers and were looking for ways to help them.

Streiff said on March 25 that buying a stake in suppliers was not part of the company's strategy but that it would do its best to help struggling equipment makers, 85 of which it considers to be in significant financial difficulty.

(Additional reporting by Clement Dossin, Matthias Blamont and Jean-Loup Fievet; Editing by Steve Orlofsky)