Peugeot chief quits after profits warnings

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The chief executive of Peugeot, Jean-Martin Folz, is to step down after three profits warnings from the French car maker in the past 12 months.

Shares in the company, Europe's second biggest car maker, rose strongly on the news, recording their biggest one-day gain on the Paris bourse in almost a year.

Peugeot, which has been hit hard by increases in raw material costs, said M. Folz had informed the board that he wished to retire in January next year when he reaches 60, having led the company for the past 10 years.

M. Folz oversaw a transformation in Peugeot's fortunes after he took over as chief executive in 1997, increasing sales by 10 per cent a year and profits by nearly 40 per cent in his first four years. But in the past three, profits have declined and in July Peugeot warned it would not meet its target of a 2.8 per cent operating margin this year either. The company blamed a soaring raw materials bill which is now forecast to increase by €450m (£305m) this year compared with an earlier estimate of €200m-€250m.

The company is closing its Ryton plant in Coventry with the loss of 2,000 jobs in a move which will save the group €91m a year. Peugeot is due to unveil a fresh cost-cutting initiative this month which is likely to involve further job losses but no more plant closures.

M. Folz pioneered the concept of "one group, two marques" which involved Peugeot and Citroen cars being built on the same platforms while retaining their separate identities.

Although M. Folz is quitting five years before Peugeot's compulsory retirement age of 65, a spokeswoman maintained the decision to step down was his and was not the result of board pressure or the recent string of profits warnings. A new chief executive is expected to be appointed in the first quarter of next year. Analysts favour a candidate from outside to succeed M. Folz.