PSA Takes €4.1 Billion Writeoff

PSA Peugeot Citroen says its financial results for 2012, due to be reported on Feb. 13, will include a €4.1 billion charge for writing down the value of its auto unit's property, facilities and other assets.

PSA says the action reflects the worsening outlook for its operations because of the slumping European auto market. The company expects industry sales in the region, which hit a 17-year low in 2012, to remain at that level for the "foreseeable future."

The charge, which is more than twice PSA's market value, indicates the company's continued reliance on Europe, The Wall Street Journal notes. PSA derived 62% of its sales there last year compared with 67% in 2011.

The non-cash writedown will slash PSA's net earnings for the second half of 2012. But the company points out that the accounting action does not affect its cash flow or liquidity. The valuation could be reversed if the company's prospects improve.