French carmaker PSA Peugeot Citroen has reported a net loss of 5 billion euros ($6.7 billion) for 2012.
The loss was mainly due to asset write-downs, but Peugeot also blamed a collapse in sales in Europe.
Last week the company wrote down the value of its assets by 4.1 billion euros, in what it described as an “accounting adjustment”.
In 2011, Peugeot made a 588 million euro profit, but still embarked on a 1bn euro cost-cutting programme.
PSA Peugeot Citroen has reported a net loss of 5 billion euros for 2012
Car maker PSA Peugeot Citroen is writing down the value of its assets by 4.1 billion euros ($5.5 billion) to reflect the worsening state of the car market.
Peugeot said new accounting guidelines had prompted the move and that it was reversible when conditions improve.
The statement comes ahead of next week’s earnings and indicates it will report heavy losses for the period.
Global sales at France’s largest car firm fell 16% in 2012 to less than three million.
Peugeot is in the process of cutting 8,000 jobs and closing a factory to stem losses.
PSA Peugeot Citroen is writing down the value of its assets by 4.1 billion euros to reflect the worsening state of the car market
Chief financial officer Jean-Baptise de Chatillon said: “There was a realization in the second half that the crisis was going to be longer than expected… This is purely an accounting adjustment which has nothing to do with operations.”
France’s market regulator last year demanded that companies value their assets more realistically – prompting a 7.4 billion-euro charge from Credit Agricole.
A report in the French newspaper Liberation said the government was examining the possibility of buying a stake in the struggling company as a “last-resort plan”.
Peugeot, a founding member of the main French stock market index, the Cac-40, was demoted last year as a result of its tumbling share price.