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Renault profitability follows sales to record high

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Renault profitability follows sales to record high

Renault profitability follows sales to record high
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Christian Hartmann(Reuters)
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By Laurence Frost and Gilles Guillaume

PARIS (Reuters) - French carmaker Renault <RENA.PA> said on Friday it achieved record profitability in the first half as emerging-market sales surged, more than offsetting exchange-rate challenges.

The group's operating margin rose 5.2 percent to 1.914 billion euros (£1.7 billion), or 6.4 percent of sales, from 6.2 percent a year earlier. Revenue rose 1.4 percent to 29.957 billion euros, the carmaker said.

Renault, which is exploring a closer tie-up with 43.4 percent-owned alliance partner Nissan <7201.T>, has expanded its low-cost lineup and emerging market presence in recent years.

Chief Executive Carlos Ghosn said the results were the fruit of Renault's "strategy of regional diversification".

Net income fell 16.3 percent, however, to 2.04 billion euros, weighed down by a restructuring charge of about 150 million euros as well as a weaker U.S. dollar, Argentinian peso and Brazilian real currencies.

Renault said earlier this month that first-half sales volumes had risen almost 10 percent to an all-time high, helped by rebounding markets in Russia and South America.

The negative currency effects led to a 0.5 percent decline in automotive revenues, which dipped to 26.867 billion euros despite pricing improvements.

The overall results were broadly in line with analyst expectations, based on an Inquiry Financial poll for Reuters.

Reiterating full-year guidance, finance chief Clotilde Delbos told reporters that Renault expected "almost zero" sales in Iran in the second half as new U.S. sanctions bite. Renault has no recent Iran investments to write down, she added.

Delbos also said new European emissions-test standards continued to add "uncertainty" to the second-half outlook. The company declined to quantify the effect of any disruption.

Mercedes maker Daimler <DAIGn.DE> and French auto parts supplier Valeo <VLOF.PA> have both warned of an earnings hit from the new Worldwide Harmonised Light Vehicle Test (WLTP) standards taking effect in September.

There is "still some work to do" for Renault to meet vehicle certification deadlines, Chief Operating Officer Thierry Bollore said, although he added that Renault did not expect the issue to have any significant negative impact on its business.

(Reporting by Laurence Frost and Gilles Guillaume; Editing by Sudip Kar-Gupta)

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