Renault reports drop in H1 net profit

Renault reports 20.6 percent slide in first-half profit

French carmaker Renault SA said on Wednesday that its first-half earnings fell 20 per cent as car sales in Europe dropped and the contribution from Japanese affiliate Nissan Motor Co shrank.

Net profit fell to euro 1.32 billion ($A2.05 billion) from euro 1.65 billion ($A2.57 billion). Sales fell 1.4 per cent to euro 20.56 billion ($A31.99 billion) as the number of vehicles sold decreased 3.7 per cent. The fall was led by a 9.1 per cent plunge in the European market.

The results are in line with analysts' forecasts. A poll by Dow Jones Newswires had forecast net profit at euro 1.31 billion ($A2.04 billion).

The operating margin rose to euro 722 million ($A1.12 billion) or 3.5 per cent of revenues compared with 2.8 per cent a year earlier and analyst expectations of 3.1 per cent. Renault attributed the gains to cost controls and sales outside Europe.

Operating profit at Renault's automobile division - a key indicator of the company's financial health - improved to 2.3 per cent from 1.6 per cent a year ago.

Chief Executive Carlos Ghosn is trying to turn Renault and Nissan around with the launch of new models. Last year, he called 2006 a "year of transition" and introduced a target of a 3 per cent operating margin for 2007.

Renault confirmed on Wednesday it is sticking with this target.

Ghosn is pinning his hopes on the rapid expansion of the low-cost Logan sedan - launching this year in India, Iran and Brazil - as well as the launch of a new Twingo super-mini and Laguna upscale sedan in the final quarter.

Nissan, which is also headed by Ghosn, said on Tuesday its April-June quarter profit fell 16 per cent because of higher material costs and a shift among consumers away from trucks and other vehicles that deliver heftier profits. Renault owns 44 per cent of Nissan.

Ghosn said the Tokyo-based automaker promised revival with models that have rolled in showrooms recently, such as the Altima and Infiniti G35, and more models in the pipeline. Nissan is launching 11 new global products this year.

Renault shares closed down 3.5 per cent at euro 108.10 in Paris.

The French car-maker's cross-town rival PSA Peugeot-Citroen fared better. The company said on Wednesday that first-half earnings rose 60 percent on rising demand, better pricing and the rollout of new models.

Peugeot-Citroen reported a first-half net profit of euro 492 million ($A765.4 million) and an operating margin of 2.7 per cent

?© 2007 AP DIGITAL

Source: [url=http://www.smh.com.au/news/Business/Renault-reports-drop-in-H1-net-profit/2007/07/26/1185339137619.html]Sydney Morning Herald[/url]