Renault reports 2006 net income of ?‚¬2.9 billion and 2.56 ...

Renault??™s global sales decreased 4% last year, although growth outside Europe continued, accounting for 30% of total sales. Renault achieved its 2006 operating margin target, generating net income of ?‚¬2,943 million - a slight 0.8% dip in revenues. The company ended 2006 with a ratio of net debt to shareholders' equity of 11.4%.
The Group reported revenues of ?‚¬41,528 million, down 0.8% on 2005 on a consistent basis.
The downturn is mainly attributed to:
- A lower contribution from the France and Europe Regions (down 4.2% on 2005) where Renault pursued its selective commercial policy pending the product offensive planned to start in second-half 2007,
- A stronger contribution from the other Regions ??“ Euromed, Americas and Asia-Africa ??“ over the same period (up 2.3%) with sales growth driven by the three brands: Renault, Dacia and Samsung.
In 2006 Group operating margin totaled ?‚¬1,063 million or 2.56% of revenues, versus 3.20% in 2005. Business in 2006 was impacted by lower sales volume in Europe, and the consequent lower absorption of fixed costs, a higher-than-expected rise in raw materials prices, and the cost of transition to the Euro 4 emissions standard, not passed on in sale prices.
Owing to the continued development of 26 new products, along with environmentally-friendly and safety technologies, Research and Development expenditure totalled ?‚¬2,400 million, up ?‚¬136 million on 2005.
Sales financing contributed ?‚¬492 million to Renault??™s operating margin versus ?‚¬465 million in 2005.
The Group reported operating income of ?‚¬877 million, compared to ?‚¬ 1,514 million in 2005. Net financial income totalled ?‚¬61 million, compared to an expense of ?‚¬327 million in 2005. Efficient management of debt, the net cost of which was ?‚¬19 million (compared to ?‚¬57 million in 2005), and the capital gains made on Scania shares in the second half-year were two main drivers of 2006 financial income.
Renault reported net profit of ?‚¬2,260 million from its share in the income of associated companies, particularly Nissan (?‚¬1,871 million) and Volvo (?‚¬384 million).
The company??™s tax charge came to ?‚¬ 255 million compared with ?‚¬ 331 million in 2005. Net income amounted to ?‚¬ 2,943 million. Earnings per share came to ?‚¬11.17. At Renault??™s AGM on May 2, the Board will recommend increasing the dividend to ?‚¬ 3.10 per share, from ?‚¬ 2.40 last year.
Net financial automotive debt totalled ?‚¬2,414 million at December 31, 2006, or 11.4% of equity compared with 11.5% in 2005. Shareholders' equity increased by ?‚¬ 1,540 million to ?‚¬21,201 million at December 31, 2006, versus ?‚¬ 19,661 million at end-2005.
Renault has committed to make and sustain itself as the most profitable European volume car company. In 2006 the Group made progress in all three areas of the plan: quality, profitability and growth.Significant progress has been made in terms of product quality. This improvement is reflected in a 30% year-on-year drop in warranty costs. The percentage of ???very satisfied; customers across the Renault network worldwide rose from 71% to 75% in 2006.
Although growth is not reflected in the 2006 results, Renault says it is in the pipeline; five of the 26 models included in the company??™s product plan (Logan Van, Twingo, Laguna saloon, estate and Renault??™s first cross-over) have already been launched in 2007.
Renault expects its sales will start to grow again in 2007. In Europe, where its markets are stable, Renault will pursue its selective commercial policy to defend margins, but in the second half, will progressively benefit from the launches of the new Twingo and Laguna. Outside Europe, the launch of Logan in Brazil, Iran and India in spring 2007 will contribute to sales growth. At year's end a cross-over vehicle will be launched by Renault Samsung in South Korea.
Overall, Renault??™s global sales are forecast to increase slightly in 2007. Most of the growth will occur in the second half-year.
To keep on track with the commitment of 6% operating margin in 2009, annual milestones for profitability were set in July 2006. Renault has confirmed the target for 2007 of a 3% operating margin . This figure is the average for what it says will be a year of contrasts, with the first half lower than 2006 and the second half marked by an increase.

Source: [url=http://www.autoindustry.co.uk/news/08-02-07_12]Auto Industry[/url]