Paris (AFP) – French automaker Renault said Thursday that the tough retail and commercial van market in Europe had squeezed profits, although it was able to maintain profitability better than most rivals. Excluding exceptional items, Renault saw its first half net profit slump 69 percent to 461 million euros ($528 million). However, it suffered 11.6 billion euros in exceptional losses due to its partner Nissan, including the 9.3 billion euros it announced at the beginning of the month due to switching the accounting treatment of its Nissan stake so it will no longer impact its operating results.
Renault rescued Nissan in 1999, and the two automakers have held stakes in one another since, in a rocky partnership that never saw them merge. Heavily indebted Nissan has hit another rough patch, posting a net loss of $4.5 billion for the financial year to March 2025 and announcing plans to cut 15 percent of its workforce. Renault has fared well in recent years thanks to bringing a number of new models to market under its own brand as well as that of its low-cost unit Dacia, and by tapping into a consumer shift to hybrid models.
However, Renault’s heavy reliance on Europe, where the market has never fully recovered from the pandemic-era drop in sales and contracted by 1.9 percent in the first half of the year, means it faces a difficult road ahead. Moreover, it lost in June the dynamic Luca de Meo as chief executive to Kering, a French luxury conglomerate that includes Gucci. He was replaced on Wednesday by Francois Provost, a long-time company veteran who has been helping execute its strategic plan.
“Our first-half results, in a challenging market, were not aligned with our initial ambitions,” Provost said in a statement, adding that actions were already being taken to achieve the company’s targets. “Nevertheless, Renault Group’s profitability remains a reference in our industry, and we are determined to maintain this standard.” Renault turned in an operating margin of 6.0 percent — down by 2.1 percentage points — but said it hopes to raise that to 6.5 percent for the full year.
Rival Stellantis — which includes the French brands Citroen and Peugeot — saw its margin squeezed to just 0.7 percent in the first half of this year. Volkswagen, Europe’s largest carmaker, saw its margin slide to 4.7 percent. Both groups are more exposed to US tariffs than Renault, which does not operate in the United States. Renault’s revenue rose by 2.5 percent overall, but automotive revenue only edged 0.5 percent higher in the first half of the year. Renault’s shares were down 0.4 percent in late morning trading while the CAC 40 index was 0.2 percent lower.
© 2024 AFP
