On the day it announced a new business plan targeting a 6% operating profit by 2009, Renault reported a 2005 result of EUR1.32bn or 3.2% of revenues, down from 5.2% (EUR1.6bn) a year ago, and said this year’s figure was likely to fall further.

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But net income was nonetheless EUR3,367m on revenues up 1.9% to EUR41,338m.


Vehicle sales in 2005 rose 1.7% to 2,533,000 units, exceeding the 2.5 million mark for the first time. Sales in Europe declined 4% in a stable market, while international sales climbed 21.2%.


The automobile division share of group revenues rose 2% to EUR39,458m.


Sales financing subsidiary Renault Crédit International contributed EUR1,880m, on par with 2004.

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Automobile operating margin was EUR858m, or 2.2% of revenues, compared with 4.3% last year.


Although international division profit rose in 2005, the contribution from European sales fell sharply, mainly due to what Renault said was “a less favourable phase in the product cycle”, – in other words, mostly an ageing Laguna line and the launch of the redesigned Clio and updated Megane.


Profitability was hit by “a deterioration in the geographical and product mix, the decline in transaction prices, higher raw material prices and the cost of meeting the Euro 4 emission standards,” Renault said.


Automobile R&D expenses rose in 2005, chiefly due to the growth in international business and the development of new vehicles, though purchasing costs fell.


Apart from making cars, the automaker profited EUR191m mostly from capital gains on the sale of Spanish land and the disposal of its 17.88% stake in heavy truck maker Nissan Diesel.


Nissan contributed EUR1,825m in 2005, compared with EUR1,689 million a year previously.


This excluded one-time income of EUR450m generated when the company finished transferring part of its pension liabilities to the Japanese government.


The share in the net income of other associated companies, notably AB Volvo, was EUR322m, compared with EUR234m in 2004.


Pre-tax net income was EUR3,784 million, compared with EUR3,464 million in 2004.


After tax, net income was a record EUR3,367m, compared with EUR2,836m in 2004, producing a return on equity of 17.6%. Earnings per share were EUR13.19, compared with EUR11.16.


Expecting higher raw material costs this year, an extremely competitive European market and continuous international growth, Renault plans an operating margin of 2.5% of revenues for 2006 and stable unit sales year on year.


Graeme Roberts