Renault has reported a 43% rise in net income to €3.5 billion and 5.9% operating margin, up €1 billion in 2004 to €2.4 billion thanks to profitability gains in Europe and on international markets.
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The group’s net income is equivalent to a return on equity of 28.4%.
Revenues rose 8.4% to €40.7 billion in 2004, driven by the successful product range, a higher mix of vehicles sold and buoyant group sales outside western Europe.
Renault accelerated debt reduction in 2004, with debt declining by €1.2 billion.
The automobile division’s net indebtedness accounted for just €541 million, or 3.4% of group shareholders’ equity at end-2004.
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By GlobalDataIn 2004, the group posted a significant 4.2% increase in worldwide sales to a record 2,489,401 vehicles, representing a global market share of 4.1%. While consolidating its position as western European leader, Renault accelerated the pace of growth outside Europe, particularly in Turkey, Eastern Europe, Russia, Africa and the Middle East.
In Western Europe, Renault was the leading European brand with 1.8 million passenger cars and light commercial vehicles sold and market share of 10.8%.
In the rest of the world, the group saw a sharp rise in sales (up 16.5%) to nearly 700,000 vehicles. The proportion sold outside Western Europe came to 27.2% of total unit sales in 2004, compared with 24.3% in 2003. That performance was achieved on the back of strong growth in Renault sales in Turkey, an increase in Dacia sales and sharp rises recorded in many market areas, including Russia and North Africa.
In the Korean market, which contracted nearly 14%, Renault Samsung Motors saw market share slip 1.5 points to 9.3%, ahead of the renewal of its range.
Group revenues grew 8.4% year-on-year to €40.7 billion.
The automobile division posted an 8.7% rise in revenues to €38,645 million, compared with €35,566 million in 2003. The sharp gain was attributable to the successful product range and a higher mix of vehicles sold, particularly the entire Mégane line and LCVs. Other factors contributing to the upturn were the increase in sales volume in 2004, an improved version mix, higher prices of new vehicles in Europe, buoyant spare parts business and sales of LCVs to Nissan and General Motors.
The sales financing division reported a 3.6% year-on-year rise in its revenue contribution to €2,070 million.
The group’s operating margin climbed 72.5% in 2004 to €2,418 million, or 5.9% of revenues, compared with €1,402 million in 2003 (3.7% of revenues).
The automobile division’s operating margin came to €1,974 million (5.1% of revenues), compared with €1,035 million in 2003 (2.9% of revenues). Coupled with the rise in revenues, this was attributable to the ongoing reduction of purchasing costs and tighter cost control in European factories. The contribution from international markets to operating margin rose sharply in 2004, as sales in Turkey soared and Mercosur turned in a better performance following the measures introduced in 2003.
The sales financing division reported operating margin of €444 million, or 21.4% of revenues, compared with €367 million (18.4% of revenues) in 2003.
Other operating income and expenses showed a charge of €270 million in 2004, compared with a charge of €168 million in 2003.
In 2004, income included a €45 million capital gain from property sales, including €42 million from the sale of land in Meudon, France. Expenses included €175 million of restructuring charges related mainly to early retirement plans in France and Spain, in addition to €80 million of non-recurring operating expenses. Of this total, €49 million covered end-of-life vehicle recycling.
As a result, operating income for the year was €2,148 million, up 74% on 2003’s figure of €1,234 million.
As announced on February 9, 2004, the group recorded 15 months of Nissan income in its financial statements for fiscal year 2004 to align the recognition of Nissan’s results on Renault’s accounting period. Nissan Motor contributed €1,767 million for the 2004 fiscal year and an additional €432 million for the previous quarter (October – December 2003). The equity accounted contribution of other group companies, including AB Volvo, came to a positive €253million, compared with €155 million in 2003.
The group’s pre-tax income was €4,252 million, compared with €3,023 million in 2003. After tax and minority interests, Renault posted net income of €3,551 million – a historic high – compared with €2,480 million in 2003. Return on equity was 28.4%.
Earnings per share came to €13.35, versus €9.32 in 2003.
Outlook for 2005
In 2005, Renault expects the automobile market to remain stable in Europe and to grow slightly in the other main countries in which the group operates, with the exception of Turkey.
Against this background, Renault will benefit in 2005 from the ongoing renewal of its range.
Building on the success of the Mégane family and light commercial vehicles, Renault will profit from the first full year of Modus sales and the launch of the all-new Clio in the second half.
Overall, in a sluggish market and an environment impacted by the rise in raw material prices, Renault intends to continue to grow its global sales and report a group operating margin higher than 4% of revenues.
