Renault boosted its first-half operating margin 22% year on year to EUR722m (3.5% of revenues down 1.4% to EUR20,562m, compared with 2.8% a year ago.)
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The group reiterated full-year operating margin guidance of 3% for 2007.
The automobile division operating margin of EUR455m or 2.3% rose compared with 1.6% in first-half 2006.
Renault said it achieved the H1 result “despite a lacklustre environment thanks to cost control and the development of sales outside Europe”.
Group sales declined 3.7% to 1.27m units, reflecting contrasting performances, the automaker said.
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By GlobalDataEuropean market sales dropped 9.1% to 866,440 vehicles but, outside the continent, volume rose 10.2% to 400,651 units, or 32% of volume worldwide.
Renault’s experience mirrors that of French rival PSA Peugeot-Citroen which offset essentially flat H1 ’07 growth at home in western Europe with healthy sales – and profit – rises in emerging markets such as eastern Europe and China.
Renault’s automobile division’s contribution to group revenues decreased 1.5% to EUR19,567m. The decline in sales in the France and Europe regions was partly offset by continued growth in international activities and the sales of spare parts, powertrains and built-up vehicles to partners.
Sales financing subsidiary RCI Banque contributed EUR995m to revenues, up just 1% on H1 ‘06.
Renault said it reduced purchasing costs despite an additional EUR147m charge for increased raw material prices, general and administration expenses decreased, manufacturing costs declined, international activities expanded and the LCV segment performed well.
First-half 2007 R&D expenses were flat at EUR1.2bn. The expense capitalisation rate was 54.5% (44.3% a year ago), reflecting, Renault said, the rapid development of new models, 25 of which are in the pre-production stage.
Exchange rate fluctuations, mainly on the US dollar, Turkish lira and the Mercosur (Latin America) currencies, had a negative impact.
RCI Banque contributed EUR267m to the operating margin against EUR269m in first-half 2006.
Operating income was EUR689m, compared with EUR649m in first-half 2006.
Renault reported EUR837m profit for its share in the net income of associated companies.
Nissan’s contribution totaled EUR615m, compared with EUR1,013m in first-half 2006 due to the decline in the Japanese automaker’s results and unfavourable developments in the yen/euro exchange rate.
Renault’s share in the net income of other associated companies, in particular AB Volvo, was EUR222m, compared with EUR199m in 2006.
H1 2007 net income was EUR1,317m versus EUR1,659m a year ago.
Earnings per share were EUR4.96 versus EUR6.34.
Looking ahead, the French automaker said it was continuing to implement its so-called Renault Commitment 2009 programme with new models like the redesigned entry-level Twingo and the redesigned Laguna, on sale from October.
“Outside Europe, strong sales growth will continue on the back of the momentum achieved by Logan, combined with the success of the Renault models launched in Mercosur and the good performance of Renault Samsung Motors,” the firm said.
