Renault has reported net income for 2008 of EUR599m “amid severe downturn” on revenues off 7% year on year (but 28.7% in the final quarter) to EUR37,791m.

President and CEO Carlos Ghosn said: “A financial and economic crisis of massive proportions hit the global economy in 2008. Beginning in July, Renault implemented a special action plan that included working down inventory and cutting costs and investments to adjust swiftly to the new market conditions. The group will step up these measures in 2009 to improve free cash flow.”

Renault said it was on track to hit annual targets in the first half but, in the second half, “performance abruptly deteriorated, especially in the fourth quarter, as the financial crisis spread to the global economy, wiping out almost all the gains made over the previous three quarters”.

Group operating margin was EUR865m in the first half, or 4.1% of revenues, but shrank by EUR653m (-3.9%) in the second half to EUR212m, or 0.6% of revenues, for the full year.

Automobile’s operating margin fell to a negative EUR275m (-0.8% of revenues) in 2008 due to lower volumes and a substantial decline in production, “fierce competitive pressures”, rising raw materials prices and foreign exchange effects.

Renault said it expects market conditions to worsen in 2009 and has abandoned as “unachievable” commitments on volumes and operating margins made under Renault Commitment 2009.

Its priorities this year will be to control working capital requirements, in particular by reducing inventories by a further EUR800m to EUR1bn; focus capital expenditure and research and development programmes on strategic projects, including electric vehicles and environment-friendly engine performance.

Investments already made at the international level will be exploited to the full though vehicle projects have been put on hold at Chennai (India) and postponed at Tangiers (Morocco).

Total investments in 2009 will be at least 20% lower than in 2008 and Renault will boost cutting fixed costs, notably by controlling total salary costs and reducing G&A.

It will also work with Nissan on new opportunities, in particular by converging the engine range and working together on electric vehicles.