FRANCE: Renault revenue up, margin forecast dropped

By just-auto.com editorial team | 24 October 2008

Renault Group has reported consolidated revenues up 9% to EUR30,091m for the first nine months of the year but reduced its operating margin forecast down from 4.5% to between 2.5% and 3%.

It said automobile and sales financing activities grew 0.9% and 1.8%, respectively, over the same period.

Total revenues for Q3 2008 were down 2.2% year on year to EUR9,149m.

The automaker said the sharp fall in European markets in the second half had prompted it to revise its full-year operating margin target.

It said the Renault group has EUR9.5bn in confirmed lines of credit with top-level banks.

"Amid worsening global financial and economic conditions, the group is well positioned to weather the crisis," the automaker said on Friday.

"It can rely on a rejuvenated range, growth in international markets, reduced costs and greater operating efficiency, improved working capital requirements and, in the longer term, mass marketed zero-emission vehicles."

In a European market down 4.4%, Renault increased its market share 0.2 points to 8.9% thanks to new models. Dacia sales grew 38.1%, boosted by the launch of Sandero hatchback versions.

Renault said its 6.8% increase in registrations in France was accompanied by a change in the product mix, with the bonus/penalty measure on CO2 emissions favouring sales of A/B segment models.

But the Europe region's contribution to revenues at end-September 2008 fell 1.1%, with contrasting trends - Europe excluding France declined 2.7% while France rose 1.6%.

Outside Europe, the group - which like French rival PSA does not compete in the US and Canada - grew sales in its three key regions, reflected in a 1.8-point rise in their revenue contribution.

Sales in the Americas rose 13.5%, buoyed by Brazil and Argentina where Renault did particularly well with the Sandero which it builds locally.

In the so-called Euromed region sales increased 5.9% boosted by 24.6% growth in Russia.

Sales in Asia-Africa rose 17.9% but this region's contribution has been hit affected since the start of the year by the depreciation of the South Korean won, which had "a strong impact" on revenues.

Renault said other activities made a positive contribution of 0.2 point to revenues. These included EUR165m from AvtoVAZ for manufacturing and sales rights for one model and a number of components.

Sales financing made a EUR1.57bn contribution to Renault group revenues in the first nine months of 2008, up 1.8% year on year though the contribution from RCI Banque fell 2.5% year on year in Q3 in what Renault called "a particularly tense financial environment".

Looking ahead, Renault said: "The evolution of the European car market has worsened considerably in the third quarter. The market could end 2008 down 8% compared with 2007. In addition, some emerging markets are beginning to show signs of slowing growth.

"For full year 2008, and without further deterioration in car markets, group volumes should slightly exceed 2007 levels and Renault should achieve a consolidated operating margin between 2.5% and 3%."

It will not provide its 2009 outlook until 2008 full-year results are released in February.

"The group is currently assessing the consequences in the deterioration of market conditions."