Renault Profits Climb to €583 Million despite Eurozone Crisis

Merci Beaucoup Nissan! The Alliance that was established in 1999 when Nissan was facing bankruptcy now has the longest-lasting cross-cultural partnership in the auto industry.

Renault posted a profit of €583 million in the first half of 2013 in the face of the Eurozone crisis. The unexpected positive increase of 15% in earnings compared to last year came as Group revenues of 20,441 million dropped – 0.9% compared to the  first-half 2012. Automotive operational free cash flow was negative at -€31 million with an automotive net cash of €732 million at end of June 2013.

Renault Group sales of 1.3 million vehicles were down -1.9% as international growth was not strong enough to offset the continued weakness of sales in Europe, and France in particular where Renault is the second largest automaker. Much of the good news came from Nissan’s contribution to Renault, which holds 43% of the Japanese automaker. The contribution of coupled companies, mainly Nissan, was €749 million in the first half of 2013.

“In a difficult environment, the success of new models, cost controls and the commitment of all the teams enabled the Renault group to post a positive operating margin for the Automotive in the first half year. We are on track to achieve the objectives we announced for 2013,” said Carlos Ghosn, Chairman and Chief Executive Officer of Renault in a statement.

The Automotive division posted a profit of €211 million (1.1% of revenues), up €95 million cialis online to buy compared to the first half of 2012. Despite negative volume and currency effects, the Group benefited from its claimed pricing policy that restricts incentives and cost controls – particularly from a deal with its French unions to hold the line on labor costs for three years while eliminating 17% of the jobs.

Sales Financing contributed €372 million to Group profits, compared with €392 million in the first half of 2012. The -€20 million decrease was due to an unfavorable currency effect in Brazil and a slight rise in distribution costs while the cost of risk (defaults) improved to 0.40% of average performing loans (versus 0.44% in the first half of 2012).

Other operating income and expense items came to -€832 million, mainly due to a €512 million charge that covers the Group’s entire exposure to Iran, which it is vacating because of international pressure; to €227 million in impairment charges for vehicle programs, and €173 million in restructuring costs related to the union competitiveness agreement in France. Operating income came to -€249 million, compared with €545 million in the first half of 2012.

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