PARIS (Agefi-Dow Jones). Automaker Renault boosted its full-year numbers on Friday as its half-year results were hit by the semiconductor crisis and the shutdown in Russia, but came in well above analysts’ expectations.
In fiscal year 2022, Renault expects to achieve an operating margin of more than 5% and generate free operating cash flow of 1.5 billion euros. The Diamond Group expected an operating margin of 3% as well as generating positive operating cash flow in the automotive industry.
Renault also confirmed that it expects a production loss of 300,000 vehicles in fiscal 2022 due to semiconductor shortages.
The Group realized these prospects after posting a net loss in the first half of the year due to an exceptional expense of EUR 2.3 billion related to the termination of its activities in Russia. In May, the manufacturer sold a 100% stake in Renault Russia to the city of Moscow, and its 67.69% stake in Russian manufacturer AvtoVAZ was transferred to NAMI, an automotive research institute that is subordinate to the Russian Ministry of Industry. As such, operations in Russia were classified as ‘discontinued operations’ in the Group’s half-yearly financial statements.
Thus, the group’s share of net losses amounted to 1.36 billion euros, compared with a profit of 354 million euros in the first half of 2021.
Net income from continuing operations, which thus excludes operations in Russia, was EUR 657 million, compared to EUR 199 million in the first six months of 2021. Nissan’s contribution was positive at EUR 325 million.
Group turnover was €21.1 billion, up 0.3% year-on-year on a reported basis and 1.1% at constant exchange rates. Car sales rose by 0.3% to 19.6 billion euros. The group’s efforts to significantly increase prices had a positive impact of 7.4 points in the first half and 8.4 points in the second quarter.
The group’s operating margin was €988 million compared to €432 million in the first half of 2021. In relation to revenue, the level of operating margin amounted to 4.7% against 2.1% a year earlier. As such, the group has almost reached its 2025 target of an operating margin of 5% three years ahead.
Automotive operating margin reached 2.1% in the first half of the year.
Automotive free cash flow was positive at €956 million.
According to the company’s consensus, analysts had expected average revenue of €20.7 billion, operating margin of €610 million, or 2.9% of turnover, and free operating cash flow from the automotive industry of €30 million.
The manufacturer will host an investor day in the fall, during which it will update its medium-term financial targets as well as its strategy.
Renault said it repaid 1 billion euros of a state-guaranteed loan (PGE) provided in 2020 in the first half of the year and plans to repay another 1 billion euros in the second half. The entire amount of PGE will be reimbursed no later than the end of 2023, reminded Renault.
-Julien Marion, Agefi-Dow Jones; +33 (0)1 41 27 47 94; [email protected] editorial: ECH
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July 29, 2022 01:04 AM ET (05:04 GMT)