The sale of its Russian activities weighed on Renault’s accounts in the first half, but the French car group took advantage of an overall rise in car prices to improve its profitability and is optimistic for the year.
The sale of its Russian activities weighed on Renault’s accounts in the first half, but the French car group took advantage of an overall rise in car prices to improve its profitability and is optimistic for the year. The automaker on Friday posted a net loss of 1.6 billion euros for the first half, compared to 368 million euros in net profit for the same period of 2021. Better margins on its sales did not compensate the charge of 2.3 billion euros related to the sale of Avtovaz in Russia, where the group dominated the market with the Lada brand, acquired in 2014 and sold to the Russian State in May, following the war in Ukraine .
The group’s half-year turnover remained stable (+0.3%) at 21.1 billion euros, despite sales down 12% (excluding Russia), slowed by shortages of electronic chips. The group has improved its margins by selling its vehicles at higher prices, at higher trim levels, and with fewer discounts. It shows 4.7% operating margin excluding Russia. Net income from continuing operations was 657 million euros for the half-year. The launches of new models such as the Renault Arkana SUV, the Dacia Jogger wagon and the electric Megane E-Tech have helped improve these figures.
Shortage and inflation
The Dacia Sandero remains the best-selling vehicle to individuals in Europe, all manufacturers combined. And the group’s order book is at a “record” level of 4.1 months of sales on the continent, the main region for Renault. It is “a new step in the recovery of the group”, underlined the company in a press release, with “significant improvement in profitability, strong generation of free cash flow and strengthening of the financial structure”. Renault has slightly raised its forecasts for the year 2022, now aiming for an operating margin of 5%, in line with its long-term objectives.
The group has confirmed that the semiconductor crisis will have an estimated impact of 300,000 vehicles on its production for the year 2022. Electric and hybrid vehicles now represent 36% of group registrations, compared to 26% in the first half of 2021. Rise in the price of raw materials also weighed on the accounts for 797 million euros, partially offset by savings on purchases for 167 million. The group repaid in advance one billion euros of the loan guaranteed by the French State, paid at the start of the Covid-19 epidemic. It now intends to repay another billion in the second half of the year, and a final billion by the end of 2023 at the latest.