Renault remains structurally behind its competitors

Renault remains structurally behind its competitors

Renault is not Stellantis! The diamond firm certainly displays this Friday an operating margin of 4.7% in the first half, a marked improvement (2.1% a year earlier), with an (operational) result of 988 million euros. But the group is very far from the 14.1% announced Thursday by its main competitor. Even 9.7% recorded by the Volkswagen group And the only automotive activities (excluding financial activities) of Renault display a very measured margin, barely 2.1%. Which seems a priori the weakest in the global automotive industry! Unglorious. It is true that Renault has come a long way. The group’s margin was negative at -0.8% for the year 2020!

A loss of 2.3 billion euros, just for Russia

Renault plunged into the red in the first half, posting a sharp net loss of 1.35 billion. But this is cyclical, since due to the forced and forced abandonment of the first Russian manufacturer Avtovaz (Lada, Togliatti and Ijevsk sites) hitherto controlled by the Boulogne-Billancourt firm, as well as its own activities in Russia (Moscow factory). A blow. Russia was Renault’s second largest outlet behind France! Net income from discontinued operations shows a loss of 2.3 billion euros due to the adjustment charge related to the disposal of these industrial activities.

On the other hand, the net result of the activities continued by Renault is positive. But it remains very modest (+657 million). The profits from Nissan do not compensate for the withdrawal from Russia, by far. The contribution of the Japanese ally controlled at 43.4% by Renault amounts to 325 million. The net debt of the automotive activities was nonetheless reduced by 1.2 billion euros compared to December 31, 2021, including more than half a billion following the sale of activities in Russia. It now stands at 426 million.

12% drop in sales in the first half

Renault saw its sales decline over the half-year by 12% for a stable turnover (excluding Russian activities). This difference is due in particular to a rise in prices, of 7.4%. Dacia, Renault’s low-cost firm, has in particular revised its prices. In almost two years, a Dacia Sandero has seen its base price raised by 2,000 euros! Renault attributes this overall improvement in price levels above all to the success of the Renault Arkana SUV-coupé (100,000 orders in one year) and the launch of the electric Mégane (more than 25,000 orders in six months). For the latter, however, these scores are not fabulous and are in no way comparable to those of the previous thermal Mégane in its infancy. The raised Dacia Jogger station wagon collected more than 50,000 orders in six months. The group’s total portfolio of orders in Europe is equivalent to more than four months of sales.

Luca De Meo, general manager of the firm, foresees a continuation of the “rise in average prices in the third and fourth quarters. We intend to do even better with the Austral SUV (launched in the second half), the price of which will be higher than that of the average of the range”, specifies the manager. C-segment (compact) vehicles like the Austral are considered “twice as profitable as those in the B-segment (small cars)”, of which Renault is the leading specialist.

“The emergency resurrection phase is over at Renault,” said the managing director. “The revolution phase is well underway”, with “25 new vehicles planned by 2025”, particularly in the upper segments, added Luca De Meo. Renault also revised its financial outlook for the year 2022 upwards on Friday, now aiming for a group operating margin of more than 5% and a net cash flow of more than 1.5 billion euros for automotive activities. . Sign of the improvement in operational competitiveness: “our factories will run at more than 100% of our installed capacity in 2023 thanks to the lowering of the dead bridge (breakeven point)”, welcomes Luca De Meo.

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