Renault/Nissan CEO Carlos Ghosn sees good times ahead -- everywhere but in Europe.
The Renault Group posted a profit of €1.7 billion, or $2.27 billion, for 2012 thanks to asset sales and a healthy contribution from affiliated companies, including Nissan and the group’s Russian partner AutoVaz where income tripled last year.
The reasonably strong performance by Renault, the second-largest of the French automakers, came in sharp contrast to its Paris-based rival PSA Peugeot Citroen, which ran up losses of €5.01 billion, or $6.74 billion, last year raising further concerns about its long-term health.
But both makers will be facing a tough year ahead. After falling to the lowest level since 1995, the European market remains uncertain and is expected to contract by at least 3% in 2013, with the French market down 3% to 5%, forecast Renault Chairman and Chief Executive Officer Carlos Ghosn.
“In a contrasted global automotive market, Renault benefited from the growth of markets outside Europe, which account for over half of its sales,” noted Ghosn. “Thanks to the commitments of all its employees, the Renault group is pursuing its strategy of global growth while strengthening its financial situation and delivering a positive automotive free cash flow.”
(PSA Peugeot Citroen loses $6.7 bil for 2012. Click Herefor that story.)
Despite Europe’s ongoing problems, the global automotive market is expected to grow 3% year on year. This growth will be fueled by positive momentum expected in China, North America, India, Russia and Brazil, Renault forecast. The Indian market is expected to grow by 11%, the Russian by 5% and the Brazilian markets will expand by 1.5%. Renault is either a significant player in those emerging markets or, in the case of Brazil, making a significant push to expand its position.
In Europe, the Group is targeting market share growth with new product launches such as the Captur, ZOE, Clio Estate and New Logan and the full impact of the products launched at the end of 2012 such as the Clio V and New Sandero with a sustainable pricing policy.
Overall, Renault Group revenues dropped 3.2% to 41.270 billion euros. With the strong increase in sales outside Europe of 9.1% failing to offset the decrease in Europe where sales dropped 18%.
Operating income was €122 million, after recognizing other negative operating income and expense items, which totaled €607 million, mainly from impairment charges and write-offs on several vehicle lines, the devaluation of the Iranian currency, and restructuring costs.
The automotive division posted a slightly negative operating margin as compared with apositive €330 million in 2011. The positive impact from cost reductions for €528 million and the good control of expenses did not offset the sharply negative volume impact €501 million from increased competition in Europe.
The contribution of sales financing to Group operating margin came to €754 million, compared with €761 million in 2011.
The contribution of the Renault Group’s Japanese alliance partner Nissan dropped slightly to €1.234 billion, down slightly from the €1.33 billion contribution in 2011, while Volvo’s also shrank to €80 million. However, the contribution from AutoVaz increased to €186 million euros from €49 million the previous year.