|
Renault profit slumps
|
 |
February 12, 2002: 11:59 a.m. ET
French carmaker posts 77% drop in '01 core profit, cites economic downturn.
|
PARIS (Reuters) - Renault SA posted stable net profit for 2001 Tuesday due to a dramatic rebound at its Japanese partner Nissan Motor.
But it said core profit slumped 77 percent due to aging products in Europe and economic turmoil in its key foreign markets.
Net income at Europe's fourth-largest carmaker totaled  1.051 billion, down slightly from 1.080 billion a year earlier. Operating profit slid to 473 million from 2.022 billion as sales fell 9.5 percent to 36.35 billion.
Operating profit was slightly ahead of consensus estimates while net profit fell in the middle of a wide range of market forecasts.
"The aim for 2002 is to consolidate the group's unit sales and maintain a positive operating margin on a consistent accounting basis," Renault said.
Management declined to provide additional details on its profitability goals within its key divisions.
Analysts have not ruled out an operating loss in 2002 for Renault, whose aging product lineup has forced it to spend more on incentives to bolster its western European market share, which remained at 10.6 percent.
The company's stock, which ended Tuesday at 41.83, fell 29 percent last year versus a relatively flat performance in the DJ Stoxx European autos index. It has edged up over 5 percent since the start of 2002.
Renault's bottom line in 2001 was boosted by a 497 million contribution from its Japanese global alliance partner Nissan, though its 20 percent stake in Swedish truck maker Volvo pulled profit down 26 million.
The net figure also was distorted by capital gains of 632 million from the sale of Renault's truck division to Volvo and the separate sale its logistics unit. Restructuring costs also pulled down profit by 204 million.
Sales crumbled in Renault's key foreign markets of Argentina and Turkey, where economic upheaval hit demand for big-ticket items like cars. Production cuts led to provisions of 41 million for Argentina, where Renault is the market leader.
Despite the drop in core earnings, Renault said it would maintain its annual dividend of 0.92 per share.
Even though earnings from its core carmaking business risk dwindling to nothing this year, that has not stopped Renault from embarking on a radical product revamp that has spawned its most unusual car designs in decades.
The Avantime luxury coupe and larger luxury Vel Satis sedan have brought a sparkle to the notoriously conservative car world, though questions remain over their ability to compete with more established luxury brands from Germany such as Mercedes-Benz and BMW.
Rising research and development costs linked to these new products also weighed on profits in 2001. Renault hopes to accelerate the rollout of new models to try to avoid the drops in demand that have plagued it in recent years.
Its domestic rival PSA Peugeot Citroen, which has two distinct makes to fall back on, has had huge success churning out a steady stream of new models as Renault's big volume products have grown old.
"We intend over the next three years to bring to the market about 20 new body styles, of which 15 will be under the Renault brand," Chairman Louis Schweitzer said. 
Copyright 2002 Reuters All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
|
|
|
|
|
|
|
