French carmaker Renault today posted a worse-than-expected €2.712 billion net loss for the first half on plunging sales but revised its full-year forecast for the world automotive market upwards.
Renault confirmed it aims at a positive free cash flow and an increase in market share for the full year.
The group, hit like fellow carmakers late last year by a widespread industry sales crisis, was forced in February to abandon its earlier 2009 profitability targets and focus instead on cutting costly stocks of unsold vehicles.
Renault now expects the world automotive market to fall 12 per cent compared with 2008 to more than 57 million units.
It had previously predicted a drop of 15 per cent but said it had seen positive effects from tax incentives in the first half. In Europe, it expects the car market to improve in the second half and finish the year with an 8 per cent decline, after a 13.7 per cent fall in the first six months.
Renault itself is showing "resilience", chief executive Carlos Ghosn said in a statement, adding the group was preparing for the post-crisis period with zero emission vehicles, expansion of its entry-level range and a move to expand synergies with alliance partner Nissan.
The group said that despite the effects of scrapping incentive schemes in major European markets, Europe contributed to half the total revenue decline. Group revenues fell 23.7 per cent to €15.991 billion in the period.
"The product mix has been been pulled downwards," Renault said. Smaller, cheaper models are eligible for government scrapping schemes, under which drivers are paid cash bonuses to trade in old cars for newer, greener ones.
In Europe, several currencies also adversely affected revenues, Renault said in a statement.
Renault posted a group operating loss of €946 million for the first half, against an operating income of €845 million in the same period a year earlier.
The group said it had further cut stocks by €891 million compared with the level at the end of 2008.
Earlier this month Renault posted a 16.5 per cent drop in vehicle sales for the first half, clinging on to a stable market share.
Mr Ghosn, who is also CEO of its Japanese alliance partner Nissan, said earlier in July that he expected 2010 to be "as difficult as 2009" as the auto industry crisis continues.
French carmaker PSA Peugeot-Citroen yesterday posted a first half loss and said it did not see a recovery in Europe starting before the end of 2010.
But shares in the group surged as investors focused on its improved cash position.
Nissan yesterday posted an 86 per cent fall in quarterly operating profits but shares rose in the session after the publication.
Reuters