French carmaker Renault today reported a small decline in operating income from its core car and financing activities but kept its full-year margin target despite a rise in steel prices.
Boosted by Europe's top-selling Megane model and the popularity of the no-frills Logan, the world's fourth-biggest automobile manufacturer said group revenues rose 3.8 per cent to €21.3 billion ($25.7 billion).
But this masked a decline in Turkey and in central Europe and a slow take-up of the Modus model. While Renault will launch a remodelled Clio later in 2005, new chief executive Carlos Ghosn had decided to delay the launch of a new Twingo until 2007 for fine tuning of the new model.
Finance director Thierry Moulonguet said the full-year cost impact of higher raw material prices such as steel would be at the top of an earlier indicated €150-200 million range.
He added the second half was seasonally always less than the first, while Renault would have costs to launch the new Clio.
The net profit for the first half jumped 52 per cent to €2.211 billion from €1.453 billion in the previous year, restated for the new IFRS accounting standards, which was ahead of the average expectation of €1.83 billion by analysts polled.
This net figure was boosted by one-off gains, and the operating income of the automobile and financing activities slipped to €943 million from €1.106 billion, below an average expectation of €982 million.
Renault maintained its target of a full-year group operating margin of more than 4 per cent, after the first-half figure slipped to 4.4 per cent from 5.4 per cent a year ago.