Renault drives in record results in 2004

8th February 2005, Comments 0 comments

PARIS, Feb 8 (AFP) - French car manufacturer Renault clocked up record profit in 2004 with a boost from Japanese partner Nissan and Volvo trucks, but warned on Tuesday that rising raw material costs could hold it back this year.

PARIS, Feb 8 (AFP) - French car manufacturer Renault clocked up record profit in 2004 with a boost from Japanese partner Nissan and Volvo trucks, but warned on Tuesday that rising raw material costs could hold it back this year.

Full-year 2004 net profit surged by 43 percent to EUR 3.55 billion (USD 4.52 billion) from the 1993 figure, the highest profit in the company's history and beating market expectations.

Analysts had expected net profit of EUR 3.29 billion, up 32.5 percent from a year earlier, according to JCF Group in Paris.

Renault said in a statement that its stake in Nissan Motor Company had made a strong contribution - EUR 2.2 billion - with 15 months of results taken into account to close the accounting gap between the two companies' fiscal years.

Renault owns 44.4 percent of Nissan which owns 15 percent of Renault.

Chief executive Louis Schweitzer said that the results "position us as the best European generalist, which is important for the balance of the alliance with Nissan".

Renault also owns 20 percent of Volvo, the Swedish truck manufacturer, and earnings from this investment also soared, advancing 63 percent to EUR 253 million.

Presenting his last annual results before being replaced in April by Nissan CEO Carlos Ghosn, Schweitzer told journalists that the results were "signposts for the future" because they were based on improved quality, renewal of the product line and growing internationalization.

Ghosn, a former Renault executive, is credited with turning around the debt-ridden Nissan, the second-largest Japanese auto maker, after Renault took a controlling stake in the company.

Full-year operating income shot up by 74 percent to EUR 2.15 billion in 2004 from EUR 1.23 billion the previous year, with the operating margin rising to 5.9 percent from 3.7 percent, beating the company's own forecast of 5.5 percent. "Renault's own performance has improved," Schweitzer noted.

Renault said it expected to post a full-year operating margin of "higher than four percent" in 2005, under the new IFRS accounting standards, pressured by a "sluggish market" and rising raw materials prices.

Applying IFRS accounting standards to 2004 results would have reduced the operating margin by EUR 300 million or 0.75 percent of sales, which means the margin would have been 5.15 percent, Schweitzer said.

Full-year sales rose by 8.4 percent to EUR 40.7 billion from EUR 37.6 billion, the group said, topping analysts' forecasts of 40.81 billion, according to JCF.

Sales were driven by the company's product range, a higher mix of vehicles sold, as well as buoyant group sales outside western Europe, Renault said.

"In 2005, Renault expects the automobile market to remain stable in Europe and to grow slightly in the other main countries in which the group operates, with the exception of Turkey," Renault said.

It planned to pursue development outside Europe supported by its current range of models and the roll-out of the budget-priced Logan in a number of countries, as well as production start-ups in Russia, Morocco and Colombia.

Investors cheered the results, sending the share price up 2.42 percent to EUR 65.55 in midday Paris trading, outperforming a flat market, with the CAC 40 index up 0.01 percent at 3,982.45 points.

© AFP

Subject: French News

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