Renault profits slump as competition intensifies

Japan Today

4 days ago

Renault has hit a rough patch as it reckons with its stake in trouble partner Nissan and a sluggish European market
By Taimaz SZIRNIKS
French automaker Renault said Thursday that the tough retail and commercial van market in Europe had squeezed profits although it was able to maintain profitability better than many rivals.
Excluding exceptional items, Renault saw its first-half net profit slump 69 percent to 461 million euros ($526 million).
However, it suffered 11.6 billion euros in exceptional losses related to its Japanese partner Nissan. That includes 9.3 billion it announced at the beginning of July resulting from a change in the way it handles accounting of its Nissan stake so that it no longer impacts its operating results.
Renault rescued Nissan in 1999 and the two automakers have held stakes in one another since, in a rocky partnership that never saw them merge.
Heavily indebted Nissan has hit another rough patch, posting a net loss of $4.5 billion for the financial year to March 2025 and announcing plans to cut 15 percent of its workforce.
Renault has fared well in recent years, largely thanks to a number of new own-branded models brought to market, as well as its low-cost Dacia range, and by tapping into a consumer shift to hybrid models.
However Renault's heavy reliance on Europe, where the market has never fully recovered from pandemic-era drop in sales and contracted by 1.9 percent in the first half of the year, means it faces a difficult road ahead.
Moreover, in June, it lost its dynamic CEO, Luca de Meo, to Kering, a French luxury conglomerate that includes Gucci.
He was replaced on Wednesday by Francois Provost, a long-time company veteran who has been helping execute its strategic plan.
"Our first-half results, in a challenging market, were not aligned with our initial ambitions," Provost, 57, said in a statement, saying actions were already being taken to achieve the company's targets.
"Nevertheless, Renault Group's profitability remains a reference in our industry, and we are determined to maintain this standard."
Provost said the current trading environment "is difficult in Europe, marked by a drop in the retail market (for private customers) and by a market for commercial vehicles which is experiencing a significant decline".
"We know exactly what must be done, particularly having benchmarked our best competitors, especially our Asian competitors," Provost observed.
Provost underlined the company's costly commitment to its Alpine team in F1, saying it had ambitions to "achieve success" in 2026 with a new car.
There had been speculation over those ambitions given the team's struggles at the tail end of the constructors' championship which some observers had suggested might see Renault sell up.
Internationally, Provost said Renault will maintain South America and India among its "priorities," but added there was "no major alliance project" with Chinese partner Geely.
Analysts at Oddo BHF said Provost was bringing a much-awaited visibility to Renault and forecast the constructor would be able to "bounce back quickly after this difficult first half".
Renault said it's operating margin in the first half was 6.0 percent -- down by 2.1 percentage points -- but said it hopes to raise that to 6.5 percent for the full year.
Rival Stellantis -- which includes the French brands Citroen and Peugeot -- saw its margin squeezed to just 0.7 percent in the first half of this year.
Volkswagen, Europe's largest carmaker saw its margin slide to 4.7 percent.
Both groups are more exposed to U.S. tariffs than Renault, which does not operate in the United States.
Renault's revenue rose by 2.5 percent overall, but automotive revenue only edged 0.5 percent higher in the first half of the year.
© 2025 AFP