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Renault drives out of last year's slump

French car giant Renault on Tuesday (July 29) reported first-half net profits nearly 20 times better than during the slump of last year as European sales offset weaker growth in emerging markets.

PARIS: French car giant Renault on Tuesday (July 29) reported first-half net profits nearly 20 times better than during the slump of last year as European sales offset weaker growth in emerging markets.

Renault reported net profits of 749 million euros (US$1 billion, S$1.25 billion) in the first six months of the year, compared to a meagre 39 million euros it achieved in the first half of 2013 when its figures were hit by the ending of its business in Iran.

Chief executive Carlos Ghosn said in a statement that his group's profits and registrations had improved in the first half "thanks to the success of... recently launched models."

"These results are in line with the full-year target," added Ghosn.

Renault sold 1.36 million new cars in the six months to June, a gain of 4.7 percent compared to the outcome in same period last month.

"In the first half of the year, the strong performance of the group in Europe, driven by the success of new models... enabled the group to offset the sharp slowdown in its main emerging markets," Renault said.

Despite this, turnover was actually down 3.0 percent, at 19.8 billion euros - a decline the company blamed on "adverse" currency market moves.

The price of shares in the company was showing a fall of 3.24 percent to 67.25 euros in mid-morning trading because traders and investors considered the results disappointing, particularly in terms of the firm's cash situation. The overall French market as measured by the CAC 40 index was down 0.16 percent.

Brokers Aurel BGC commented that the operating profit was above the general figure expected by analysts.

But sales were disappointing as was a negative figure for cash generated by operations, known as free cash flow, of 360 million euros in the first half, more than 10 times the equivalent figure last year, Aurel BGC said.

At Bank of America-Merrill Lynch, analysts also commented that this figure was unduly weak.

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