Renault "Not Dying, Unlike Some Others On The Ward"

Bertel Schmitt
by Bertel Schmitt
renault not dying unlike some others on the ward

If you look at half year sales in Europe, then you see Renault as the worst performer of the volume makers. With EU sales down 17.09 percent, the Renault Group took a bigger hit than European patients Opel (- 15 percent) and PSA (-13.9 percent). Even troubled Fiat was doing better than Renault, by a hair (-17.08 percent for Fiat.) Whereas the percentages carry the smell of death, Renault’s half year results smell downright rosy.

The Renault Group reported a half year group profit of €1.02 billion ($1.26 b) before tax, and €786 million after tax. While this is nowhere near the X-rated profits of Volkswagen, or those of Daimler, a billion euro is a billion euro, and it is a miracle when your home market collapses.

Why the difference? Renault appears the best managed carmaker in trouble. Sure, most of the profit (€630 million) comes from Renault’s shares in other companies, notably Nissan. As Volkswagen and Daimler will confirm, global diversification is a good hedge against regional calamities. Sure, a big chunk of the money (€395 million) comes from sales financing. A well run bank that does not dabble in mortgages or currency gambles is beneficial to a carmaker’s bottom line. Still, Renault has eked out €87 million from making and selling cars, which is, it bears repeating, a miracle.

Astounded analysts expected Renault’s auto manufacturing business to report a loss. “The patient is not well, but not dying either, unlike some others on the ward,” Bernstein analyst Max Warburton told Reuters.

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  • Raded Raded on Jul 27, 2012

    BMW and Mercedes have the benefit of gravy train badges, which keep them profitable, but Renault-Nissan still being profitable despite Renault's biggest market taking a gigantic hit says a lot about their management. Market fluctuations shouldn't necessitate government assistance, it should force companies to improve their business practices. Or go out of business, whichever.

    • Billfrombuckhead Billfrombuckhead on Jul 27, 2012

      Forget about the French government bailing out Nissan so Renault would a have a more worldwide presence and economies of scale?

  • Beerboy12 Beerboy12 on Jul 27, 2012

    It's not a bad performance from a company from Europe, often perceived to be a bunch of socialist, union hugging liberals. I have always believed that a well run business can make profit in just about any environment. It takes a 3rd world despot dictator (like Bob Mugabe... Oh! No, he was elected in a free and fair election) to bring a good business to it's knees and France is far from that. Also, that is a very good point about the well run bank... very good.

  • Dimwit Dimwit on Jul 27, 2012

    I'm not sure just how "Euro" Renault is anymore. That said, the Board must think Ghosn walks on water. Between him and Mulally it must gall the GM Board of Bystanders to have to haved settled for Akerson.