Helsinki – Renault’s profit surged 38 percent in 2016
after the French carmaker gained market share in Europe with an expanded lineup
of sport utility vehicles and upgraded models like the Megane hatchback.
Operating profit increased to 3.28 billion euros ($3.5
billion) from 2.38 billion euros a year earlier, the Boulogne-Billancourt-based
company said in a statement. The figure exceeded the 3.05 billion-euro average
of 16 analyst estimates compiled by Bloomberg. Revenue jumped 13 percent to
51.2 billion euros. The shares rose the most in seven months.
“It is a very good year, and we reached the targets that
we set for ourselves,” CFO Clotilde Delbos told reporters on Friday. “We
reached these good results,” despite struggles in once-strong markets like
Russia and Brazil.
After overtaking French rival PSA Group as Europe’s
second biggest carmaker last year after Volkswagen, Renault faces the challenge
of maintaining momentum as growth in its home region slows. That will put more
emphasis on Renault’s efforts to reduce its reliance on Europe by returning to
Iran and expanding in India and Africa.
2022 target
To show that growth can continue, the company intends to
present a plan in October to increase annual revenue 37 percent to 70 billion
euros by 2022 and lift its operating margin to 7 percent of sales in five years
from 6.4 percent.
Renault is “one of the most attractive earnings
transformation stories” in the European auto industry, Thomas Besson, an
analyst with Kepler Cheuvreux, said in a note. “Renault’s 2017 earnings should
grow further on full availability of new models and the early stage of an emerging
markets’ recovery.”
Read also: Renault faces emissions backlash
The shares rose as much as 4.1 percent, the biggest jump
since July 12, and were up 2.1 percent at 84.50 euros at 9:14 a.m. in Paris
trading. The stock has climbed 18 percent in the past 12 months.
Last year, Renault widened its market share in Europe to
10.1 percent as it lured customers with SUVs like the Kadjar and Captur and
refreshed the Megane as well as the Scenic minivan. The French manufacturer
expects sales of its namesake Renault brand and the budget Dacia nameplate to grow
further this year. Renault’s worldwide deliveries rose 13 percent in 2016,
compared with 4.6 percent across the sector.
Russian loss
In 2017, Renault is targeting higher operating profit and
revenue at constant exchange rates, excluding the impact of Russian carmaker
AvtoVAZ, in which Renault owns a majority stake and which it is consolidating.
The company expects the global car market to grow 1.5 percent to 2 percent,
paced by a 2 percent increase in Europe and France.
Renault’s alliance with Japanese automaker Nissan Motor
Co. came just short of surpassing General Motors Co. and joining the ranks of
the top-three automakers by global sales. The automotive partnership, which
combined delivered 9.96 million vehicles in 2016, was lifted by the addition of
Nissan’s minority stake in Mitsubishi Motors. Nissan’s contribution to Renault
amounted to 1.74 billion euros, while Lada-maker AvtoVAZ was a negative 89
million euros.
Renault, which is the target of a probe by French
prosecutors into allegations of emissions irregularities, hasn’t made any
provisions for potential damages, Delbos said. The company has repeatedly
insisted that its vehicles comply with French and European Union rules and
aren’t equipped with software to cheat on emissions. The CFO said the company
had no information about the content of the French investigation.