Renault Loses €3 Billion, Won’t Attempt To Predict 2010

The bad news is that Renault lost an eye-watering €3 billion in 2009, compared with a profit of €600 million the previous year, and claims to have little clue about what will happen in 2010.

The good news is that investors expect steady progress over the next few years as black ink is gradually restored, even though Renault was unwilling to speculate on its bottom line.

“Frankly we think that in 2010 there is still a lot of uncertainty and volatility and we don’t want to spend our time every month correcting the earnings guidance,” said CEO Carlos Ghosn after being asked to predict 2010’s financial outcome.

“We think 2010 is particularly obscure,” Ghosn said.

Scrapping boost
Renault’s sales performance actually improved towards the end of the year, boosted by government scrapping schemes, which are now running down across Europe.

Investors say Renault’s product programme is hitting a sweet spot, with the new Megane renewal now almost complete. The new Megane CC and Wind roadster will be unveiled in Geneva next month.

Merrill Lynch reckons that Renault earnings before interest and tax (EBIT) will hit €648 million in 2010, although this is less than its earlier estimate of €1.2 billion, because European market sales forecasts have been cut. Morgan Stanley forecast Renault’s operating margin will reach 0.4 per cent in 2010, up from a negative 1.2 per cent in 2009. Citigroup Global Markets says Renault’s group operating margin will reach 0.8 per cent in 2010, 3.5 per cent in 2011, and 4.3 per cent in 2012.

Bernstein Research said it believes Renault expects to be profitable in 2010, but the company feels it is premature to say so.

Last year was supposed to a peak for Renault’s performance.

Ghosn’s “Renault Commitment 2009” included the pledge to become Europe’s most profitable car company by 2009, boost annual car sales by 800,000 vehicles and raise profit margins to 6%.