Investors Have Faith In Big New Model Programme
Renault’s first half operating profit fell nearly 20 per cent, but its forecast of positive operating profit in the second half calmed investors still reeling from Peugeot-Citroen’s more negative outlook.
“Renault did say that it expected second half Automotive operating profit to be positive with price/mix improving and despite the higher headwinds,” said Citigroup Global Markets analyst Philip Watkins.
Renault’s profit excluding one-time items fell to €630 million in the first half from €780 million in the same period of 2010. Renault also blamed supply problems and raw material cost increases, saying events in Japan wiped €150 million from profits in the first half.
“Supply problems will subside in the second half,” Renault CEO Carlos Ghosn said.
Analysts said Renault’s problems have been compounded by its ageing model lineup, but investors were impressed that despite this, the company had performed better financially than its compatriot Peugeot and its more modern cars.
“In the context of significantly lowered expectations for Peugeot-Citroen and the fact that product mix has not been as good for Renault as for Peugeot-Citroen recently, the market will take some comfort from this,” said Citigroup’s Watkins.
Twingo, Clio
At the Frankfurt Car Show next month Renault is showing a face-lifted Twingo, and next year will premier its important Clio small car.
Deutsche Bank analyst Gaetan Toulemonde looks to Renault’s long-term new models to boost profits.
“We will have to wait until mid 2012 to see a stronger product offensive, with the Clio launch, the effect of the launch of the electric Zoe and the ramp-up of the green field factory in Morocco. In early 2013, Renault should start to produce Logan derivatives at the AvtoVAZ plant in Russia. The group will renew 35 per cent of its lineup between mid 2012 and mid 2013. Our “buy” case remains unchanged,” Toulemonde said.
Neil Winton – August 1, 2011
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