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Renault’s Horrific First Half Was A Swing Of €4 Billion Plus

Will it sell Volvo Truck stake, and part of its bank?

Renault’s first half performance was horrendous, but things could get better in the second half.

Renault lost €2.7 billion in the first half compared with a net profit of €1.5 billion in the same period of 2008 – that’s a swing of more than €4 billion.

To make matters worse, that was also a period of maximum activity induced by the government inspired scrapping boom in small car sales, which may well expire at the end of the year.

But Commerzbank analyst Gregor Claussen believes Renault has been doing some things right, including savage removal of stocks, and cutting spending on research and development. Renault also suffered from huge losses from its partnerships in Nissan, Volvo Trucks and the Russian venture AvtoVAZ totalling €1.58 billion.

Nissan will improve
“We believe that these losses will be significantly reduced in the second half of the year thanks to the full effect of the Megane introduction, a stabilisation in U.S. vehicle sales which will be positive for Nissan, and an improvement at (AvtoVAZ and Volvo Trucks),” Claussen said.

Some analysts also expect Renault to sell at least 50 per cent of RCI, its financial services subsidiary, and its holding in Volvo Trucks.

The Volvo holding could be worth upwards of €2 billion.

Neil Winton – August 15, 2009

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