Renault sales and profits fall on diesel, currency setbacks - Automotive News Europe

PARIS -- Renault's revenue and profits fell in 2018, hit by collapsing diesel sales, exchange-rate setbacks and a withdrawal from the Iranian market.

Revenue fell 2.3 percent to 57.42 billion euros ($64.7 billion), while recurring operating profit dropped 6.3 percent to 3.61 billion, for a 6.3 percent operating margin, the company said in a statement Thursday thet reported annual earnings.

Net income came in at 3.3 billion euros, down sharply from the 5.31 billion recorded in 2017.

Excluding currency effects, revenue would have risen 2.5 percent, Renault said.

"2018 was clearly a challenging year in which we faced expected as well as unexpected difficulties," new CEO Thierry Bollore said. The results "demonstrate the group's resilience," he said.

Renault said sales to partners including Nissan fell by 946 million euros ($1.1 billion) in 2018, reflecting collapsing diesel demand. A further negative impact is expected this year, the company said.

Nissan's contribution to Renault earnings came in at 1.51 billion euros, a 46 percent decline from 2017 when Nissan's profit was inflated by one-off gains.

Renault's own cost-saving efforts in purchasing and manufacturing contributed 421 million euros to profit, a 37 percent decline.

Weaker targer

Renault set a weaker profit goal for 2019, citing exchange-rate challenges and market uncertainties. The company targeted profitability of "around 6 percent," compared with 6.3 percent in 2018.

Global and European car demand, except in the event of a no-deal Brexit, should be stable this year with growth in Russia and Brazil, Renault said.

A tougher business environment is adding to pressure on Renault and alliance partner Nissan to ease tensions in their two-decade old alliance forged by their former leader Carlos Ghosn, on top of a looming Brexit, record investments in electric cars and a slowing Chinese market.

Renault said on Wednesday it had blocked 30 million euros in deferred and severance pay to Ghosn, who had served as its CEO since 2005, and as chairman for almost a decade.

The automaker said it saw no need for any financial provisions in relation to the scandal and ongoing investigation into Ghosn's conduct and executive payments by Renault and the jointly owned Renault-Nissan BV alliance management company.

On Tuesday, Nissan took the unusual step of taking a 9.2 billion yen ($83 million) charge to reflect accumulated payments due to Ghosn. The move escalates the case against the former chairman after Tokyo prosecutors indicted Ghosn for allegedly understating his income at Nissan by tens of millions of dollars.

Renault's new Chairman Jean-Dominique Senard is flying to Japan this week with a brief to mend relations as Nissan seeks to gain more control in the partnership.

Bloomberg contributed to this report

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