Renault posts loss, sees difficult 2010

[February 11, 2010]  PARIS (AP) -- French carmaker Renault SA on Thursday said it made its first annual loss in 2009 since it was privatized thirteen years ago, as the economic downturn cut into sales, and predicted another tough year in 2010.

Renault's net loss of euro3.07 billion ($4.23 billion) was greater than the euro2.59 billion forecast by analysts and compares with 2008's euro571 million profit. Revenue fell 10.8 percent to euro33.71 billion.

The last year Renault had a full year net loss was 1996, the year it was privatized.

In the second half, Renault lost euro356 million after government scrappage schemes held off the worst of the crisis.

"We are continuing our work on building the Renault of the post-crisis period," said CEO Carlos Ghosn. "Economic conditions will remain difficult in 2010."

Renault said the European car market could contract by 10 percent this year.

Shares were down 5.1 percent at euro31.11 in Paris midday trade.

Renault said it met both its targets in 2009: achieving positive cash flow -- the funds a company is able to generate after maintaining or expanding assets -- at euro2.09 billion and increasing market share, although by a modest 0.1 percent.

It used the cash flow to reduce debt from euro7.9 billion to euro5.9 billion and vowed to achieve positive cash flow again this year.

Credit Suisse analyst Stuart Pearson said the debt reduction is "a very impressive performance" that he "thought would take another two years to achieve."

He added he was concerned about a lack of earnings guidance going forward. Ghosn said that the outlook was too uncertain to give a forecast.

He also said now is not the time to sell Renault's 21 percent stake in Swedish truck maker AB Volvo because the share price is low.

Last year, Renault slashed inventories, cut investment and reduced its headcount to save money.

Renault spokeswoman Frederique Le Greves said around 1,000 people should leave the company through attrition this year.

In 2009, Renault cut its workforce by 7,600 through a voluntary redundancy scheme and attrition. At the end of the year, the total headcount was 121,422.

In exchange for state help during the crisis, Renault promised to make no forced layoffs in France, but recent comments by Industry Minister Christian Estrosi suggested the government wants a bigger say in the running of the company.

Ghosn was summoned to the Elysee presidential palace to explain reports that it was considering transferring production of its popular Clio 4 model from France to Turkey. He issued a statement saying that the car would be built in both France and Turkey, where it is cheaper to produce.

In a conference call with analysts, Ghosn was quizzed about the influence of the French government, which owns around 15 percent of the company.

He said that while "some governments are more vocal than others," governments everywhere are sensitive about auto industry jobs.

"We have a duty to anticipate and explain before it happens," Ghosn said.

Renault also said it is seeking economies through its alliance with Japanese partner Nissan Motor Co. In 2009 the companies saved euro1.5 billion in synergies, and plan to save an additional euro1 billion this year.

Chief Operating Officer Patrick Pelata said Renault is in advanced talks about setting up a car manufacturing plant in Algeria.

The results compare to crosstown rival PSA Peugeot Citroen SA, which on Wednesday said it had lost euro1.16 billion in 2009 -- in line with analyst expectations -- compared with a net loss of euro363 million in 2008.

[Associated Press; By EMMA VANDORE]

Associated Press writer Fanny Dassie contributed to this report from Paris.

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