Renault returns to profit, aims for 3 million sales

[February 10, 2011]  PARIS (AP) -- Renault SA said Thursday that strong demand outside Europe helped it reverse 2009's record losses last year, while it unveiled a plan to focus on small cars and developing markets to lift its sales above 3 million vehicles by 2013.

France's second-largest car maker reported net profit of euro3.4 billion ($4.6 billion) in 2010, compared with a net loss of euro3.1 billion in 2009, as the economic downturn forced it to slash inventories, cut investment and reduce its headcount to save money.

Renault also detailed plans to entrench growth and restore profits by 2013. The car maker pledged to improve its operating margin, a key measure of profitability, to over 5 percent by then, a level not seen since before Chief Executive Carlos Ghosn took charge in 2005.

Shares slumped, however, as investors were disappointed with the relatively unambitious targets. In late morning trading Renault shares were down 4.8 percent at euro46.23.

It is Ghosn's second attempt at turning around Renault, after failing to achieve the more ambitious 2009 targets set out when he became CEO. He blamed the global economic slowdown, which caused car markets to plunge and required the French government to provide a euro3 billion bailout for both Renault and rival PSA Peugeot Citroen.

Electric cars and developing markets are two of the pillars on which Ghosn has built his new bid to turnaround the car maker. The plan, dubbed "Drive the Change," depends on the successful rollout of four electric vehicles by 2012, and further models after that.

Together with alliance partner Nissan Motor Co., Renault aims to sell 1.5 million electric vehicles by 2016. The two companies say their combined production capacity of electric cars will reach 500,000 a year by 2015.

Renault is also making a push into three developing markets that it has identified as key to achieving its 3 million target: Brazil, India and Russia.

Along with electric cars, Renault is also pushing a new, lower-emission combustion engine in a bid to position itself as a leader in green vehicles. The company said these initiatives would cut its fleet's emissions to an average below 120 grams of carbon dioxide per kilometer by 2013, and to below 100 g/km by 2016.

Renault's sales rebounded 15.6 percent last year to euro39 billion, after a 10.8 percent slump in 2009.

The company sold 2.6 million vehicles last year, the most ever and more than management had forecast, with growth in all regions. That's up from 2.3 million vehicles in 2009.

The company forecast the European car market to be flat to slightly down in 2011, as the withdrawal of government scrappage bonuses continues to be felt. Last year the market for passenger cars fell 5.5 percent in the European Union, according to Brussels-based European Automobile Manufacturers' Association.

Renault has been hit recently by a suspected case of industrial espionage that France's industry minister appears to involve Renault's electric car program. Renault and partner Nissan have invested $4 billion to develop electric cars.

[Associated Press; By GREG KELLER]

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