Renault Profit Surges 38% as Buyers Snap Up SUVs

Renault SA’s profit surged 38 percent in 2016 after the French carmaker gained market share in Europe with an expanded lineup of sport utility vehicles and upgraded models like the Megane hatchback.

Operating profit increased to 3.28 billion euros ($3.5 billion) from 2.38 billion euros a year earlier, the Boulogne-Billancourt, France-based company said in a statement. The figure exceeded the 3.05 billion-euro average of 16 analyst estimates compiled by Bloomberg. Revenue jumped 13 percent to 51.2 billion euros.

“It is a very good year, and we reached the targets that we set for ourselves,” Chief Financial Officer Clotilde Delbos told reporters on Friday. “We reached these good results,” despite struggles in once-strong markets like Russia and Brazil.

After overtaking French rival PSA Group as Europe’s second biggest carmaker last year, Renault faces the challenge of maintaining momentum as growth in its home region slows. That will put more emphasis on Renault’s efforts to reduce its reliance on Europe by returning to Iran and expanding in India and Africa. The company plans to present a plan in October to push annual revenue to 70 billion euros by 2022 and lift its operating margin to 7 percent of sales in five years from 6.4 percent.

This year, Renault targets higher operating profit and revenue at constant exchange rates, excluding the impact of Russian carmaker AvtoVAZ, in which Renault owns a majority stake and is consolidating. The company expects the global car market to grow 1.5 percent to 2 percent, paced by a 2 percent increase in Europe and France.

Renault’s alliance with Japanese automaker Nissan Motor Co. came just short of surpassing General Motors Co. and joining the ranks of the top-three automakers by global sales. The automotive partnership, which combined delivered 9.96 million vehicles in 2016, was lifted by the addition of Nissan’s minority stake in Mitsubishi Motors Corp. Nissan’s contribution to Renault amounted to 1.74 billion euros, while AvtoVAZ was a negative 89 million euros.

source: bloomberg