Renault sees 2021 profit despite chip crunch, raw material costs
French carmaker Renault said on Friday it expected to deliver a full-year 2021 profit even as a global shortage in semiconductor chips and rising raw material costs crimped car production.
Renault said it now expects the chip shortage to lead to a production loss of 200,000 units over the course of 2021, up from its previous forecast of a loss of 100,000 units.
The carmaker posted a half-year net profit versus a hefty loss for the same period in 2020 due to rising car sales and a turnaround plan focused on profitability.
The company reported an operating margin of 2.8% for the first half of the year and said it is aiming for a full-year margin “of the same order.”
These results “mark only the first step in our turnaround, which should accelerate with arrival of the new vehicles in preparation,” Chief Executive Officer Luca de Meo said in a statement.
Renault almost returned to positive cash flow in the first half of the year, from negative cash flow of nearly 6.4 billion euros in the year-ago period.
Chief Finance Officer Clotilde Delbos said the carmaker’s improved liquidity position “allows us to pursue our recovery with serenity.”
Last month, Renault unveiled a more ambitious strategy for electric vehicles (EVs), betting on new, affordable versions of its iconic small cars of the past to catch up with Volkswagen in the fast-growing sector.
After posting a drop in car sales for five consecutive quarters, Renault’s revenue for the first half of 2021 rose 18.7%.
CEO De Meo, a former Volkswagen executive who turned the German automaker’s Seat brand around, has been tasked with helping Renault turn a new page after a troubled spell.
De Meo’s turnaround plan – which he calls a “Renaulution” – includes laying off thousands of workers, cutting the carmaker’s model range, and improving cooperation on production with its alliance partners – Nissan and Mitsubishi.
The French carmaker said last month that by 2030 the Renault-Nissan-Mitsubishi alliance will produce one million EVs globally a year, up from the 200,000 they made in 2020.
Renault on Friday posted a net profit of 354 million euros ($420.52 million) for the first six months of 2021, versus a hefty loss of nearly 7.3 billion euros for the same period in 2020, which included lengthy industry-wide production shutdowns to slow the spread of the global coronavirus pandemic.
Former boss Carlos Ghosn was ousted and arrested in Japan in 2018 on charges of financial malpractice, which he denies. Ghosn left behind a sprawling model range with low margins, and Renault racked up heavy losses when global demand for cars fell.
