Renault sees positive auto earnings despite European slump

Thu Feb 14, 2013 6:11am EST
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By Laurence Frost

PARIS (Reuters) - French carmaker Renault (RENA.PA: Quote) predicted an upturn in global sales will restore its manufacturing division to profit this year, as overseas growth outweighs Europe's slump.

The maker of Clio subcompacts and no-frills Dacia vehicles said new models would revive its European market share, after yearly group profit fell 15 percent amid shrinking regional demand.

Despite the net income decline to 1.77 billion euros ($2.4 billion) on a 3.2 percent revenue slide to 41.27 billion, operational cash flow came in at 597 million euros, lifting Renault's shares.

"(That) can only be described as magic when we see a car company facing falling sales," Credit Suisse analyst David Arnold said in a note.

The stock was up 5.5 percent at 45.56 euros as of 4:49 a.m. ET, extending its 12-month gain to 19 percent - compared with a 9 percent advance for the broader STOXX Europe 600 autos & parts index .

While the group's namesake brand has suffered badly in Europe, Renault's earnings are cushioned by income from its 43.4 percent stake in Japan's Nissan (7201.T: Quote) and resilient sales of its low-cost cars in emerging markets such as Russia.

The carmaker's performance and outlook contrasted sharply with French rival PSA Peugeot Citroen (PEUP.PA: Quote), which on Wednesday unveiled a 5 billion euro loss bloated by writedowns and a 1.5 billion deficit for its auto division.

Chief Executive Carlos Ghosn told reporters a recently updated Clio and upcoming mini crossover, Captur, will boost sales and profit for the Renault brand. The marque's share of European car sales dropped 1.2 point to 6.5 percent last year.   Continued...

The Renault company logo is displayed on the front of a car dealership in Andernos, Southwestern France, February 12, 2013. REUTERS/Regis Duvignau