Renault First-Quarter Revenue Falls 12% on European Drop
Renault SA (RNO), France’s second-biggest carmaker, said first-quarter revenue fell 12 percent as an intensifying car-market contraction in Europe that’s now in its sixth year overwhelmed delivery growth outside the region.
Sales dropped to 8.27 billion euros ($10.7 billion) from a restated 9.37 billion euros a year earlier, the Boulogne- Billancourt, France-based company said yesterday in a statement. Revenue was less than the 8.57 billion-euro average of 11 analyst estimates compiled by Bloomberg.
Renault and larger competitor PSA Peugeot Citroen (UG) cut their forecasts for industrywide European car sales in 2013 as a recession in the 17 countries that use the euro pushed the automotive market in Europe to a two-decade low. Renault reiterated targets for its carmaking division of a positive operating margin and positive free cash flow this year.
“You saw a huge destocking at the dealer level, and therefore the revenue was a negative surprise, but I think this will revert over the year,” Sascha Gommel, an analyst at Commerzbank AG with a hold recommendation on Renault shares, said by phone.
The European car-market contraction also contributed to first-quarter operating-profit declines of 26 percent at Volkswagen AG (VOW), the region’s largest auto manufacturer, and 56 percent at Daimler AG, owner of the Mercedes-Benz luxury brand. Daimler reduced its full-year forecast for earnings before interest, taxes and one-time items yesterday, saying profit will fall rather than match the 2012 level.
Renault shares were up 12 cents, or 0.2 percent, to 50.66 euros as of 09:07 a.m. in Paris trading. The French manufacturer has advanced 25 percent this year, valuing the company at 15 billion euros.
Renault’s margin and cash-flow forecasts depend on no further worsening in the European car market, Chief Financial Officer Dominique Thormann said yesterday on a conference call with analysts. Industry deliveries in the region are probably “not far from the bottom,” he said.
Currency effects reduced Renault’s first-quarter revenue by 251 million euros, the French company said in a presentation. Shifts in the value of Argentina’s peso and Brazil’s real against the euro were the main contributors, Thormann said.
The French company’s first-quarter deliveries in Europe fell 12 percent. It predicted that the region’s car market will contract 5 percent this year rather than a 3 percent drop forecast earlier. Paris-based Peugeot, Europe’s second-biggest carmaker, also forecast a 5 percent drop in full-year industry sales in the region yesterday, instead of a decline in a range of 3 percent to 5 percent.
Sales by Renault in the Eurasia region, which includes former Soviet states, jumped 21 percent, the company said. Middle Eastern and African vehicle sales rose 9.1 percent and registrations in the Asia-Pacific market increased 3.8 percent. Renault’s sales in the Americas fell 8 percent, led by a 19 percent drop in Brazil because of the shutdown of a factory during a capacity-expansion project.
Renault and Peugeot have been among the top vehicle discounters in the past year in Germany, Europe’s biggest market, according to Autohaus PulsSchlag magazine. Renault, which sees price pressure remaining high in the region, reduced customer incentives there by 2 percentage points during the first quarter and it’s working on a “virtuous pricing policy,” Jerome Stoll, the company’s head of sales, said on the call.
To contact the reporter on this story: Mathieu Rosemain in Paris at firstname.lastname@example.org