Published on August 1st, 2014 | by Daniel Sherman Fernandez0
Renault Sees 25% Profit Jump In 6 Months
Renault has just reported a 25% jump in first-half operating profit thanks to cost-cutting even as currency headwinds and mounting inventories hurt sales and cash flow. Earnings before interest, taxes and one-time items climbed to 729 million euros ($979 million) from 583 million euros a year earlier.
The automaker stuck to its goal of increasing full-year operating profit on the back of higher sales and vehicle deliveries. The company said the European auto market recovery was stronger than foreseen. It predicted the market will grow by 3 percent to 4 percent this year instead of the 2 percent to 3 percent previously forecast.
Earnings were helped by 412 million euros in cost reductions, including 200 million euros from purchasing. Logistics, research and development delivered a further 190 million.mRenault is cutting thousands of jobs, mainly in France, as it implements a 2013 union deal in pursuit of a 5 percent margin goal for 2016. Renault last year reduced its domestic workforce by almost 5,600 jobs to 48,550 as of Dec. 31.
Net income, which had been blighted by a 511 million euro writedown on Renault’s Iran business a year earlier, rose to 801 million euros from 97 million. Automotive operating profit was 348 million euros, compared to 211 million in the first half of last year.