Renault embarks on post-Ghosn era with lower profit goal

Renault embarks on post-Ghosn era with lower profit goal

PARIS (Reuters) – Renault set a weaker profit goal for 2019 on Thursday, citing exchange-rate challenges and market uncertainties, as the French carmaker presented annual results without its recently ousted CEO Carlos Ghosn for the first time in 13 years.

FILE PHOTO – The logo of French car manufacturer Renault is seen at a dealership of the company in Illkirch-Graffenstaden near Strasbourg, France, January 10, 2019. REUTERS/Vincent Kessler/File Photo

The company, under new leadership since Ghosn was forced out over financial misconduct allegations, targeted profitability of “around 6 percent”, compared with a 6.3 percent operating margin recorded in 2018.

Revenue and profit both tumbled in 2018 on the combined effect of currency setbacks, a withdrawal from Iran and a diesel sales collapse that hit engine production for Renault’s alliance partner Nissan and affiliate Daimler.

The results nonetheless met Renault’s own targets, including revenue growth before currency effects and an operating margin above the 6 percent benchmark.

“2018 was clearly a challenging year in which we faced expected as well as unexpected difficulties,” new Chief Executive Thierry Bollore said, adding that the results “demonstrate the group’s resilience”.

Bollore, formerly Ghosn’s deputy, was promoted to CEO on Jan. 24, with outgoing Michelin boss Jean-Dominique Senard taking over his role as company chairman.

Ghosn faces trial in Japan after a Nissan internal probe uncovered evidence of misconduct including failure to declare more than $80 million in deferred income – straining relations with 43.4 percent-owner Renault. Ghosn denies wrongdoing.

Underscoring challenges to alliance cooperation, Renault’s sales to partners including Nissan fell by 946 million euros ($1.1 billion) in 2018, reflecting collapsing diesel demand. A further negative impact is expected this year, the company said.

Nissan’s contribution to Renault earnings came in at 1.51 billion euros, a 46 percent decline from 2017 – when the Japanese carmaker’s profit was inflated by one-off gains.

Renault’s own cost-saving efforts in purchasing and manufacturing contributed 421 million euros to profit, a 37 percent decline.

Overall revenue fell 2.3 percent to 57.42 billion euros, while recurring operating profit dropped 6.3 percent to 3.61 billion. Net income came in at 3.3 billion euros, down sharply from the 5.31 billion recorded in 2017, partly reflecting the exceptional year-earlier gain from Nissan.

Excluding currency effects, revenue would have risen 2.5 percent, Renault said. Analysts had expected recurring operating profit of 3.52 billion euros on revenue of 58.1 billion, based on the median of 12 estimates from an Infront Data poll.

Renault said on Wednesday it had blocked 30 million euros in deferred and severance pay to Ghosn, who had served as its CEO since 2005, and as chairman for almost a decade.

The carmaker said it saw no need for any financial provisions in relation to the scandal and ongoing investigation into Ghosn’s conduct and executive payments by Renault and the jointly owned Renault-Nissan BV alliance management company.

Reporting by Laurence Frost; Editing by Sudip Kar-Gupta

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