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Renault loses 1,666 million until June due to its departure from Russia

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Renault lost 1,666 million euros in the first half of the year due to the accounting effect of the exit from Russia -until then its second largest market after France-, which led to a negative charge of 2,323 million .

Without this loss, the company detailed that it would have obtained a net profit of 657 million euros, compared to 199 million in the same period of 2021, it specified this Friday in a statement.

The French automobile group registered a turnover of 21,121 million euros between January and June (0.3% more than a year ago) and an operating profit of 988 million euros, which is more than double that in the same period of 2021.

The company also substantially improved its operating cash flow, which reached 956 million euros, compared to a negative figure of 514 million a year ago.

On the basis of these results, Renault has updated its forecasts for the whole of 2022 upwards, with an operating margin of more than 5% and an operating cash flow of more than 1,500 million euros.

The improvement in profitability is due to three factors: higher prices, lower discounts and the fact that customers are increasingly choosing (70%) the more equipped versions of their main models.

In addition, the group’s net debt has been reduced to 426 million from 1.6 billion six months earlier, despite the impact of some 800 million euros in the higher cost of raw materials.

“We have achieved it in what is probably the worst international situation in the last fifteen years,” said the group’s CEO, Luca de Meo, in a conference with analysts.

Renault has abandoned its operations in Russia in light of international sanctions over the invasion of Ukraine, although it maintains an option to return for the next six years.

In that country, it controlled the main national producer, AvtoVaz, manufacturer of the Lada brand, and owned a factory that produced Renault, Dacia and Nissan models. The group had a total of 40,000 employees there.

Russia’s departure “was a difficult but necessary decision that has not affected the result of the rest of the group,” De Meo said.

The group sold 1,000,199 vehicles in the first half, with a drop of 29.7% compared to the same period in 2021, largely due to the departure of Russia, since without that factor, the decrease would have been 12 %.

The company blamed this decline on the shortage of semiconductors that affects the sector globally, a situation that is expected to improve slightly during the second half of this year.

“We anticipate that there will be an improvement that will allow us and other manufacturers to increase production volumes,” explained Thierry Piéton, the group’s chief financial officer.

However, Renault has orders equivalent to 4.1 months of production, which according to De Meo already guarantees a remarkable level of sales in the second half of the year.

Regarding the possibility of power cuts this winter in Europe, the Italian executive explained that they concentrate almost all their European production in three countries with very low dependence on Russian gas: France, Spain and Romania, and that they are carrying out a performance plan energy from its factories to cut consumption.

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