French carmaker Renault posted EUR729 million in earnings before interest, taxes and one-time items for 2012, according to its recently disclosed financial results. Renault operating profit for 2012 was essentially higher than the EUR698-million average of 15 analyst estimates compiled by Bloomberg News. Renault’s automotive unit also managed to become debt-free in 2012 as it cut back on spending and abstained from reducing vehicle prices.
According to the carmaker’s financial results for 2012, its automotive unit's net cash position was EUR1.49 billion ($2 billion) at the end of 2012, compared with a net debt of EUR299 million at the end of 2012. Renault chief executive Carlos Ghosn said in a statement that the carmaker Renault benefited from the growth outside Europe.
He noted that the difficult environment in Europe and France forced them to implement a “rigorous sales policy.” Ghosn said that the Renault group is pursuing a strategy of global growth while boosting its financial situation.
Jose Asumendi, an analyst at JPMorgan Chase & Co., described Renault’s financial figures as good results, noting that the outlook of positive operational free cash flow and positive operating margin is reassuring for the investors.
According to Renault Chief Financial Officer Dominique Thormann, the carmaker’s auto operations logged EUR25 million in losses in 2012, in contrast to EUR330 million in profits a year earlier. Asset writedowns at the unit reached EUR279 million.
Thormann told analysts that reorganization costs in 2012 reached EUR110 million, while currency effects slashed EUR184 million from operating profit. Renault lost market share in Europe in 2012 but reported gains in Latin America and Russia.
The carmaker’s sales in Europe dropped 19 percent, worse than the regional industry's 7.8 percent decline. Renault is hoping that its new models – like the revamped Clio subcompact and budget Dacia Logan – will enable it to recover its European market share.