Renault posted an 11.8-percent drop in revenues in the first quarter of 2013 to EUR8.27 billion ($10.7 billion), no thanks to the European vehicle market that shrinks faster than the growth pace outside the region. The French carmaker also posted a 4.7-percent fall in global deliveries to 608,455 vehicles in the quarter. In a statement posted on its investors' Web site, Renault reduced its 2013 forecast for industry-wide European car sales.
The carmaker now expects a 5-percent drop in industry-wide sales instead of the 3-percent fall it earlier predicted. Renault noted that the conditions in Europe “were tougher than expected" in the first three months of 2013.
Renault, however, reiterated its full year targets of a positive operating margin and positive free cash flow for its carmaking division. In 2012, the carmaker posted EUR729 million in earnings before interest, taxes and one-time gains or costs.
Renault is trying to penetrate further into Latin America and Russia in order to reduce its dependence on Europe, where it posted a 12-percent drop in first-quarter deliveries.
The carmaker posted a 21-percent surge in sales in the Eurasia region, which includes former Soviet states. Renault also posted a 9.1-percent hike in sales in the Middle East and Africa and a 3.8-percent increase in the Asia-Pacific region.
Renault, however, saw its sales in the Americas drop 8 percent, led by a 19-percent dive in Brazil due to a plant shutdown to increase capacity.
Both Renault and PSA/Peugeot-Citroen reduced their forecasts for industry-wide European car sales in 2013 as recession in the region drops the vehicle market to a two-decade low. Sascha Gommel, an analyst at Commerzbank, remarked that there was a “huge destocking at the dealer level,” and the revenue was a negative surprise.
For the full year 2012, Renault logged EUR729 million in earnings before interest, taxes and one-time items. Renault’s operating profit for 2012 was higher than the average of EUR698 million of 15 analyst estimates compiled by Bloomberg News.
Renault’s automotive unit also became debt-free in 2012 after slashing spending and abstaining from reducing vehicle prices. At the end of 2012, the unit had net cash position of EUR1.49 billion ($2 billion), compared with a net debt of EUR299 million at the end of 2011.
According to Carlos Ghosn, Renault chief executive, the French carmaker was able to take advatage of growth outside Europe. He remarked that the difficult environment in Europe and France forced Renault to implement a “rigorous sales policy” and pursue a strategy of global growth.