PARIS– French automaker Renault said Thursday that its profits were halved in the first half of this year, swerved off course by the current crisis at its Japanese partner, Nissan. Renault said in a statement that its net profit nosedived to 970 million euros ($1.1 billion) in the period from January to June from 1.952 billion euros a year earlier.
Earnings were "heavily penalised by the decline of Nissan's contribution," the French group said. Renault owns a 43-percent stake in the embattled Japanese group which this week announced 12,500 job cuts and a dramatic drop in quarterly profits as it struggles with weak sales and the arrest of its former chief. Normally, Nissan accounts for a large chunk of Renault's bottom line. Last year it contributed 805 million euros to the French carmaker's profits.
But Nissan has been buffeted by its poor performance in the United States and Europe as well as the scandal of financial misconduct charges against former boss Carlos Ghosn. Renault said group revenues also declined in the first half, falling 6.4 percent to 28.05 billion euros. - Overseas markets slump - In addition to its own brand, Renault also makes Alpine, Dacia, Lada and Samsung Motors cars and worldwide unit sales were down 6.7 percent at 1.94 million vehicles in the six-month period.
On its overseas markets, the group also saw its sales fall in Argentina and Turkey as both countries battle economic crisis, as well as in Iran after the US re-imposed sanctions on the Islamic republic. Prior to the sanctions, Renault and rival French group PSA together made nearly half the cars sold in Iran. Chief executive Thierry Bollore insisted Renault's first-half performance was "in line with expectations". "In a tougher-than-expected environment, the group stayed its course," he said.
"The launches of many new models (and) enhanced competitiveness... allow the group to confirm its profitability objectives for the full year." Renault said it is targeting an operating margin -- underlying profits measured as a proportion of revenues -- of around six percent for the whole year compared with 5.9 percent in the first half.