PARIS—French car maker Renault SA reported an 86% rise in net
income as strong European demand and an increase in sales to its
partner auto manufacturers boosted revenue.
Renault posted net income of €1.4 billion ($1.54 billion), far
higher than the €749 million it earned during the same period a
year earlier. Revenue rose 12% to €22.2 billion as European demand
made up for weak sales in Brazil and Russia, two countries that
have been engines of growth in past years.
After a half-decade slump, Europe's car market is firing up,
turbocharging the fortunes of its manufacturers, especially
France's long-suffering auto manufacturers. On Wednesday, PSA
Peugeot Citroë n posted a first-half net profit—its first since
2011—that far surpassed analyst forecasts.
Despite the strong results, Renault's shares declined 7% at the
market opening Thursday, as the first-half figures didn't exceed
expectations far enough, analysts said.
"After the monumental beat from Peugeot, investors needed a
stronger message from Renault," said Arndt Ellinghorst at Evercore
ISI.
For Renault, the boom in Europe offsets slumping emerging
markets. Renault counted on Russia and Latin America for sales
growth in recent years as Europe struggled. The French firm has a
very small presence in China and doesn't operate in the U.S.—the
world's two largest car markets.
European demand and new products to be launched in coming months
will put Renault "in a favorable position to reach its revenue
growth and operating margin targets," said Chief Executive Carlos
Ghosn.
Global vehicle sales were nearly flat, up just 0.8%. However,
sales of Renault and Dacia cars rose 9.3% during the first six
months, offsetting a 20% decline in the Americas region and a 10%
decrease in the Eurasia region, which includes Russia.
Revenue was also boosted by €1.11 billion increase in "sales to
partners," which include everything from the assembly of Nissan
Motor Co.'s Rogue SUV model and supplying motors to Daimler AG.
Chief Financial Officer Dominique Thormann said the company was
on track to reach its operating profit margin target of over 5%
"sooner than planned." Renault hoped to reach that figure by
2017.
Mr. Thormann said Renault is also on track to reach 100%
capacity utilization at its European plants by the end of 2016.
Currently, the company's factories on the continent are running "in
the low to mid 80s" in terms of capacity utilization, he said.
Renault is in an alliance with Nissan Motor Co. and owns a 43%
stake in the Japanese car maker. Nissan contributed €979 million to
Renault's bottom line, up 24%. Renault's stake in a Russian car
maker accounted for a €70 million loss, higher than the €55 million
loss posted in the same period in 2014.
Write to Jason Chow at jason.chow@wsj.com
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