Renault SA’s first-half earnings exceeded recently upgraded expectations as the French carmaker continues to see strong demand and prices for new models like the Austral crossover.
(Bloomberg) — Renault SA’s first-half earnings exceeded recently upgraded expectations as the French carmaker continues to see strong demand and prices for new models like the Austral crossover.
Operating margin at group level rose to a record 7.6%, the company said in a statement Thursday, compared with guidance for a first-half operating margin of more than 7%.
The results chime with other carmakers holding up well despite consumers being hit by a surge in interest rates and high inflation at a time when easing supply-chain woes improve vehicle availability. Rival Stellantis NV and luxury-car maker Mercedes-Benz Group AG both reported better-than-expected earnings.
The French manufacturer’s order book in Europe is at 3.4 months of sales at the end of June and set to stay above a target of 2 months through the year, the company said. First-half operating income more than doubled to €2.1 billion ($2.3 billion).
Read more: Stellantis Targets Suppliers to Cut Costs, Protect Profit
Renault Chief Executive Officer Luca de Meo, leading Renault through a turnaround for the past three years, is pursuing a listing of the company’s electric-vehicle and software unit Ampere. The plan is facing some headwinds following aggressive price cuts by Tesla Inc. and increasing competition that are weighing on demand for its flagship EV, the Megane E-Tech.
First-half sales of the model reached 23,000 units, Renault said Thursday, with the majority of deliveries of higher-end version of the vehicle.
Concerns about the sustainability of Renault’s pricing strategy has led to investor pushback on the planned share sale, now more likely to take place in the first half of next year. Still, the manufacturer took a step toward the entity’s initial public offering on Wednesday, when Japanese partner Nissan Motor Co. agreed to spend as much as €600 million for a stake in Ampere after months of talks between the two companies.
The Nissan investment in Ampere is “modest,” according to Stifel analyst Pierre-Yves Quemener, and the IPO plans remain under scrutiny. Renault is proceeding with Ampere’s carve-out, due to be completed later this year.
Renault also is still dealing with some logistics troubles, leaving a high number of cars stranded at factories. Inventory as of June was 569,000 vehicles, slightly down from end-March, and transportation issues should improve during the second half, it said.
The company remains focused on efforts to produce more affordable EVs, with a target of 40% cost reduction on a car-by-car basis in next-generation vehicles by 2027.
(Updates with details on Ampere carve-out in eighth paragraph.)
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