Renault drives into red with 2.7 bn euro loss in H1

French carmaker Renault today posted a net loss of 2.7 billion euro for the six months ended June 30 as all its major markets shrank due to the global economic meltdown.     

The auto major had a net profit of 1.58 billion euro during the first six months in the previous year.     

The total income for the first half dipped by 23.71 per cent to 15.99 billion euro from 20.96 billion euro in the corresponding period last year, the company said in a statement.     

"We anticipated the crisis from July 2008 and made the first decisions necessary to weather it. Today, Renault is showing resilience, as illustrated by our significant positive free cash flow," Renault Chairman and CEO Carlos Ghosn said.     

During this period, the company sold 11.07 lakh vehicles as against 13.26 units in the year-ago period, down 16.53 per cent.     

The company has generated a positive cash flow of 848 million euro in H1 on account of various cost-cutting measures, power investment and lower working capital requirements.     

"R&D spend fell by 25 per cent in the first-half of 2007, ahead of the 15 per cent reduction target initially set for the period 2007-2009. In light of this performance, the objective has been revised to a 20 per cent reduction," the company said. Renault's market share in France, which is also its largest market fell by 0.9 per cent. Its other major market UK also squeezed by 2.2 per cent in H1.     

Some of the other major countries where the auto major lost its market share include Italy, Brazil,Turkey, Argentina and Iran.     

As on June 30, the company's net financial debt from automobile business stood at 7.24 billion euro, although it had 3.4 billion euro cash in hand. Besides, the firm has 4.2 billion euro undrawn confirmed credit lines.     

In the coming six months, the carmaker would be benefitted with the launches that took place in the first half of the year, mainly new Megane, two versions of New Scenic and Clio III phase 2, it said.

"The product offensive will continue with the renewal of the SM3 and SM5 in South Korea," it added.     

"We are already preparing Renault for the post-crisis period with the mass marketing of zero-emission vehicles from 2011, the expansion of the entry-level range, consolidation of our presence in emerging markets and a drive to accelerate and expand synergies with Nissan," Ghosn said.