Renault swings back to profit after 2 years of loss on chip supply issues

Renault said on Friday it returned back to the black in 2021, beating expectations and reversing out of two straight years of losses aggravated by the coronavirus pandemic and subsequent chip supply issues weighing on the auto industry.

The French carmaker reported a group share of net profit of 888 million euros ($1.0 billion), beating expectations from the analysts polled by Refinitiv, who had seen the figure at 818.7 million euros.

The boost follows the start of a vast restructuring to reduce fixed costs and refocus on Renault's most profitable car models and markets.

"Renault Group largely exceeded its 2021 financial targets despite the impact of semiconductor shortages and rising raw material prices," said Chief Executive Officer Luca de Meo in a statement. He said the performance was helped by the group's strategy of choosing "value over volumes" and "financial discipline."

The net profit followed the previous year's hefty losses of 8.01 billion euros and a loss of 141 million euros in 2019, its first in ten years.

The group's operating margin of 3.6% also exceeded its own expectations. It had earlier targeted an operating margin at the same 2.8% level it recorded in the first half of the year. In 2020, it had a negative margin of 0.8%.

Renault, hurt by declining sales, margins and indirectly by difficulties at its close partner Nissan, had targeted a positive automotive operational free cash flow for 2021, after an outflow of 4.5 billion euros in the pandemic-stricken 2020.

It posted a positive cash flow of 1.6 billion euros, as it said it carried out its cost reduction plan a year ahead of time.

The group will not propose any dividend for 2021.

(Reporting by Gilles Guillaume; Writing by Piotr Lipinski; Editing by Kenneth Maxwell)