Renault posts record profitability

Renault on Thursday posted a 7.5% increase in net profit in the first half, a result the French automaker said was a record in terms of profitability.

Net profit came in at 1.5 billion euros on sales of 25.2 billion euros, up 13.5%, as strong sales of new car models kicked in.

"Success of our new models, our regional diversification and the efforts of all our employees have allowed the group to set a new record for its first half operating margin and to have confidence in the outlook for the full year", the company's chairman Carlos Ghosn said in a statement.

Renault's operating margin was 6.1% of sales, an increase of 1.2 points over the same period last year.

For the full year, Renault is targeting higher sales, a better operating margin than in 2015 and a positive free cash flow from the automobile division, it said.

The French group does, however, now expect the world's automobile market to provide a less favourable environment than previously thought, with global car market growth now estimated at 1.7% this year, down 0.3 points from Renault's previous estimate.

The Brazilian car market is expected to decline by 15 to 20% and Russia by 12%, but China and India are both expected to rise.

Renault's home market France is likely to expand by 5%, as is the rest of Europe.

Car exports to Algeria will be negatively affected by that country's recent trade barriers, finance relations director Thierry Huon said in a conference call.

The British car market saw a peak early in 2016 and is likely to soften over the remainder of the year, finance director Clotilde Delbos said, adding that this had little to do with Britain's decision to leave the EU.

"As far as volumes are concerned, it is much too early to say what the impact of Brexit will be," she said. "We had already been expecting a market that would probably come off the highs seen in recent months."

Renault's shareholding in alliance partner Nissan contributed 749 million euros to profits, while Russia's AvtoVAZ weighed in with 75 million.

Delbos confirmed Renault's plan to help recapitalise struggling AvtoVAZ by year-end, which she said will give Renault a majority stake in the Russian car maker as well as its parent company.