Renault posts record 2017 earnings, extends Ghosn's term by 4 years

Renault pledged to maintain its group operating margin above 6% in 2018 despite worsening currency effects that reduced its full-year profit by 300 million euros

French carmaker Renault posted record sales and profit for 2017, bolstering Chief Executive Carlos Ghosn's position in the face of government demands for a clearer succession plan and deeper integration with alliance partner Nissan

Renault said on Friday its operating profit surged 17.4 per cent to an all-time high of 3.854 billion euros ($4.84 billion), or 6.6 per cent of revenue —- which rose 14.7 per cent to 58.77 billion on buoyant European demand.

The record earnings and margin beat analysts' expectations of 3.65 billion euros in operating profit, based on the median of 14 estimates in an Inquiry Financial poll for Reuters. Revenue came in below their 59.25 billion consensus.

Operating profit at the core automotive division, excluding the recently consolidated AvtoVAZ business in Russia, rose 15.2 per cent to 363 million euros, Renault said. Manufacturing cost savings increased to 663 million euros from 184 million.

Renault pledged to maintain its group operating margin above 6 percent in 2018 despite worsening currency effects that reduced its full-year profit by 300 million euros.

The strong financial performance may help Ghosn to resist pressure from the French government, Renault's biggest shareholder, for a closer tie-up with Nissan that safeguards national interests. The state commands a 15 per cent stake in Renault and two board seats.

The carmaker's board said on Thursday it would ask shareholders in June to back Ghosn for another four-year term, during which he would "take decisive steps to make the alliance irreversible" and "strengthen the succession plan".

Renault owns 43.4 per cent of its Japanese partner, which in turn controls Mitsubishi Motors via a 34 per cent stake.

Ghosn had earlier been expected to hand over the reins to a new CEO and move to a non-executive chairman role overseeing the Renault-Nissan-Mitsubishi alliance. But the plan foundered on differences with the French state over the alliance's future shape and direction, sources have said.

President Emmanuel Macron said on Tuesday he was seeking a "clear road map safeguarding the interests of the company, the alliance and all of the French industrial sites".

Ghosn has also agreed to cut his salary by about 30 percent, Renault confirmed, securing government support for his reduced package. Shareholders led by the French state voted against his compensation in 2016 but approved it narrowly last year.

Net income 49.6 per cent to 5.114 billion euros, Renault said, helped by a 2.791 billion euro contribution from Nissan.

Renault's 2017 global vehicle deliveries rose 8.5 percent, the company disclosed last month, with about one-third of the growth coming from Europe - helped by its new Koleos mid-sized SUV and recently revamped Megane family of compact cars.

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