Renault to rely on low-cost and electric cars to boost sales

By Laurence Frost

PARIS (Reuters) - French carmaker Renault expects a first-mover edge in electric cars and a wider vehicle line-up for emerging markets to help it deliver a 44 percent sales increase by 2022.

Electric cars are "turning into a significant contributor to our performance while other automakers are just starting the journey", Chief Executive Carlos Ghosn said on Friday.

Renault's mid-term plan shows it growing faster than alliance partner Nissan, which it trails in China, due to recent investments in Iran and India and a Russian rebound.

While taking a lead in electric vehicles had come at the expense of profitability, Ghosn expects to turn this around by rolling out eight new battery-powered models and 12 hybrids.

"Our vision now is a profitable core business."

Renault plans to increase sales to 5 million vehicles in 2022 from 3.47 million last year - while also targeting a 7 percent operating margin and 70 billion euros ($82 billion) in revenue, goals that were announced in February.

Renault also said on Friday that its margin would stay above 5 percent over the intervening years, as it pursues 4.2 billion euros in cumulative productivity gains and invests 18 billion euros in research and development.

Renault shares rose 0.6 percent to 86.12 euros at 0757 GMT. The stock may be supported in coming weeks by "management's increased confidence" on the mid-term goals, Evercore ISI analyst Arndt Ellinghorst said.

"This is good news in a world where most people fear earnings, cash flow and profitability will fall due to disruption," Ellinghorst said.

LOW-COST LINE UP

China, where Renault only began manufacturing last year, is expected to account for half a million sales by 2022.

Renault's budget car lineup, starting with the Dacia Logan in 2004, has underpinned the push into emerging markets and spawned a second car platform underpinning the Kwid mini-SUV, which has more than doubled the group's sales in India.

Combined sales of the "Global Access" low-cost lineups are seen expanding 54 percent to reach 2 million vehicles, or 40 percent of the group total. An expanded utility van range is also expected to contribute to the emerging-markets surge.

The European share of Renault's vehicle deliveries would shrink to 36 percent from 52 percent under the plan, with sales in the home region remaining broadly flat.

Renault had been transformed since 2005 - when he took over - from a carmaker dependent on French sales of Megane compacts into a "resilient, multi-polar global company", Ghosn said.

Ghosn, who also heads the Renault-Nissan-Mitsubishi alliance, has not yet indicated whether he will seek to renew his Renault CEO contract, which expires next year.

Renault also outlined a new dividend policy on Friday, promising to increase shareholder payouts to 15 percent of earnings by 2022, from 7 percent last year.

In addition, it will continue to pass through its own Nissan and Daimler dividends to Renault shareholders. Renault owns 43.4 percent of its Japanese alliance partner and 3.1 percent of the Mercedes-Benz maker.

($1 = 0.8547 euros)

(Reporting by Laurence Frost; Editing by Maya Nikolaeva)