Breaking the habit

28 July 2004 By Marianne Brun-Rovet

Nissan s share in the French carmaker s profits is falling. Renault s European business is recovering. But this is not reflected in Renault s valuation. Investors could be more generous.

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Renault raised its 2004 profit target on Wednesday after reporting a 29 per cent rise in profits in the first half of the year. Profits rose on the back of cost cuts and of strong sales of Megane hatchbacks and Scenic minivans.

Net profits at France's second largest carmaker increased to E1.5bn from E1.2bn, exceeding estimates. Sales rose 12% to E20.8bn from E17.3bn.

Renault receives a majority of its net income from Nissan Motors, Japan's thirdlargest car maker, in which it holds 44%. Nissan's contribution to Renault's bottom line for the half rose 9.3% to E939m from E859m a year earlier, the French carmaker said in April.

Volvo AB, Europe's largest truckmaker, added E124m to Renault's bottom line. The French carmaker owns 20% of Volvo.

Renault's earnings before interest, taxes and reorganization charges rose to E1.3bn in the half, or 6.1% of sales, from E588m, or a margin of 3.2%. For the second half, that margin should be 4.8%, up from 4.3% a year earlier, the company said.

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