Renault sticks to 2024 outlook as first-half profit beats estimates

By Nick Carey and Gilles Guillaume

LONDON (Reuters) - Renault posted a better-than-expected operating profit for the first half of the year on Wednesday due to strong pricing and new vehicle launches, and stuck to its full-year profit-margin forecast.

The French automaker last week reported that its first-half sales volume rose 1.9% versus the same period in 2023 due to the strong performance of hybrid models in Europe, its key region.

Renault posted a higher operating margin of 8.1% for the first half of the year, up from 7.6% a year earlier and higher than the 7.9% expected by analysts.

This is a key metric for Renault, which has targeted a double-digit operating margin by 2030.

The automaker stuck to its full-year operating margin forecast of 7.4% or above.

When asked during a conference call with reporters whether Renault could hit that double-digit margin target earlier than 2030, Chief Financial Officer Thierry Pieton declined to comment, adding: "we continue to be ahead of the plan we had set for ourselves."

Renault returned to growth last year after four consecutive years of declining unit sales, and is hoping that 10 new launches this year will keep the momentum.

The company had hoped to be at the forefront of legacy automakers' efforts to go electric, with a plan for the Renault brand to go fully electric by the end of the decade.

After touting Renault's efforts to electrify, CEO Luca de Meo called this week for a "little more flexibility" in the European Union's planned 2035 ban on combustion engine models.

But demand for EVs has slowed sharply in Europe, with data from the region's trade body showing last week that sales only rose 1.3% in the first half.

Automakers are instead seeing strong demand for more affordable and more convenient hybrids and are rolling out additional models to meet demand.

Renault has launched new hybrid models and executives said last week it will continue to do so.

Renault reported first-half revenue of 26.96 billion euros ($29.26 billion), up 0.4% over the previous year and above market forecasts of 26.9 billion euros.

The company said it currently has a strong order book equivalent to 2.6 months of forward-looking sales.

Renault reported a lower net profit for the first half of 1.4 billion euros versus 2.1 billion euros a year earlier, largely due to a 440 million euro capital loss on the sale of shares in alliance partner Nissan and restructuring expenses of $123 million.

($1 = 0.9213 euros)

(Reporting by Nick Carey; editing by David Evans, Alexandra Hudson)