RNO Renault SA

--Renault first-half profit dropped on lower sales, Nissan contribution

--French auto maker cuts revenue outlook, but backs other targets

--Company reports negative automotive operational free cash flow

 
   By Max Bernhard 
 

Renault SA (RNO.FR) on Friday reported a drop in first-half net profit, hit by lower sales and a decline in the payout from its alliance partner Nissan Motor Co. (7201.TO).

Net profit fell to 970 million euros ($1.08 billion) in the six months to the end of June from EUR1.95 billion the same period last year, the French auto group said. Revenue fell 6.4% to EUR28.05 billion.

Renault said its earnings were "heavily penalized" by a decline in Nissan's contribution, which swung to a EUR21 million loss from a EUR805 million profit the same period a year ago.

Nissan on Thursday reported a 95% fall in first-quarter net profit and said it would slash some 12,500 jobs globally. Renault's alliance with the Japanese partner has been in turmoil since the arrest of former CEO Carlos Ghosn and amid tensions over the future of their partnership.

Earnings were also hit by a slump in demand. Vehicle sales fell in Renault's homemarket of France and were hit by a sharp drop in demand in Turkey and Argentina.

Operational free cash flow in the automotive business was negative EUR716 million, compared with positive EUR418 million a year ago, due to higher investments and a change in working capital requirements, Renault said.

Renault cut its 2019 revenue outlook, now expecting revenue to be close to last year's, compared with a previous forecast for an increase. The company backed its guidance for an operating margin of about 6% and a positive operational free cash flow in its core auto business.

Write to Max Bernhard at max.bernhard@dowjones.com; @mxbernhard

(END) Dow Jones Newswires

July 26, 2019 02:53 ET (06:53 GMT)

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