PARIS (Bloomberg) – Renault SA will target a operating margin of more than 5 percent by 2013 after posting a full-year profit on European incentives, an emerging-market recovery and the sale of a Volvo AB stake.
Renault is also aiming for annual sales of 3 million vehicles in three years, the carmaker said in a statement Thursday.
Net income was 3.42 billion euros ($4.78 billion), compared with a 3.07 billion-euro loss a year earlier, the company said. Profit matched the 3.43 billion-euro average estimate of analysts surveyed by Bloomberg.
Renault is counting on the Logan sedan and other models in the no-frills “Entry” range to power an emerging-market expansion as it adds capacity in Morocco, India, Russia and South America. Profitability will improve as research and development costs are capped and more vehicle designs are pooled with 43 percent-owned Japanese affiliate Nissan Motor Co., Renault said.
Renault's results “showed its ability to seize growth opportunities while strengthening its balance sheet,” CEO Carlos Ghosn said in the statement. “These results constitute a solid base for the launch of our new strategic plan.”
Under the plan, Renault said it will rely on its no-frills Entry range of vehicles, such as the Dacia Duster pickup, to drive growth. Investment, research and development spending will be limited to 9 percent of company revenue.
The carmaker pledged to reduce direct production costs 12 percent, and increase capacity utilization at under used European factories by 20 percentage points.
The results confirm provisional figures published by the carmaker Jan. 31. Revenue rose 16 percent to 39 billion euros, driven by rising sales volumes for low-cost models such as the Sandero compact.
The budget models were boosted in the past two years by government sales incentives in western Europe, where they are sold under the Dacia brand.
Earnings before interest, tax and one-time items rose to 1.1 billion euros, for a 2.8 percent operating margin, after a 396 million-euro loss, Renault said. Auto-division operating profit came to 1.3 billion euros, or 1.1 percent of divisional revenue.
Renault, under the plan unveiled today, will aim for 2 billion euros in free cash flow in 2013. The new targets are Ghosn's first medium-term plan since the 2008 financial crisis, when he scrapped his “Commitment 2009” pledges of a 6 percent operating margin and 3.33 million sales the following year.