Renault revenue falls amid Ukraine war, chips crisis

PARIS -- Renault, the Western automaker most exposed to the Russian market, posted a drop in first quarter revenue, as the conflict in Ukraine and problems with supplies of semiconductor hit vehicle sales.

The group, which also produces Dacia and Lada brand vehicles, said its revenue fell by 2.7 percent from a year earlier to 9.75 billion euros ($10.6 billion). Excluding the activities of AvtoVAZ and Renault Russia, revenue was down 1.1 perecent to 8.9 billion euros.

The auto market is "severely disrupted by the conflict in Ukraine, the semiconductor crisis and inflation," Chief Financial Officer Thierry Pieton said on Friday.

In a client note J.P. Morgan analysts said Renault had a "strong quarter."

"Renault continues to deliver on its pricing and model rationalization policy and today’s result comes in as another step in the right direction," J.P. Morgan wrote.

Renault said it is sticking with an estimate that chip supplies will reduce production by around 300,000 this year, mainly in the first half.

The automaker said its order book is strong and at the end of March had hit a 15-year high of 3.9 months of sales.

The company said its sales of full-electric and hybrid vehicles were up 13 percent and accounted for 36 percent of sales.

Future in Russia

Renault is the most exposed automaker to Russia through its majority-owned AvtoVAZ venture, which makes Lada, the country's best-selling brand. The company last month said it intends to withdraw from Russia, but it has yet to disclose details beyond halting an assembly plant in Moscow.

On Friday, Renault said talks with AvtoVAZ on the future of Russian operations were "ongoing and making progress."

The quarterly report reflects Renault’s souring prospects after Russian President Vladimir Putin ordered the invasion of Ukraine. The company’s shares have lost just over a quarter of their value since the war began.

Revenue from Russia fell 16 percent to 900 million euros, with the AvtoVAZ venture accounting for 527 million euros of the total, Renault said on Friday.

The automaker confirmed its financial outlook laid out in March of a full-year 2022 operating margin of around 3 percent and said it would give a more detailed update on its targets and strategy later this year.

In the three months ending March 31, Renault's global vehicle sales fell more than 17 percent to 552,000 vehicles, the lowest quarterly sales since during the height of the global financial crisis in 2009. The drop included a 34 percent plunge in Russia, the automaker's second-biggest market.

Renault is working on a turnaround plan and has been pushing ahead with plans to split its electric and combustion businesses, as it catches up to rivals such as Tesla and Volkswagen.

Bloomberg contributed to this report