PARIS -- Renault Group said on Friday that it returned to profitability in 2021, beating expectations and reversing out of two straight years of losses aggravated by the coronavirus pandemic and subsequent chip supply issues weighing on the auto industry.
The automaker reported a group share of net profit of 888 million euros ($1.0 billion), beating expectations from the analysts polled by Refinitiv, who had seen the figure at 818.7 million euros.
The boost follows the start of a vast restructuring to reduce fixed costs and refocus on Renault's most profitable car models and markets.
"Renault Group largely exceeded its 2021 financial targets despite the impact of semiconductor shortages and rising raw material prices," said CEO Luca de Meo in a statement. He said the performance was helped by the group's strategy of choosing "value over volumes" and "financial discipline."
The net profit followed the previous year's hefty losses of 8.01 billion euros and a loss of 141 million euros in 2019, its first in 10 years.
The group's operating margin of 3.6 percent also exceeded its own expectations. It had earlier targeted an operating margin at the same 2.8 percent level it recorded in the first half of the year. In 2020, it had a negative margin of 0.8 percent.
In presenting the financial results, CFO Clotilde Delbos said she would be stepping down from that position after six years to focus on Mobilize, Renault's mobility services brand. She said she would continue to work closely with de Meo. Delbos will be succeeded by Thierry Pieton, Renault deputy CFO since 2020.
Renault, hurt by declining sales, margins and indirectly by difficulties at its alliance partner Nissan, had targeted a positive automotive operational free cash flow for 2021, after an outflow of 4.5 billion euros in the pandemic-stricken 2020. It posted a positive cash flow of 1.6 billion euros, as it said it carried out its cost reduction plan a year ahead of time.
For 2022, Renault is targeting a 4 percent operating margin and at least 1 billion euros in free cash flow. De Meo said the chip shortage would bring a shortfall of about 300,000 units, mostly in the first half.
The group will not propose any dividend for 2021.
Renault said that in 2022 it would make an additional 1 billion euro repayment on 5 billion euros in state-backed loans it obtained in 2020. The loans will be fully repaid by the end of 2023, it said.
