Renault Profit Rises 37%, Lowers 2009 Sales Target

Renault reported a 37 percent increase in net profit Thursday for the first half, but warned that its full year sales target will fall short of a goal set two years ago because of the worsening economic environment.

Net income for the six months to June rose to euro1.46 billion (US$2.2 billion) from euro1.07 billion a year earlier, Renault said in a statement. The results exclude the second quarter contribution from its stake in Japanese automaker Nissan Motor Co., which reports Aug. 1.

Revenue rose 2.3 percent to euro20.94 billion (US$32.96 billion) over the period.

For the full year, the French car maker said it now expects to sell more than 3 million vehicles under its Renault, Dacia and Renault Samsung brands compared with the 3.3 million goal tabled as part of its four-year turnaround plan launched in 2006.

Renault said it is still on track to achieve its target of a 4.5 percent operating margin in 2008, but said the "worsening economic conditions would make this milestone more difficult to attain."

In a statement, the carmaker said "the deterioration in the macroeconomic environment has far exceeded the worst-case scenarios" envisaged when CEO Carlos Ghosn unveiled the turnaround plan two year ago.

Renault said it will cut costs and raise prices in response to an environment of higher oil and raw materials prices, a more expensive euro, higher financing costs, and a slowdown in the major European markets.

Renault said it is considering a voluntary redundancy plan in Europe to reduce overhead costs by 10 percent. In a briefing to journalists, CFO Thierry Moulonguet said that could translate into job cuts of around 5,000 by 2010.

Renault also said it is raising sales prices, halting or postponing non-priority projects, freezing new hires and cutting research spending.