Renault reports higher first half earnings

AP News
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Posted: Jul 28, 2011 4:01 AM
Renault reports higher first half earnings

French carmaker Renault SA said Thursday its earnings rose in the first half compared to a year earlier as higher international growth helped offset a squeeze on profitability after the disaster in Japan choked off supply chains.

Renault shares traded 2 percent higher at the open in Paris at euro36.56 after the company said its net profit grew to euro1.22 billion ($1.76 billion) in the first half compared to euro780 million a year earlier.

France's number two carmaker said that the March earthquake and tsunami in Japan had an estimated euro150 million negative impact on its earnings in the first half, while higher rising costs for steel and other raw materials weighed on earnings growth too.

Japan's earthquake and tsunami, and the resulting nuclear meltdown, was among the biggest disruptions ever to hit the global car industry. Carmakers have struggled to reweave their complex supply chains, leading to delays and higher costs.

On Wednesday Renault's rival Peugeot Citroen pegged the impact of the Japanese crisis on its earnings at euro147 million in the first half alone, and forecast further losses for the rest of the year.

Renault said it expected supply constraints from the disaster to subside in the second half of the year and said it is on track to achieve targeted growth in its operational free cash flow. It forecast an additional euro50 million negative impact on earnings in the second half from the Japan disaster.

The maker of the Megane and Twingo said its sales rose 7.3 percent in the first half to euro21.1 billion. Renault forecast European car markets to be flat to 2 percent lower for the year, with a 4 to 6 percent decline in its key French market.