Renault revamps drive surge in profits

Renault's profit surged 38 per cent in 2016 after the French carmaker gained market share in Europe with an expanded line-up of sport utility vehicles and upgraded models like the Megane hatchback.

Operating profit increased to €3.28 billion ($3.5 billion) from €2.38 billion a year earlier, the Boulogne-Billancourt-based company said in a statement.

The figure exceeded the €3.05 billion average of 16 analyst estimates compiled by Bloomberg. Revenue jumped 13 per cent to €51.2 billion.

"It is a very good year, and we reached the targets that we set for ourselves," chief financial officer Clotilde Delbos told reporters on Friday.

"We reached these good results," despite struggles in once-strong markets like Russia and Brazil.

After overtaking French rival PSA Group as Europe's second biggest carmaker last year after Volkswagen, Renault faces the challenge of maintaining momentum as growth in its home region slows.

That will put more emphasis on Renault's efforts to reduce its reliance on Europe by returning to Iran and expanding in India and Africa.

To show that growth can continue, the company intends to present a plan in October to increase annual revenue 37 per cent to €70 billion by 2022 and lift its operating margin to 7 per cent of sales in five years from 6.4 per cent.

2017 Target

Last year, Renault widened its market share in Europe to 10.1 per cent as it lured customers with SUVs like the Kadjar and Captur and refreshed the Megane as well as the Scenic minivan.

The French manufacturer expects sales of its namesake Renault brand and the budget Dacia nameplate to grow further this year.

Renault’s worldwide deliveries rose 13 per cent in 2016, compared with 4.6 per cent across the sector.

In 2017, Renault is targeting higher operating profit and revenue at constant exchange rates, excluding the impact of Russian carmaker AvtoVAZ, in which Renault owns a majority stake and which it is consolidating.

The company expects the global car market to grow 1.5 per cent to 2 per cent, paced by a 2 per cent increase in Europe and France.

Renault's alliance with Japanese automaker Nissan Motor came just short of surpassing General Motors and joining the ranks of the top-three automakers by global sales.

- Bloomberg