Renault returns to profit despite chip shortage

Photo: EPA Luca de Meo

French carmaker Renault announced it was optimistic about 2021 financial results and further noted it even expected to close a full-year with profits despite the acute semiconductor chip shortages that pressured the whole automotive industry. Renault reported first-half net profit of 354 million euros after suffering a loss of nearly 7.3 billion euros a year earlier amid long industry-wide production shutdowns during the pandemic, Reuters elaborated.

The French company returned to positive cash flow in the first half of the year, from a nearly 6.4 billion euro outflow in the year-ago period. After five consecutive quarters of falling car sales, Renault's revenue for the first half of 2021 rose by 18.7%. The carmaker, which previously announced focus on its most profitable models, reported a return to half-year net profit after a hefty loss a year ago, crediting rising car sales and its pricing efforts.

Renault reported an operating margin of 2.8% for the first half of the year, saying it was aiming for a full-year margin "of the same order". It added it was ahead of its cost cutting targets. These results "mark only the first step in our turnaround, which should accelerate with arrival of the new vehicles in preparation," Chief Executive Officer Luca de Meo said in a statement.

Renault plans to repay around a fifth of a 5 billion-euro loan from the French state by year end, Chief Finance Officer Clotilde Delbos said. The loan was part of government emergency support offered at the start of the coronavirus pandemic.

Last month, Renault unveiled a more ambitious strategy for electric vehicles, betting on new, affordable versions of its iconic small cars of the past to catch up with Volkswagen in the fast-growing sector. The French carmaker said that by 2030 the Renault-Nissan-Mitsubishi alliance would produce one million EVs globally a year, up from the 200,000 they made in 2020.

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