Renault Beats Revenue Estimates as Electric-Car Sales Surge
(Bloomberg) -- Renault SA reported third-quarter revenue that beat estimates, partly fueled by a surge in sales of its popular electric model that the carmaker said will allow it to meet European emissions rules.
Although revenue fell 8.2% to 10.37 billion euros ($12.2 billion) in a period still marked by the pandemic, it surpassed the 9.96 billion-euro average of estimates compiled by Bloomberg. The French manufacturer sold fewer passenger cars and trucks in the quarter, but sales of the battery-powered Zoe more than doubled, Renault said Friday.
The global health crisis has added to pressure on the carmaker, which was already suffering from overcapacity in its factories and problems at alliance partner Nissan Motor Co. Renault drew down 3 billion euros from a state-backed loan provided by France, but sought to reassure investors by predicting positive operational free cash flow for its automotive activities in the second half.
“This third quarter highlights the change in our commercial policy, which now focuses on profitability rather than volumes,” Chief Executive Officer Luca de Meo said in the statement.
The sales beat is in line with better-than-expected results from BMW AG, Daimler AG and Volvo Group, and the rise in overall European car registrations in September for the first time this year.
Orders were 60% higher at the end of last month and inventories were down by about a fifth compared with last year, Renault said. It held 15.2 billion euros in liquidity reserves at the end of September, including the 5 billion-euro government-backed credit line.
While Renault doesn’t report earnings on a quarterly basis, it posted a record first-half loss due mostly to impairments and restructuring costs at Nissan. The partners in the alliance, which also includes Mitsubishi Motors Corp., have embarked on plans to cut costs and jobs in a bid to turn around their flagging operations.
De Meo has promised to unveil a strategic plan in January and overhaul the company’s model portfolio. He has provided some clues in recent months with an expansion in the line-up of electric vehicles and a new focus on the Alpine, Dacia and Renault brands.
The Franco-Japanese car-making alliance has been trying to overcome damage wrought by the November 2018 arrest of Carlos Ghosn, who was chairman of all three companies. The partnership was meant to create a global powerhouse to compete against Volkswagen AG and Toyota Motor Corp., but its aggressive strategy that fixated on volume growth proved misguided when auto sales began to decline.
Renault has announced a plan to eliminate about 14,600 jobs worldwide and to lower production capacity by almost a fifth in a bid to cut costs by more than 2 billion euros.
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