Like other automakers, Renault has decided to deal with the electronic components crisis and supply shortages by favoring some higher-margin cars. The results of this policy can be seen in the first half of 2022. In fact, Renault Group sales fell by 11.9% in volume worldwide. On the other hand, the turnover is €21.1 billion for the first half of 2022 compared to €21.06 billion for the first half of 2021.
Operating margin was 4.7% of sales, ie 988 million euros, an increase of 556 million euros. Automotive segment operating margin was 420 million euros or 2.1% of vehicle sales (19,574 million euros). Regarding the net result, you have to look with and without Avtovaz. Indeed, by detaching from these Russian activities, the Renault group was forced to spend 2.3 billion euros in provisions. The net result without this part would be positive at 657 million euros. This compares to the first half of 2021 which delivered a net result of €199 million. Free cash flow was positive at €956 million.
High-margin vehicles save the balance sheet
“The success of the Arkana, launched in the second quarter of 2021, as well as the successes of Jogger and Mégane E-TECH electric during the first half, represent the renewal of the Renault brand in the C-segment and produced a positive product mix impact. 3.3 points.”
Nissan, Renault’s partner (a subsidiary) in the alliance, contributes €325 million to Renault’s balance sheet. This offsets the negative contribution of the depreciation of the shares of Renault Nissan Bank in Russia, for example.
Renault says it is well ahead of its 2022 targets. The Renault group has prepaid €1 billion of the loan from a banking group that benefits from a French state guarantee (PGE). During the second half of 2022, €1 billion will be repaid under the contractual maturity date. Renault still intends to repay this state-guaranteed loan in full by the end of 2023 at the latest.
Finally, on the inventory side, the total of new vehicles (including the autonomous grid) on June 31, 2022 was 348,000 vehicles. At the end of June 2021, it was 427,000. The stock represents nearly 60 days of sales.
|in millions of euros||first half 2021||first half 2022||disparity|
|group rotation||21,057||21121||+ 0.3%|
|As a percentage of turnover||2.1%||4.7%||+ 2.6 points|
|Other operating income and expenses||-70||-49||+21|
|result of exploitation||362||939||+577|
|Share in the result of companies accounted for using the equity method||160||214||+54|
|Current and deferred taxes||-185||-260||-75|
|Including continuous operations||199||657||+458|
|Including halted operations||169||-2323||-2492|
|net income, group share||354||-Z3S7||– 1711|
|Auto running free cash flow||-fM4||956||+1,470|
Our opinion, by leblogauto.com
Were Renault’s initial forecasts intentionally pessimistic so that over time performance would look better than expected? However, the French car group is way ahead of these goals. The early redemption of €1 billion, for example, is a case in point. All of this is stronger with the Russian routine that we had to get out of quickly.
The only downside to these “sell less but sell better” trade policies are low-end (or “entry”) car buyers who have to wait longer than those who want high-margin vehicles.
Renault Group is ahead of its 2022 financial goals. Despite losing Russia and losing heavyweight to Avtovaz, Renault is showing better-than-expected numbers. This should reassure investors.
Renault applies a better selling policy, even if it means less selling. It works with many other builders after all.