Renault first-quarter sales rise 15% on emerging markets

PARIS -- Renault said first-quarter revenue rose 15 percent on buoyant demand for its no-frills models in Russia and emerging markets.

Revenue increased to 10.43 billion euros ($15.27 billion) in the first three months from 9.07 billion euros a year earlier, the company said. That compares with the 9.5 billion-euro median of six analyst estimates compiled by Bloomberg.

Sales were "lifted by stronger markets and our good international sales performance," CEO Carlos Ghosn said in a statement on Tuesday.

Renault, whose Chief Operating Officer Patrick Pelata is stepping down over a botched industrial espionage investigation, is counting on emerging-market demand for its budget models to sell 3 million vehicles with a 5 percent profit margin in 2013, compared with 2.63 million deliveries and a 2.8 percent margin achieved last year.

The sales growth was led by an 88 percent gain in the so-called Eurasia region including Russia and other former Soviet states.

"We're now running at full capacity in our Moscow plant" thanks to the success of the no-frills Sandero subcompact, Chief Financial Officer Dominique Thormann said on a call with analysts. "The momentum will continue in coming months with several news model launches."

Renault said its main automotive division recorded a 15 percent sales increase to 9.97 billion euros, while the sales-financing unit posted an 8.4 percent gain to 466 million euros.

The company said its results in the first three months of the year were ahead of plan and said it expected to post higher sales volumes and revenue this year than last year.

Renault is targeting automotive operational free cash flow of more than 500 million euros with a ratio of capital expenditure and research and development close to 9 percent of revenue.


Earthquake hits production

Thormann said the automaker may adjust summer work schedules to meet its 500 million-euro cash-flow goal this year and accommodate disruption from the March 11 Japanese earthquake, which is likely to affect some plants in the second and third quarters.

"The biggest impacts on production look to be limited to summer months," Thormann said, adding that full-year production and delivery volumes are still expected to rise. "The situation will have returned to normal by the fourth quarter."

Global auto production growth will now be below 6 percent this year because of the Japan disaster, Thormann said, adding that he would have raised Renault's forecast had it not been for the earthquake.

"With the supply of certain parts already under strain in the first quarter, the tsunami in Japan has increased the pressure on the global automotive industry's logistics chain and could result in slower production in the coming months," Renault said.

"At this stage, the group's targets for full-year 2011 are unaffected by the expected temporary impact of this slowdown," the carmaker added in a statement.

"Everyone is now working on weaker production than predicted because of the repercussions of the situation in Japan," Societe Generale analyst Philippe Barrier said. "But apart from that, the Renault figures are good."