Renault Predicts It Will Stay Profitable This Year

Although Renault reported a dramatic drop in operating profit in 2012, it is confident that strong demand in Russia, Latin America and Asia will bring profit in 2013.

Renault’s sales in Europe dropped 18%, a steeper decline compared with domestic rival PSA Peugeot Citroen, but it managed to keep its profit up thanks to its alliance with Japan’s Nissan and the fact that 50% of it global sales were outside Europe. Still, the French automaker’s operating income was 122 million euro in 2012, compared with 1.2 billion euro in 2011, and the group sales dropped 3.2% year-on-year to 41.3 billion euro.

Renault plans to cut 7,500 jobs in France, and it decision had a better reception compared with PSA Peugeot Citroen’s plan to cut 8,000 jobs in France and close the Aulnay plant near Paris. Renault expects sales in Europe to drop at least 3% in 2013 and between 3%-5% in France, but predicts the global auto market will increase 3% this year, due to a 11% cumulative rise in North America, China and India, 5% in Russia and 1.5% in Brazil.

Unlike its rival Peugeot, which has spent 200 million euro a month in its auto division, Renault announced that its operational free cash flow for its auto division was 597 million euro in 2012, a decrease from 1.1 billion euro in 2011.