Renault profit increases thanks to European turnaround image

Renault SA, France’s second largest automaker, managed to post a serious operating profit jump for the first six months of the year, but the company shares dropped as the rivals at PSA Peugeot Citroen had and even larger growth.

The company’s stock slid the most in around four years after its half-year financial results were not as high as French rival PSA Peugeot Citroen and the automotive margins were disappointing for analysts. Renault’s operating profit jumped 47 percent to 1.07 billion euros ($1.17 billion), marginally off the 1.08 billion-euro average of seven analyst estimates that Bloomberg surveyed. Meanwhile, France’s PSA announced its profit for the first six months of the year more than tripled to 1.42 billion euros thanks to cost cuts and better vehicle pricing. Arndt Ellinghorst, a London-based analyst with Evercore ISI commented Renault posted “decent, but disappointing (results) compared to the monumental beat of Peugeot,” and though market share has been soaring thanks to new introductions at home in Europe such as the Kadjar compact sport utility vehicle, profitability hasn’t kept up the pace.

Renault’s auto unit had an operating margin of 3.1 percent during the first six months of the year, which is both below analyst estimates and Peugeot’s own achievement of 5 percent. Renault’s shares took a dive of up to 8.3 percent to 82.87 euros, the steepest fall since November 2011 – though the company stock has so far surged 38 percent this year, with a total value of 24.6 billion euros. Chief Executive Officer Carlos Ghosn’s plans to push the automaker towards emerging markets has been impeded by the economic issues in Brazil, Argentina and Russia, where Renault and its alliance partner, Japan’s Nissan, are market leaders.

Via Bloomberg