Renault returns to profit in first half

By GREG KELLER AP Business Writer

PARIS (AP) - Renault SA said Friday it returned to profit in the first half of the year as higher car sales in all regions helped reverse massive losses a year earlier.

Europe's number three car maker behind Volkswagen AG and PSA Peugeot Citroen SA reported net profit of euro780 million ($1.1 billion) for the six months to June, compared to a loss of euro2.7 billion a year earlier and well above the euro435 million that analysts had expected.

The maker of the Megane, Logan and Clio models confirmed its outlook for increased market share this year despite a 7 to 9 percent forecast drop in its key European market.

"The actions we have undertaken are paying off," Chief Executive Carlos Ghosn said in a statement.

Last year Renault posted its first annual loss since it was privatized thirteen years ago, as the economic downturn cut into sales. In response the carmaker slashed inventories, cut investment and reduced its headcount to save money.

Renault reported vehicle sales were up 21.7 percent to 1.35 million cars and light trucks. Renault group sales includes its subsidiaries Dacia in Romania and Renault Samsung Motors in South Korea.

That lifted Renault's global market share in passenger cars and light trucks to 3.8 percent. Ghosn has set a target of continuing to lift Renault's global market share this year, from the 3.7 percent achieved in 2009.

At the same time, Ghosn said that Renault will "continue to focus on its key target of generating positive free cash flow" for the full year.

The company is counting on high demand in countries such as Brazil and South Korea to drive an 8 percent growth in the global car market this year, offsetting falling demand in Europe as governments roll back scrappage bonuses that boosted sales during the recession.

Renault is also counting on economies through its alliance with Japanese partner Nissan Motor Co. In 2009 the companies saved euro1.5 billion through synergies, and plan to save an additional euro1 billion this year.

Renault shares fell 0.4 percent to euro33.53 in early trading on the Paris stock exchange.

(This version CORRECTS Corrects reporting period to first half. Corrects net profit figure. Adds byline.)