Renault reports automotive operational free cash flow of € 1084 million in 2011

CEO'sTalk by  2 yrs ago

The French car manufacturer Renault has reported automotive operational free cash flow of 1084 million euros, in line with the trajectory set in mide-term plan, Renault 2016 - Drive the Change.


The Renault Group revenues stood at 42,628 million euros in 2010, up 9.4 percent. Also the group operating margin showed a figure of 1091 million euros, or 2.6 percent of revenues, in comparison with 1099 million euros or 2.8 percent achieved in 2010. What is more, the Renault Group operating income rose to 1,244 million in contrast with the year ago period figure of 635 million euros. Contribution of associated entities were at 1,524 million euros as against 1,289 million euros in 2010.


Similarly, the net income of Renault stood at 2,139 million as capared to 3,490 million in 2010, which included a two billion euros capital gain from the sale of B shares in AB Volvo. Renault made a positive automotive operational free cash flow of 1,84 million euros including 627 million euroes from a favourable change in the working capital requirement. Furthermore, Renault has an automotive net financial debt of 299 million euroes, down 1,136 million on December 31, 2010.


Commenting on the results, Carlos Ghosn, Chairman and CEO, REnault said: “Thanks to the hard work of all our employees, Renault coped with the different crises faced throughout the year, exceeding the free cash flow objective for 2011. The 19 percent increase in Group sales outside Europe, notably in Brazil and Russia, illustrates the Group’s international growth. In 2012, we expect international sales to be in excess of 43 percent of the total, while maintaining the Renault brand leadership in France, and number two position in Europe".


The Group revenues came to 42,628 million euros, up 9.4 percent. Driven by sales momentum and an improved product mix, automotive contributed 40,679 million euroes to revenues, an increase of 9.4 percent in 2010, while the operating margin was stable at 1,091 million euros, or 2.6 percent of revenues, compared with 1,099 million euros and 2.8 percent in 2010.


Automotive reported operating margin of € 330 million (0.8 percent of revenues), compared with € 396 million, or 1.1 percent of revenues, in 2010. The favorable impact of sales volumes (€ 455 million) and the improvement in costs as part of the monozukuri plan (€500 million) did not entirely offset negative factors, mainly external to the company, such as a € 509 million rise in raw materials, a € 199 million unfavorable currency effect and a € 245 million negative mix-price impact.


In all, the supply constraints stemming from the Japanese tsunami had an unfavourable impact on the operating margin of automotive of an estimated € 200 million in 2011. The impacts were mainly felt in production, commercial offers and logistics. The contribution of sales financing to Group operating margin reached a new high of € 761 million, up € 58 million, resulting from growth in loans outstanding and a historically low cost of risk.

The contribution of associated entities continued to grow, totaling € 1,524 million in 2011, driven by Nissan, compared with € 1,289 million in 2010. Net income came to € 2,139 million, compared with € 3,490 million in 2010, which included a capital gain of € 2,000 million from the sale in October 2010 of B shares in AB Volvo. Net income Group share totaled € 2,092 million (€ 7.68 per share).

Automotive operational free cash flow exceeded the objective reaching € 1,084 million, having successfully maintained operating performance despite a series of crises (supply constraints, sovereign debt) and having rigorously managed the working capital requirement and investments in an uncertain economic environment. This performance led to a reduction in automotive net financial debt for the third consecutive year, reaching a historically low level of € 299 million on December 31, 2011 down € 1,136 million. In 2011, the Renault Group continued to reduce gross automotive debt through early repayment of the remaining € 2 billion of the loan from the French government, while maintaining the automotive liquidity reserve at high level of € 11.4 billion, compared to € 12.8 billion in 2010. The net debt to shareholders’ equity ratio stood at 1.2 percent at end-2011, compared with 6.3 percent at end-2010.


In accordance with the policy announced in the mid-term plan, Renault 2016 - Drive the Change, a dividend of € 1.16 per share, representing the dividends received by the Group for its interests in listed companies in 2011, will be proposed for approval of shareholders at the annual general meeting on April 27, 2012.

Outlook for 2012

The global automotive market including passenger cars and light commercial vehicles is expected to grow four percent year on year in 2012. Trends will remain contrasted, with markets outside Europe continuing to grow, especially Brazil (five percent) and Russia (eight percent). With the economic environment remaining highly uncertain, the European market is expected to contract by 3-4 percent, including a decrease of 7-8 percent in France. Backed by the momentum of international growth, major launches (including Renault Lodgy, Renault Clio IV and Renault ZOE), a new range of energy engines and the introduction of the new design identity, Renault will continue to grow sales, in line with the objectives in the Renault 2016 - Drive the Change plan.


The Group targets positive automotive operational free cash flow in 2012, with a ratio of capital expenditures and R&D below nine percent of Group revenues. The consolidated financial statements of the Renault group at December 31, 2011 were approved by the Board of Directors on February 15, 2012. The Group’s statutory auditors have conducted a limited review of these  financial statements and their report will be issued shortly.

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