By William Horobin
PARIS--Renault SA on Tuesday reported a steep rise in profits in
the first half of the year after booking provisions over the same
period last year and as the French car maker ramped up cost
cutting.
Net profit rose to 749 million euros ($1 billion) from 39
million euros in the first half of last year, when Renault booked
provisions against the disruption of Iranian sales.
The French car maker swung to a 464 million euro operating
profit in the first half from a 249 million euro loss over the same
period the previous year thanks to a cost-cutting plan that began a
year ago.
"Margin improvement comes above all from managing costs," said
Dominique Thormann, Renault's chief financial officer. The largest
share of cost-cutting came from lower purchasing costs, followed by
logistics and research and development, he said.
The company is also starting to see the benefits of cutting jobs
in France under labor agreements signed last year, Mr. Thormann
said.
The rise in profitability came despite a 3% fall in revenue to
19.82 billion euro as a stronger than expected improvement in
European sales failed to offset a slide in emerging markets.
"Trends in the group's key markets were contrasted," the company
said in a statement.
The company confirmed its outlook for an increase in car
registrations and revenue this year, excluding the impact of
changes in foreign-exchange rates. Renault said it also expects to
improve operating profit in its automotive division.
Write to William Horobin at willam.horobin@wsj.com
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