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Renault: 2000 Financial results Renault doubled its net profit to EUR1,080 million (FRF7,082 million) and registered operating margin of 5% of revenues
In 2000, Renault posted a net profit of EUR1,080 million (FRF7,082 million), on revenues of EUR40,175 million (FRF263,534 million), up 5.6% on a consistent basis. Operating margin came to EUR2,022 million (FRF13,266 million), equal to 5% of revenues. This result was obtained in an extremely eventful year in terms of strategic operations. Nissan made a positive contribution for the first time to the Group's financial results thanks to the rapid success of its recovery plan, while the implementation of the Alliance continued at a fast pace. The agreement signed with Volvo has secured the long-term future of the Commercial Vehicles Division. In line with its objective of international expansion, Renault acquired the operating assets of Samsung Motors and consolidated its investment in Dacia, while actively pursuing its international development with support from Nissan. At the end of the year, the Group launched the new Laguna, a model embodying Renault's new brand identity. Renault's revenues came to EUR40,175 million (FRF263,534 million) in 2000 compared to EUR38,033 million (FRF249,483 million) in 1999 , an increase of 5.6% on a consistent basis. Renault sold 2.3 million passenger cars and light commercial vehicles in 2000, in line with its objective of selling four million vehicles in 2010 and consolidated its position as leading brand in Western Europe with a market share of 11%. Its sales outside Europe rose by 22.7%. Sales of the Commercial Vehicles Division grew by 11%. Operating margin came to EUR2,022 million (FRF13,266 million) equal to 5% of revenues, in line with the Group's projections.The operating margin of the Automobile Division was EUR1,574 million (FRF10,326 million), compared to EUR1,763 million (FRF11,563 million) in 1999, due in particular to the increase of EUR198 million (FRF1,294 million) in research and development expenditure and the cost of international development with the consolidation of the Dacia and Renault Samsung Motors subsidiaries, which are respectively in a recovery and restart-up phase. The contribution of the Commercial Vehicles Division to operating margin amounted to EUR195 million (FRF1,280 million), compared to EUR220 million (FRF1,444 million) in 1999, mainly due to the deterioration in market conditions, notably in the United States. The contribution of the Finance Division to operating margin rose by 13.9% to EUR253 million (FRF1,660 million). The plan to reduce costs by FRF20 billion relative to 1997 (on a constant activity basis), carried out in 1998-1999-2000, was completed successfully, which made it possible to limit the impact of the rise in the cost of raw materials and energy. Renault is currently initiating a new plan to achieve savings of EUR3 billion over three years (2001-2002-2003). This new plan includes the savings from synergies generated by the Alliance. The plan covers all group activities, with particular focus on purchasing (51%), marketing expenses (21%) and manufacturing costs (11%). Other operating income and expenses declined sharply in 2000 amounting to a charge of EUR319 million (FRF2,093 million) compared to EUR721 million (FRF4,729 million) in 1999. In 1999, this item included a provision of EUR584 million (FRF3,833 million) due to the application in France of the CASA (early retirement programme for older employees). Other operating income and expenses in 2000 mostly included the adjustment and discounting to present value of the financial charges of the CASA provision and provisions for measures to adapt the size of the workforce of the latest French subsidiaries to sign the CASA agreements, as well as an early retirement plan at the Spanish subsidiary FASA. On account of the financial situation of Daewoo, with whom Renault had signed an engine supply contract, the Group has provisioned for a doubtful receivable of EUR65 million (FRF428 million). After taking into account other operating income and expenses, operating income was up 14.8% at EUR1,703 million (FRF11,173 million) in 2000 compared to EUR1,484 million (FRF9,736 million) in1999. Net financial items showed a loss of EUR69 million (FRF454 million) compared to income of EUR32 million (FRF208 million) in 1999. This decline was due to the increase in the cost of financing the Group's international development since the end of the first half of 1999. Renault's share in the net income of companies accounted for by the equity method is the line item which changed the most, as a result of Nissan's recovery. This figure, which was a negative EUR356 million (FRF2,334 million) in 1999, became a positive EUR89 million (FRF583 million) in 2000. Nissan Motor, the main company accounted for by the equity method, made a positive contribution of EUR56 million (FRF368 million) to the Renault Group accounts. Group pre-tax income was EUR1,723 million (FRF11,302 million) compared to EUR1,160 million (FRF7,610 million) in 1999. In 2000, current and deferred taxes totaled a net charge of EUR649 million (FRF4,260 million) against a charge of EUR620 million (FRF4,068 million) in 1999. After taking into account this charge and minority interests, Renault net income in 2000 came to EUR1,080 million (FRF7,082 million) compared to EUR534 million (FRF3,506 million) in 1999, an increase of 102%. Earnings per share were EUR4.50 (FRF29.53) compared to EUR2.23 (FRF14.62) in 1999. In 2000, Renault generated cash flow from operations of EUR3,412 million (FRF22,379 million) compared to EUR3,315 million (FRF21,745 million) in 1999. On December 31, 2000, net financial indebtedness stood at EUR4,793 million (FRF31,441 million) compared to EUR2,699 million (FRF17,705 million) on December 31, 1999. It rose as a result of the following: · the 16.8% increase in capital expenditures on property, plant and equipment; · investments in subsidiaries and affiliates which amounted to EUR811 million (FRF5,320 million) with notably the acquisition of Benetton Formula Ltd and 4.9% of AB Volvo's shares; · the creation of Renault Samsung Motors which had an impact of EUR267 million (FRF1,752 million); · the temporary increase in working capital requirements, related to strained industrial sourcing conditions and preparations for the launch of the new Laguna. A proposal will be made to the Annual General Meeting of Shareholders on May 10, 2001, calling for payment of a dividend of EUR0.91 (FRF6) per share, excluding the tax credit. Outlook 2001 will be a year of self-sustained growth. Based on an identical scope of consolidation, revenues will progress due to international sales growth, the launch of new models, increased production capacity for diesel engines and with a European market stabilized at a high level. Cost cutting will continue with the introduction of a new three-year plan targeting annual savings of one billion euros. To ensure its future growth, Renault will maintain a strong focus on research and development and consolidate its international expansion. The implementation of the Alliance will continue to gain pace with the development of a second common platform and the intensification of cooperation in other areas. Renault will benefit fully from Nissan's recovery and the link-up with Volvo in the truck sector. The significant growth in revenues will come notably from the Group's recent international development. The operating margin should exceed the objective of 4% of revenues on average over a business cycle, with Renault aiming for an operating margin in euros of an amount equivalent to that attained in 2000, based on an identical scope of consolidation. Before capital gains, earnings per share should be above the consensus of security analysts' forecasts, which is EUR6 per share. (February 13, 2001) Source: Renault
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