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RENAULT

Renault’s profits plunge after end to Iran activities

There was more bad news for the French automobile industry on Friday when car giant Renault announced a dramatic plunge in profits. The company has blamed the drop partly on the fact that sanctions forced it to halt production in Iran.

Renault's profits plunge after end to Iran activities
Renault sales plunge. photo: Adrien Meyer.

French auto group Renault reported a profit plunge on Friday owing to charges for halting its activities in Iran and for restructuring in France.

The group reported a net profit for the first six months of the year of €39 million ($52 million) compared with €746 million at the same time last year.

The exceptional charges helped to push the operating result to a loss of €249 million from a profit of 519 million euros last time.

The price of shares in the group rose by 3.70 percent to €61.89 despite the profit drop because the board stood by its outlook for the year, market sources said.

The overall French market as measured by the CAC 40 index was up 1.0 percent.

Sales fell by 2.4 percent to 20.4 billion euros, the group said in a statement, but it stood by its outlook for the full year despite what it termed a "tougher environment than expected.

The company took a charge this year of €512 million for its activities in Iran which have been hit by a hardening since July 1 of international sanctions which now include the auto sector.

Finance director Dominique Thormann told a press conference that "there is an effective halt to activity" in this country.

Renault is the second-biggest French auto group after struggling PSA Peugeot Citroen which early last year interrupted its activities in Iran.

Earlier this year Renault announced it was axing around 7,500 jobs and threatened to close two plants.

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RENAULT

France ready to cut Renault stake to shore up Nissan partnership: minister

France is ready to consider cutting its stake in Renault in the interests of consolidating the automaker's alliance with Nissan, Finance Minister Bruno Le Maire said on Saturday.

France ready to cut Renault stake to shore up Nissan partnership: minister
A Renault employee works at the automaker's factory in Maubeuge, northern France. File photo: Ludovic MARIN / AFP
He was speaking in Japan after Italian-US carmaker Fiat Chrysler pulled the plug on its proposed merger with Renault, saying negotiations had become “unreasonable” due to political resistance in Paris.
 
In an interview with AFP on the sidelines of the G20 finance ministers meeting in Japan, Le Maire said Paris might consider reducing the state's 15-percent stake in Renault if it led to a “more solid” alliance between the Japanese and French firms.
 
“We can reduce the state's stake in Renault's capital. This is not a problem as long as, at the end of the process, we have a more solid auto sector and a more solid alliance between the two great car manufacturers Nissan and Renault,” he told AFP.
 
Last week, FCA stunned the auto world with a proposed “merger of equals” with Renault that would — together with Renault's Japanese partners Nissan and Mitsubishi Motors — create a car giant spanning the globe. The combined group would have been by far the world's biggest, with total sales of some 15 million vehicles, compared to both Volkswagen and Toyota, which sell around 10.6 million apiece.
 
But the deal collapsed suddenly on Thursday, with FCA laying the blame at the door of Paris. 
 
“It has become clear that the political conditions in France do not currently exist for such a combination to proceed successfully,” FCA said in a statement.
 
Le Maire said Renault should concentrate on forging closer ties with its Japanese partner Nissan before seeking other alliances.
 
Things need to be done “in the right order…. First the alliance (between Nissan and Renault) should be consolidated and then consolidation (more generally) and not one before the other.”
 
“Otherwise, everything risks collapsing like a house of cards,” he warned.
 
The minister said it would be up to the bosses of Renault and Nissan to decide how to push the alliance forward as ties between the two firms have been strained after the shock arrest of former boss Carlos Ghosn.
 
Renault is pushing for a full merger between the pair but there is deep scepticism of the plan at Nissan.
 
There were varied reactions from the French unions Saturday.
 
“The government is behaving like the agent of the big shareholders, favouring short-term profit to the detriment of the interests of the country,” said Fabien Gache, of the CGT union.
 
Cutting the state's share in Renault was abandoning its responsibility in the country's auto industry, he argued.
 
Franck Daout of the CFDT union said it backed a three-way alliance between Renault, Nissan and Japan's Mitsubishi — but not one between Nissan and Renault until the alliance had reached a “safe and sustainable maturity”.
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