Renault’s profits plunge after end to Iran activities

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

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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