Renault revealed an operating loss in 2008 and said on Feb. 12 it would focus on freeing up cash this year to weather even worse market conditions ahead. Contributions from firms in which the French company has stakes, notably Japan's Nissan, allowed Renault to hold its head above water and turn a profit of 599 million euros (US$774 million), down 78% on the year.
But the firm's own operating profit slipped to a loss of 117 million euros, compared with a profit of 1.24 billion euros a year before, amid a dramatic drop in demand following the credit crunch and economic collapse.
Sales were down by 30% in the fourth quarter and 7% for 2008 as a whole, as household incomes collapsed and motorists' credit dried up. The group foresees the market being even tougher in 2009.
Renault was already planning to reduce its 129,000-strong workforce by 9,000 this year, with around half of the posts being cut in France. Some 6,000 of these will come from voluntary redundancy, the rest from attrition.
President Nicolas Sarkozy has agreed to lend Renault three billion euros (US$3.9 billion) in exchange for a promise not to shut French plants or dismiss French workers.
The company said it would concentrate this year on finding cash. "This environment has led the group to focus its efforts on optimising free cash flow and has rendered unachievable the commitments on volumes and operating margins," it said. The automobile division's net debt surged by 5.2 billion euros over the 12 months through December to 7.94 billion euros, which Renault linked to the cost of high inventories of unsold vehicles and lower cash generation. Renault said cash flow -- the difference between cash coming in and going out of the company -- was a negative 3.0 billion euros and announced measures to generate cash this year. This would be done by selling down inventories, cutting salary and investment costs further and increasing joint operations with partner Nissan to save money.
Copyright Agence France-Presse, 2009
