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Renault: 2000 results by divisions 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 with Volvo signed on January 2, 2001, has secured for the Commercial Vehicles Division a promising solution for its future development. 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. Revenues generated abroad accounted for 64.5% of the total compared to 63.8% on the basis of restated 1999 figures, confirming the Group's continued international expansion.
The contribution of the Automobile Division to Group revenues came to EUR31,486 million (FRF206,533 million) in 2000, up 4.8% compared to 1999 on a consistent basis. The growth in revenues was due principally to the favourable version mix and higher sales volumes outside Europe. Renault Group unit sales reached 2.35 million vehicles, including 50,000 units under the Dacia brand and 12,500 Samsung-badged vehicles. Unit sales of the Renault brand totaled 1.97 million passenger cars and 323,000 light commercial vehicles, giving the brand a 4.1% share of the world market. With an 11% share of the market in Western Europe, Renault consolidated its position as leading brand for passenger cars and light commercial vehicles for the third consecutive year. In markets outside Western Europe, Renault grew by 22,7%. It remained market leader in Turkey with sales up 47% and continued its development in the Mercosur (up 11.1%), while achieving record market penetration in Central Europe. Mégane ranked second (with 4.2% of the market) among the top ten best-selling cars in Europe. Scénic accounted for more than half of overall Mégane sales and continued to make progress. Kangoo and Espace held on to their lead positions in their respective segments.
The contribution of the Commercial Vehicles Division to Group revenues amounted to EUR7,033 million (FRF46,137 million), up 8.3% compared to 1999, on a consistent basis. The Commercial Vehicles Division accounted for 17.5% of Group revenues. This increase was attributable to the growth in sales volumes, which reached a record level with 103,646 trucks sold in 2000 (including 8,819 Master vans sold by the Renault V.I. dealer network), compared to 93,354 in 1999. This performance was essentially due to Renault V.I. whose sales rose by 27.4% to 67,814 units. On the other hand, in the United States, in a rapidly declining market (down 19.4% from 1999) for class 8 trucks (over 16 tonnes), Mack performed better than its competitors and for the eighth consecutive year improved its market share, which now stands at 13.3% (13.1% in 1999). In Europe, Renault V.I. gained 0.6 of a point in the segment for trucks over 5 tonnes, taking 11.3% (versus 10.7% in 1999) and consolidated its position in the over-16-tonne segment with 12.4% (versus 12.2% in 1999). Irisbus, for its second year in business, sold 9,811 vehicles (up 11.7%) and confirmed its position as market leader in France, Italy, Spain and the Czech Republic. Its market share in the five main European markets (Germany, Spain, France, the United Kingdom and Italy) totaled 27.1% compared to 26% in 1999.
The contribution to Group revenues of the Finance Division - primarily made up of interest income from sales financing - came to EUR1,656 million (FRF10,864 million) in 2000, an increase of 10.6% compared to 1999, on a consistent basis. This growth was due to an increase in average productive credits outstanding and a rise in interest rates. Committed to a policy of regularly renewing its ranges of vehicles and powertrains, the Group invested heavily in preparing for the future and devoted EUR2,048 million (FRF13,433 million) to research and development in 2000, compared to EUR1,788 million (FRF11,727 million) in 1999, an increase of 14.6%. R&D expenditure represented 5.1% of revenues (versus 4.8% in 1999). Operating margin came to EUR2,022 million (FRF13,266 million) equal to 5% of revenues in line with the Group's projections.The Automobile Division contributed 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 Dacia and Renault Samsung Motors, two companies respectively in in a recovery and restart-up phase. Conversely, the operating margin of the Automobile Division benefitted from the continuation of the cost-reduction plan. 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, reflecting 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 observed in 2000. 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 with Nissan. Renault is aiming to realize average savings of EUR1 billion per year, on a constant basis with 1999. The plan covers all group activities. Half of the savings (51%) will come from purchasing, 21% from marketing expenses (distribution) and 11% from manufacturing costs. Other sources of savings are the Mercosur, engineering and sundry costs mainly in support services (IS, warranty costs, overhead, etc). 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 restructuring costs and measures to adapt the size of the workforce of the latest French subsidiaries to sign the CASA agreements. In Spain, a provision of EUR77 million (FRF506 million) was set aside for an early retirement plan for older employees at the FASA subsidiary. On account of the financial situation of Daewoo, with whom Renault had signed a contract to supply engines, 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) in 1999. Net financial items showed a loss of EUR69 million (FRF454 million) compared to income of EUR32 million (FRF208 million) in 1999. This change 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. More than just the annual change, it is the sheer scale of the turnaround between the first and second half of 2000 which is representative of the speed of recovery of Renault's Japanese partner. Group pre-tax income was EUR1,723 million (FRF11,302 million) up 48.5% from 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. The charge from current and deferred taxes represented 39.7% of Group income before taxes and before the income of companies accounted for by the equity method. 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. Committed to a policy of regular renewal of its product range, Renault devoted EUR2,381 million (FRF15,619 million) in 2000 to capital expenditures on property, plant and equipment and intangible assets, net of disposals. They increased by 17.1% and represented 5.9% of revenues (5.4 % in 1999). They were covered by cash flow from operations which amounted to EUR3,412 million (FRF22,379 million) in 2000. On December 31, 2000, the net financial indebtedness of the industrial and commercial activities 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. Finally, shareholders' equity of the Group rose from EUR8,185 million (FRF53,689 million) on December 31, 1999, to EUR9,652 million (FRF63,314 million) on December 31, 2000. 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.
The year 2000 was one of exceptional strategic opportunities for Renault. The Group continued its international development as part of its strategy of profitable growth. Renault's New Distribution system and e-business strategy are shifting the balance of the relationship with customers, making them the focal point of the system. Purchasing, which played a major role in the first cost-reduction plan, will again contribute to competitiveness thanks to the implementation of Covisint, the largest online exchange platform between component manufacturers and automakers (Ford Motor Company, General Motors Corporation, DaimlerChrysler). Finally, in 2000, Renault began to develop a multi-brand Group strategy with Dacia and Samsung. The Volvo agreement, which gave birth to the world's second largest truck manufacturer, has provided a solution which is favorable to the long-term development of the Renault and Mack brand names. In 2000, the Alliance also moved forward at a fast pace. The B-platform is being developed and the first vehicles to be built on this platform will be introduced in 2002. In the area of powertrains, the framework for exchanges has been defined and the development of a common diesel engine is underway. The Alliance's purchasing policy is being deployed with the definition of a panel of suppliers. In 2000, Renault and Nissan brought their commercial back offices together in seven European markets. Globally, mutual support in industrial and commercial areas has borne fruit: Scénic is produced in Nissan's Mexican plant and the New Frontier pick-up will be produced in Renault's Brazilian plants. Renault has announced its return to Australia, Taiwan and Peru, thanks to Nissan. (February 13, 2001) Source: Renault
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