Renault Vive La Cash- US-FOREX.US
Renault’s efforts to keep a tight rein on its cash seem to be paying off. The French carmaker said Friday that car sales fell 13.7% in the first half of the year, but it had also achieved “significantly positive free cash flow.” Other European carmakers like Volkswagen and BMW are expected to end the year with positive free cash flow, but on this front Renault is surpassing its main French rival, PSA Peaugeot Citroen, which is expected to end the year in negative territory.Shares of Renault
rose 1.3%, or 34 euro cents , to 25.92 euros during early morning trading. Analysts believe Renault’s business is likely to improve in the second half of the year. “The news on the cash flow shows Renault is keeping things tight on what it can control, despite a very negative operating performance,” said George Dieng, an analyst at Natixis Securities in Paris. “It has achieved that by sharply cutting capital expenditure and reducing inventories.”Last March, Renault’s chief operating officer, Patrick Pelata, told Forbes hewould “do everything” to keep cash flowing and avoid going back to the French government for another credit line. Renault is due to report net profit figures on July 30, but Dieng said that, based on the latest sales numbers, he expected the company to perform better in the second half, thanks partly to the incentives put in place by the French government to encourage drivers to get rid of old cars.
Renault said its global market share totaled 3.7%, but it lost 0.5% market share in France following a fall in short-term leasing sales in the first half of the year. The firm also lost market share in Italy by 0.5% and in the U.K. by 2.2%, following the decision to scale down sales after a slide in the value of the pound.Renault brand sales dropped 21.5% in the first six months, with car sales 19.1% lower and light commercial vehicles posting a 33.2% drop, the company said.
Thomson Reuters contributed to this article.