Renault Group Net Earnings Drop 15%

Renault SA reports a net income of €1.8 billion for 2012, down from €2.1 billion in 2011. The company's operating income plunged to €122 million from €1.2 billion in the previous year.

Operating margin (earnings excluding taxes and special items), shrank by one-third to €729 million last year.

Group revenue slipped 3% to €41.3 billion in 2012, dragged down by an 18% decline in Europe and a 6% drop to 2.55 million vehicles in global sales volume. Revenue from Renault's automotive operations shrank 4% to €39.2 billion.

But the automotive unit also eliminated debt for the first time since forming its alliance with Nissan Motor Co. in 1999. Renault says its net cash swung from a negative €299 million to a positive €1.5 billion, mainly because of the €1.5 billion sale in December of its remaining stake in commercial truckmaker AB Volvo.

Renault expects the European car market to shrink at least 3% this year, including a contraction of as much as 5% in France. But it predicts its automotive unit will reverse last year's negative €25 million operating margin and continue to show positive cash flow.