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Renault has increased its profit forecast for the year thanks to improved margins and lower costs but has delayed plans to list its electric vehicle unit.
The carmaker’s predicted operating margin is 7-8 per cent, compared with previous expectations of 6 per cent. For the first six months of the year, the margin would be above 7 per cent, the company said on Thursday, while it expected to generate €1.5bn in cash. Free cash flow for the full year was expected to be at least €2.5bn, compared with a previous figure of €2bn.
The upgraded forecasts are a sign that Renault’s strategic shift — from a focus on selling as many cars as possible to increasing margins — continues to bear fruit.
The upgrades were driven by higher sales — about two-thirds of the total — of the hybrid version of its Austral car. Customers also tended to buy more expensive versions of the model.
Improved sales were “even more favourable than we anticipated”, while costs rose more slowly than expected, chief financial officer Thierry Piéton, said on Thursday.
Raw material costs, which Renault expected to fall later this year, have come down earlier, he added.
But the business has also slightly delayed the listing of its EV and software business Ampere, he said. Renault had previously said it was aiming for a listing in late 2023.
Piéton said on Thursday that the “most favourable window” would be “most probably” in the first half of 2024.
Talks with alliance partner Nissan, which will take a stake in Ampere, have taken longer than expected, and include rebalancing the shareholding structure of the alliance between the two businesses. Piéton said on Thursday that the alliance talks should conclude in the final months of this year.
Analysts have raised questions about how Renault can meet expectations of a reported €10bn valuation for Ampere.
The French carmaker plans to spin off several businesses, including its engine development unit, to bring in new investment.
Renault shares, which have doubled in the past three years, rose 5 per cent on Thursday morning to €38.25.
