Renault revenue hit by weaker emerging markets

PARIS: Renault said an emerging-market currency slide against the euro wiped out sales gains in the first quarter, when the French carmaker's revenue fell 0.1 percent.

Revenue decreased to 8.257 billion euros ($11.41 billion) in January-March from 8.265 billion a year earlier, Renault said in a statement on Thursday, despite a 5.1 percent gain in vehicle deliveries.

Thanks to its no-frills car offering and success in markets such as Russia and Latin America, Renault has proved more resistant to a six-year European market slump than peers such as PSA Peugeot Citroen and Fiat.

But a slowdown combined with weaker currencies in Russia, Latin America and parts of Asia is beginning to hurt, wiping out sales gains and efforts to raise pricing.

"We did expect foreign exchange to be a significant drag this quarter, but didn't expect it to be quite so severe," said Erich Hauser of ISI Group.

"Better pricing might offset some of it, but this effect would always kick in with some delay," the London-based analyst said in a note.

Quarterly numbers from other large European groups have been showing a negative impact on overseas revenue when converted back into euros from weakening local currencies.

Europe's recovery may counter the gloomier outlook elsewhere, Renault said, predicting a full-year expansion of 2-3 percent in its home region, in contrast to "slightly declining" Russian and Brazilian markets.

"The European market was better than anticipated in the quarter and this is good news," Chief Financial Officer Dominique Thormann told analysts and reporters on a conference call.

But business elsewhere was "negatively impacted by several factors" including halted sales in Iran, weaker emerging market demand and currency headwinds, he said.

Leading automotive forecaster LMC Automotive warned on Thursday that industry earnings were at risk from a slowdown in Latin America, Russia, eastern Europe and India.

"Slower growth in the emerging markets is creating pressure for the global automotive industry and adding an element of uncertainty for key players that have invested heavily," it said.

Renault said foreign exchange cut revenue by 5.3 percent in the quarter, effectively cancelling the effect of its increase in deliveries to 639,239 vehicles.

The company reiterated its 2014 earnings goals including an increase in revenue excluding currency effects, positive operating cash flow and improved operating profit at group and auto division levels.