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Renault says revenue weighed down by Nissan, lower diesel engine demand

Published 10/25/2019, 02:46 AM
Updated 10/25/2019, 02:46 AM
© Reuters. FILE PHOTO: The logo of French car manufacturer Renault is seen at a dealership of the company in Bordeaux

By Gilles Guillaume and Christian Lowe

PARIS (Reuters) - French carmaker Renault's (PA:RENA) group revenue fell in the third quarter, weighed down by a drop in production at partners Nissan and Daimler (DE:DAIGn) as declining demand for diesel engines added to the effects of a slowing global market.

The company, which owns 43.4% of Japanese manufacturer Nissan (T:7201), said Renault group revenue fell 1.6% to 11.296 billion euros. It also said the group's third-quarter sales by volume were down 4.4% to 852,198 vehicles.

Renault had already flagged the weaker revenue in a profit warning last week, which sent its shares falling. On Friday it offered explanations for the worse-than-expected numbers.

Besides selling Renault-branded vehicles, the company also uses its plants to manufacture vehicles for its partner, Nissan, and for Daimler (DE:DAIGn), and it is a specialist in making diesel engines for other automakers.

Sales of the vehicles it makes for partners have slowed, with a knock-on effect on Renault's revenues, while demand for diesel engines in Europe has declined.

Renault said those effects were compounded by the closure of the Iranian market since last year as a result of U.S. trade sanctions.

Renault has been trying to regain momentum after the November 2018 arrest in Japan of Carlos Ghosn, the head of the Renault-Nissan alliance, on financial misconduct charges that he denies.

Earlier this month, Nissan appointed a new chief executive and days later Renault CEO Thierry Bollore -- who had been appointed under Ghosn -- was pushed out, to be replaced on an interim basis by Renault finance director Clotilde Delbos.

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Issuing its quarterly results on Friday, Renault revised downwards its forecasts for the growth of the global auto market, saying it expected a year-on-year decline in 2019 of around 4%, compared to around 3% previously.

In its profit warning last week, Renault had said sales were likely to drop between 3% and 4% this year, compared with its previous forecast for a similar outcome to 2018.

The company also said last week its operating margin was set to come in at 5%, versus a previous 6% goal, as it struggles to keep a lid on research and development costs.

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