Renault Group returns to profitability in 2021

Company bounces back after two years of losses as Renaulution plan takes effect

The Renault Group has returned to profitability after two years of losses, hitting a number of long-term financial targets earlier than projected.

Revealing its financial performance for 2021, the company highlighted that it has achieved an operating margin above 3% two years ahead of schedule, reduced fixed costs by €2 billion (£1.67bn) a year early, and reduced its break-even point by 40% compared with 2019.

The numbers serve as tangible evidence of the success of CEO Luca de Meo’s radical ‘Renaulution’ transformation plan, which was implemented to accelerate the company’s electrification strategy and promote profitability.

The company is now operating with a margin of 3.6%, which ties into de Meo’s new “value over volumes” ethos, which will continue to define the group’s business strategy through 2022.

The Renault Group posted revenues of €46.2bn (£38.6bn) in 2021, up 6.3% year on year, and its operating margin of €1.7bn is a €2bn increase. In the second half of 2021, the company was operating at a 4.4% margin.

It also achieved its CAFE emissions targets across the passenger and light commercial vehicle segment in Europe. It attributes this largely to demand its electrified E-Tech models, which accounted for nearly a third of its European registrations, compared with 17% in 2020.

Looking ahead, the company anticipates that the semiconductor shortage and increase in raw material costs will continue to restrict output, “particularly in the first half of 2022”, with a projected loss of 300,000 vehicles this year. 

Nonetheless, it aims to boost its operating margin past the 4% mark and achieve a free cash flow of at least €1bn (£0.83bn) this year. 

De Meo said: “Renault Group largely exceeded its 2021 financial targets despite the impact of semiconductor shortages and rising raw material prices. This reflects the sustained pace of the in-depth transformation of the group, initiated within the framework of Renaulution.

“Thanks to the continuous commitment of the teams and by capitalizing on the [Renault-Nissan-Mitsubishi] Alliance, we are accelerating the deployment of our strategic ambitions, in order to position the group as a competitive, tech and sustainable major player.”

Leave a Reply

Your email address will not be published.