Renault returns to profit but chip shortage hits output

[PARIS] Renault returned to profit last year but the global shortage of semiconductors will crimp production again in 2022, the French automaker said on Friday (Feb 18).

The company posted a better-than-expected net profit of 967 million euros (S$1.5 billion) after a record 8-billion-euro loss in 2020, when the onset of the pandemic pummelled the global economy.

Renault sold fewer cars last year but the company has cut costs, raised prices and shifted to a strategy of focusing on its more profitable brands instead of volumes.

Revenue rose 6.3 per cent to 46.2 billion euros as the company exceeded its financial targets despite the shortage of semiconductors and the higher cost of raw materials.

"Renault is back", chief executive Luca de Meo said at a news conference.

"The difficulties are behind us. We have shown that we can overcome adversity," he said.

Chief financial officer Clotilde Delbos attributed the performance to Renault's strategy of "promoting value over volumes, and its strict financial discipline".

Automakers have struggled with a shortage of semiconductors, a key component for modern cars as they power everything from anti-lock braking systems to airbags to parking assistance technology.

Some 500,000 fewer Renault cars were produced last year. The company said on Friday the chip shortage would lead to another production cut of 300,000 units this year.

Although it returned to profit, Renault said it would not distribute a dividend to shareholders this year.

Renault, which borrowed 4 billion euros to cope with the pandemic, plans to reimburse half of the state-guaranteed loans this year. AFP