Renault H1 profit margin rises, above forecasts

BOULOGNE-BILLANCOURT, France, July 24 (Reuters) – French carmaker Renault on Thursday reported a better than expected first half operating profit margin of 4.1 percent and held on to its margin targets for 2008 and 2009, but stepped up cost cuts and reduced its volume targets due to the worsening economic situation.

In line with results on Wednesday by Volkswagen, Peugeot-Citroen and Fiat, Renault's result for the first half was better than analysts had expected — the average in a Reuters poll of 10 analysts was for a margin of 4.0 percent. Last year, it had a margin of 3.5 percent.

"In a difficult environment, Renault has resisted well," finance director Thierry Moulonguet said.

But due to a decline in economic growth and consumer confidence in Europe, as well as the hike in oil prices and raw materials, Renault said it would be more difficult to attain its 2008 target of 4.5 percent and the 2009 target of 6.0 percent.

There will be a hiring freeze and a plan for voluntary departures in Europe, and research and development spending and investments will be reduced in relation to sales. In total this will save an additional 350 million euros ($550.7 million) in 2009 and 500 million in 2010.