Ghosn to give Renault outlook with H1 result

PARIS -- Carlos Ghosn is expected to detail the 2007 and 2008 profit outlook for French carmaker Renault on Thursday evening, in what many analysts see as an exercise to draw attention away from a likely weak set of first-half results.

A spokeswoman for Renault had no comment on the content of a presentation by Ghosn, also chief executive at alliance partner Nissan Motor Co.

The group will issue its first-half results shortly before the presentation, Ghosn's first big Paris news conference since he unveiled Renault's strategy plan to 2009 in February. That will be followed by an analysts' conference.

Last week, wearing his Nissan hat, Ghosn already allayed some worries in the investor community by saying that Nissan and Renault would not necessarily take a stake in General Motors if an ongoing study of a potential three-way alliance took form.

But on Thursday he needs to convince Renault investors that his plan to make the French group the most profitable European mass auto group by 2009 is taking shape even without any clear signs of improvement.

"Once again, Carlos Ghosn will have to be convincing in order to keep the market patient as it waits for the first fruits of the 2009 plan," said Exane BNP Paribas analyst Thierry Huon recently.

Ghosn has already said 2006 would be a year of transition for Renault, Europe's fourth-largest car maker, due to the start of the 'Commitment 2009' plan and the absence of new car models.

A forecast for a 2006 operating margin of 2.5 percent, at par with that of 2005, was seen as cautious in itself but could still be difficult to attain in the light of a profit warning on Wednesday by across-town rival PSA Peugeot Citroen.

Peugeot Citroen missed market expectations and its own guidance with a drop in first-half operating margin to 2.4 percent from 4.4 percent a year ago, and it forecast a flat margin in the second half whereas it previously saw a rise.

MARGIN SEEN WEAK BUT IN LINE

According to median expectations in a Reuters poll of 13 sector analysts, conducted last week, Renault is expected to report a 1.9 percent rise in sales to 21.8 billion euros while the operating result will plunge 42 percent to 550 million.

Higher raw materials prices, a fierce price war, costs for stricter European emission rules on diesel exhausts and a relatively ageing model line-up are behind that anticipated fall.

The net profit, however, is seen above the operating income at 1.29 billion euros, also down from 2.2 billion last year, due to income from the stakes in Nissan and Volvo.

That would give an operating margin of 2.5 percent, in line with the target.

Earlier this month, Renault said its first-half unit sales had declined by 3.2 percent to 1,315,385 vehicles.

Renault said that global sales should remain stable for the full year compared with 2005. Renault's figures include sales of Romanian unit Dacia, which makes the Logan no-frills car, and Renault Samsung Motors in South Korea.

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