Ghosn to review progress of GM talks next month
Renault's earnings and sales are likely to meet Ghosn's commitments through 2009, the CEO also said. Ghosn released a plan in February to boost operating profit to 6% of sales in 2009 from 2.5% this year. In July, he added targets of a 3% operating margin next year and 4.5% in 2008 on a reduction in production costs. The carmaker, France's second-largest, plans to release 26 new and redesigned models by 2009. H1 net income at Renault fell 25% to 1.63 billion euros ($2.1 billion), with the operating margin dropping to 2.7% from 4.4%, on slumping sales of the Megane compact-car line. Nissan, Japan's second-biggest carmaker and 44% owned by Renault, reiterated an outlook in July for a seventh consecutive year of record earnings. Fiscal Q1 net income rose 4% to 110.2 billion yen ($944 million) after a weaker yen and lower taxes outweighed a slump in sales.
Nissan and Renault created their alliance in 1999, with Ghosn leaving the French company to run the Japanese carmaker and then taking the helm at Renault in April 2005. The companies have a joint procurement project and already save about $868 million annually by combining $59 billion of purchasing, according to an estimate by Credit Suisse. The two carmakers make 70% of their purchases jointly, said Renault CFO Thierry Moulonguet, who was formerly CFO at Nissan. About a third of Renault's total purchasing-cost reductions stem from the common approach with Nissan, he said. The two automakers also build cars for each other in Mexico and Brazil and share engines and vehicle underbodies. GM in July reported earning $1.2 billion on its operations, excluding one-time costs, in the Q2. The company had a $3.2 billion net loss for the quarter because of a $3.7 billion charge to buy out workers. GM shares fell 7 cents to $29.18 at 4:01 p.m. in New York Stock Exchange composite trading. The stock has risen 50% this year. Nissan's US shares gained 49 cents to $22.77 in Nasdaq Stock Market composite trading, and have climbed 11% this year. Renault shares rose 4 euro cents to € 90.9 in Paris. The stock is up 32% this year. (Bloomberg)
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