Can Renault achieve full-year profit amid chip shortage?

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Renault Projects Full-Year Profit Despite Chip Shortage and Rising Costs

French automaker Renault anticipates achieving a full-year profit for 2021, even as the global semiconductor chip shortage intensifies and raw material expenses climb. The company's outlook is supported by a significant turnaround in its financial performance during the first half of the year, which saw a net profit compared to a substantial loss in the same period of 2020. This improvement was driven by an increase in vehicle sales and the successful implementation of a profitability-focused strategy.
Expected Production Impact from Chip Shortage

The ongoing semiconductor chip shortage is projected to result in a production loss of 200,000 units for Renault throughout 2021. This revised estimate is double the company's earlier forecast of a 100,000-unit production loss, highlighting the escalating challenges posed by the global supply chain disruption. Despite this impact, the company is still positioned to deliver a profit for the full year.
First-Half Financial Performance Highlights

In the first six months of 2021, Renault reported a net profit of €354 million. This marks a substantial recovery from the nearly €7.3 billion loss recorded in the first half of 2020, a period heavily affected by pandemic-related production halts. The operating margin for the first half of 2021 stood at 2.8%, with the company targeting a similar margin for the entire year.
Turnaround Strategy and Future Outlook

Renault's Chief Executive, Luca de Meo, described the current results as the initial phase of the company's turnaround plan, anticipating that new vehicle launches will further accelerate this process. The company has also recently outlined a more aggressive strategy for electric vehicles (EVs), aiming to enhance its competitiveness by introducing affordable versions of its classic small car models. This strategic shift follows five consecutive quarters of declining sales, with sales in the first half of 2021 showing a notable increase of 18.7%.

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Can Renault achieve full-year profit amid chip shortage?

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