* Renault targets 5 pct margin, 50 bln euros sales in 2017
* Company sees higher 2014 sales and op profit
* Restructuring, writedowns weigh on net income
(Adds company and analyst comments, details, background)
By Laurence Frost
PARIS, Feb 13 French carmaker Renault
said on Thursday it would lift revenue by a quarter and its
operating profit margin to 5 percent in 2017, extending its
turnaround plan by a year after a missed sales goal.
Renault shares rose after the operating margin increased to
3 percent last year from 1.9 percent in 2012, overshadowing more
than 500 million euros ($679 million) in second-half writedowns
and restructuring costs that weighed on the bottom line.
The company vowed to deliver positive cash flow in 2014 and
increase both operating profit and revenue - little changed last
year at 40.93 billion euros.
"This is as much as we could have asked for so early in the
year," Credit Suisse analyst Mike Dean said.
The outlook is "way ahead of what PSA (Peugeot Citroen), GM
or Ford will achieve in Europe this year", he added in a note.
Renault shares were 4.3 percent higher at 68.70 euros as of
0816 GMT, valuing the company at 19.55 billion euros.
The French carmaker has been cushioned from Europe's auto
slump by its 43.4 percent stake in Nissan and a foray
into low-cost cars like the Logan sedan and Duster offroader,
which have sold well during the region's economic crisis.
The Romanian- and Moroccan-built budget models have surged
to 41 percent of Renault's global registrations from below 30
percent in just two years.
Renault and Nissan are also rolling out new shared vehicle
architectures to harness their combined global scale, drive down
costs and help meet mid-term profit goals.
Chief Executive Carlos Ghosn unveiled what he described as
"ambitious yet realistic" targets for 2017, including the margin
objective and 50 billion euros in revenue.
"Our strategy laid out in the first part of our plan 'Drive
the Change' has delivered results," he said.
But those results fell short of the 3 million vehicle sales
originally pledged for last year, when deliveries reached 2.63
million. Under Ghosn, Renault had also pledged and missed 3.3
million vehicle sales and a 6 percent margin for 2009.
Postponing the completion date for its current plan by a
year to 2017, Renault gave no new volume targets on Thursday,
pledging instead to maintain positive cash flow every year.
"We would have liked to see a somewhat more challenging
target, but Renault has decided to play it safe," said Erich
Hauser, a London-based analyst with International Strategy and
Renault said net income fell by two-thirds to 586 million
euros, far short of the 1.3 billion euros expected by analysts,
according to Thomson Reuters SmartEstimates data.
The company announced a second-half writedown of 261 million
euros on underperforming vehicle programmes in addition to 227
million euros announced in July, declining to identify the
products for reasons of commercial confidentiality.
"If you say a particular programme has suffered an
impairment, it's not a great advert for the vehicles," a Renault
Restructuring charges also rose to 250 million euros in the
second half from 173 million in the first as Renault seeks
voluntary departures and buyouts from its French workforce under
a deal struck with labour unions last March.
Operating profit rose 58 percent to 1.242 billion euros last
year as automotive free cash flow rose more than a third to 827
million. Renault said it planned to maintain its dividend at
Almost 15 years into their alliance, Renault and Nissan are
lagging behind Volkswagen, Hyundai-Kia
and Toyota on platform scale - the number of vehicles
assembled from a common architecture.
But the alliance raised its joint savings goal last month,
vowing to deepen cooperation in vehicle development and
production as the race for scale intensifies.
Cooperation will cut costs by at least 4.3 billion euros in
2016, the companies said - an improvement on the 4 billion euro
target announced in 2012, when savings amounted to 2.7 billion.
Ghosn also appointed executives to converge production, research
and development and human resources.
($1 = 0.7359 euros)
(Additional reporting by Gilles Guillaume; Editing by Andrew
Callus and Elizabeth Piper)