April 27, 2018 / 5:28 AM / 10 months ago

Renault sales growth falters on Asia setbacks

PARIS (Reuters) - Renault’s (RENA.PA) revenue rose by a smaller-than-expected 0.2 percent in the first quarter as the French carmaker suffered sales setbacks in India, China and South Korea, compounded by the effects of a stronger euro.

Visitors walk past the newly launched Renault Trezor, a two-seater electric concept car, at the India Auto Show 2018 in Greater Noida, India, February 7, 2018. REUTERS/Saumya Khandelwal

Revenue advanced to 13.16 billion euros ($15.93 billion), Renault said on Friday, well short of the 13.77 billion expected by analysts, according to an Inquiry Financial poll. The company’s shares fell as much as 4.4 percent in Paris.

Sales in key growth markets showed a “mixed situation”, Renault said, with Chief Financial Officer Clotilde Delbos blaming a “massive currency headwind” for the weak quarter.

“We were expecting a negative effect from that front, but to be honest, not of that magnitude,” she told analysts.

The euro has gained about 11 percent against the U.S. dollar over the past year.

But the revenue slide also reflected lower deliveries in more volatile overseas markets.

While Europe and Russia showed solid gains, price-sensitive Indian registrations tumbled almost one-third as the Kwid mini-SUV’s early success gave way to decline and the larger Captur subcompact struggled to make inroads.

Chinese deliveries also fell 16.8 percent amid a continuing slump in sales for the recently consolidated Jinbei and Huasong commercial vehicle brands, acquired through a joint venture with Chinese carmaker Brilliance (1114.HK).

Sales by South Korean unit Renault Samsung Motors fell more than a quarter.

The quarter offers a “perfect example” of the ups and downs brought by Renault’s rapid overseas expansion, said one London-based analyst. “The economic risk is always above average.”

Renault shares were down 3.7 percent at 88.62 euros as of 0844 GMT, paring their gain this year to 9.7 percent.

The stronger euro cut automotive revenue by 4.8 percent or 575 million euros, further weakening the value of overseas sales. The overall volume increase contributed 275 million euros to revenue growth, and pricing improvements another 140 million.

Renault reiterated its 2018 market outlook and earnings guidance.

($1 = 0.8257 euros)

Reporting by Laurence Frost; Editing by Sudip Kar-Gupta and Mark Potter

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