Renault optimistic for 2012 on strong sales

French auto giant Renault said Thursday it was optimistic for this year after 2011 results showed it weathering tough times better than rival PSA Peugeot Citroen, despite a drop in net profit. Renault said it had sold a record 2.72 million vehicles last year, with particular growth in its low-cost entry-level cars, marketed under the Dacia brand in Europe. Net profit for 2011 came to 2.09 billion euros ($2.76 billion), down 39 percent, but the downturn was largely explained by an exceptional gain in 2010 from Renault's sale of shares in Swedish carmaker Volvo. Operating profit meanwhile nearly doubled to 1.24 billion euros and sales were up nine percent at 42.63 billion euros, with markets beyond Europe continuing to do well. The company said costs were kept under control but higher raw material prices could not be completely offset by increased sales, with the earthquake in Japan and subsequent disruption another negative. It said it expected strong sales this year of its new low-cost Lodgy MPV and new Clio. Renault said it continued to reduce debt and was in a position to pay a 2011 dividend of 1.16 euros per share. The company's shares soared 4.49 percent to 37.82 euros. Renault provided a sharp contrast to Peugeot's announcement that it was speeding up a cost-cutting programme after its results Wednesday saw 2011 net profit slump 48 percent to 588 million euros, even as sales rose seven percent to 59.9 billion euros. In a statement, Renault CEO Carlos Ghosn said the company had "coped with the different crises faced throughout the year" and noted a 19 percent increase in sales outside Europe, notably in Brazil and Russia. "In 2012 we expect international sales to be well in excess of 43 percent of the total, while maintaining the Renault brand leadership in France and the number two position in Europe," he said. In a conference call with analysts, Ghosn warned however that the company's "prospects for Europe are not positive in 2012." Renault, which controls Japan's Nissan Motor, is expecting a three to four percent sales drop in Europe and a seven to eight percent fall in France. The company said it plans to increase its share in Russian carmaker Avtovaz, manufacturer of the Lada, and to launch a presence in China. Press reports have suggested it could invest in the central city of Wuhan. "These two strategic advances should be presented in 2012," Ghosn said, adding that the increased investment in Avtovaz, in partnership with Nissan, should be concluded "in the coming weeks". Renault sold just 24,000 cars in China, the world's biggest car market, a tiny fraction of the 2.72 million vehicles sold across the globe in 2011. Ghosn said Renault is looking at producing electric cars in China to gain entry to the market. "We know that we need to bring the electric vehicle to China," he said, adding that this could be done through the Renault brand or another marque. "The Chinese government said recently that it is not possible to increase capacities or set up in China without bringing certain innovations," noted Ghosn during a conference with analysts on the group's annual earnings. Beside green cars, the automaker is eyeing more luxury car sales in China as it moves to renew its fleet from 2014. "Our high end line will go to China," said Ghosn. The contributions of associated companies brought in 1.52 billion euros to Renault last year, including 1.33 billion euros from Nissan and 49 million euros from Avtovaz. It said net financial debt in its automotive branch was down to a historically low level of 299 million euros and that its liquidity reserve was at a "high level" of 11.4 billion euros, compared with 12.8 billion in 2010.