Renault cuts stocks, boosts cash as market worsens

Renault hunkered down to face a worsening European car market after using discounts to clear vehicle stocks, boost cash and cut debt to its lowest in 13 years by the end of 2011. Europe's auto market, which accounted for 57 percent of Renault's 2011 deliveries, is expected to contract 3-4 percent this year as austerity measures and economic uncertainty bite into consumer spending power, the company said.
Unveiling a 40 percent drop in full-year earnings, the French carmaker pledged to maintain positive free cash flow in 2012 after more than doubling its target last year, in contrast with mounting debts and cash burn at larger domestic rival PSA Peugeot Citroen. Renault shares rose as much as 4.8 percent to 37.94 euros and were up 3.1 percent at 1439 GMT, against a 0.8 percent drop in the 15-member Stoxx Europe autos and parts index.