Renault forecasts 2021 profit despite global chip shortage

LONDON: French carmaker Renault said on Friday it expected to post a full-year 2021 profit despite a worsening semiconductor chip shortage and rising raw materials costs.

Renault said it now expects the chip shortage to lead to a production loss over the course of 2021 of 200,000 units, up from its previous forecast of a loss of 100,000 units.

The carmaker posted a half-year net profit versus a hefty loss for the same period in 2020 due to rising car sales and a turnaround plan focused on profitability.

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Renault reported an operating margin of 2.8% for the first half of the year and said it is aiming for a full-year margin "of the same order."

These results "mark only the first step in our turnaround, which should accelerate with arrival of the new vehicles in preparation," Chief Executive Luca de Meo said in a statement.

Last month, Renault unveiled a more ambitious strategy for electric vehicles (EVs), betting on new, affordable versions of its iconic small cars of the past to catch up with Volkswagen in the fast-growing sector.

After posting a drop in car sales for five consecutive quarters, Renault's sales for the first half of 2021 rose 18.7%.

The French carmaker posted a quarterly net profit of 354 million euros ($420.52 million) for the first six months of 2021, versus a hefty loss of nearly 7.3 billion euros for the same period in 2020, which included lengthy industry-wide production shutdowns to slow the spread of the global coronavirus pandemic.