French automaker Groupe Renault (FR:RNO) reported a record operating margin of 8.1% in its H1 results, beating the 7.9% analysts’ estimate. Renault’s performance was mainly driven by its robust pricing, new vehicle launches, and strong demand for its hybrid SUVs (sports utility vehicles) like the Austral and Espace.
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Backed by its strong results, the company maintained its full-year forecast for operating profitability and free cash flow. For the full year, the company expects an operating margin of more than or equal to 7.5% and a free cash flow of €2.5 billion and above. The company aims to deliver a double-digit operating margin by 2030.
Renault Group is a global automotive manufacturer specializing in cars, light vehicles, electric vehicles (EVs), and more.
Highlights from Renault’s H1 Results
In the first half, Renault reported revenue of €27 billion, marking a 0.4% increase from the previous year. Last week, the company reported a 1.9% increase in overall sales in the first half of the year, reaching 1,154,700 vehicles. This was mainly supported by the demand for its hybrid models. During the year, Renault introduced new hybrid models in response to strong demand for more affordable and convenient hybrids amid a slowdown in EV sales.
On the flip side, Renault reported a lower net profit of €1.4 billion for the first half, down from €2.1 billion a year earlier. This decline was primarily due to a €440 million capital loss on the sale of shares in its alliance partner Nissan and restructuring expenses of $123 million.
Looking ahead, the company stated that it currently holds a robust order book in Europe, equivalent to 2.6 months of forward sales.
Is Renault a Good Stock to Buy?
According to TipRanks’ consensus, RNO stock has received a Strong Buy rating based on nine Buy and three Hold recommendations from analysts. The Renault share price forecast is €58.17, which is 22.3% higher than the current price level.
