Carmaker eyeing markets such as Africa to offset missed opportunities, COO says
Renault says likely to pull out of Iran due to US sanctions
Renault is shaping up to be the latest French company to fall victim to Donald Trump’s renewed sanctions on Iran - even if it doesn’t sell cars in the US.
Iran operations are likely to be put on hold to comply with US sanctions, Renault chief operating officer Thierry Bollore told analysts during a conference call about the automaker's earnings Friday.
“We are looking to new business opportunities, particularly in Africa, with strong growth to offset the missed opportunities in Iran,” he said.
Renault’s French rival, PSA Group, which makes Peugeot and Citroen cars, also suspended its push in the country after the US canceled a 2015 nuclear accord with the Islamic republic. French energy companies Total and Engie are also heading to a pullout. Renault has no presence in the US, but its long-time partner Nissan Motors, in which Renault owns a majority stake, sells autos there.
Renault had been reviewing options, aiming to keep at least a small presence in Iran, like it did after the previous round of sanctions, the company's chief executive Carlos Ghosn had told shareholders last month.
Renault signed an agreement last year with Iran’s Industrial Development and Renovation Organization and local dealer Parto Negin Naseh to boost its local production by 75 per cent. The company had not yet started manufacturing vehicles or making investments under the deal, according to Renault's chief financial officer Clotilde Delbos, but has been producing cars there since 2003 with two other partners.
The US administration this month rejected France’s demands for a waiver or exemption for companies seeking to do business in Iran. Even companies with no business ties to the US find it difficult to operate in Iran because banks are reluctant to finance Iranian operations. Expanding to Iran was already “extremely complicated” due to banks’ reluctance, PSA said last month, but was made impossible when Trump decided to pull out.
In the first half, Renault’s sales in Iran fell 10 per cent, for a market share of 8 per cent, due to the Iranian central bank policy, Delbos told reporters Friday. She added that Iranian sales would be near zero in the second half.
The French automaker’s operating margin increased to a record 6.4 per cent from 6.2 per cent in its first-half 2018 financial results, Renault said in a statement on Friday. That compares with a profitability of 7.8 per cent, also an all-time high, at the maker of Peugeot and Citroen cars PSA.
The company lifted its margin despite a “volatile economic environment”, chief executive Carlos Ghosn said in the statement. This is “due to our strategy of regional diversification” and “the success of our new products”.
Renault sold a record 2.07 million vehicles in the first half of the year, as it added new brands in China, and it gained market share in Europe, up 5 per cent excluding the new Chinese operations.