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Renault hit by Iran withdrawal as quarterly sales drop 5%
Renault reported a decline in revenue and unit sales in the first quarter after withdrawing from Iran, weakness in some emerging markets and currency fluctuations.

Revenues at the French carmaker fell 4.8 percent to €12.5 billion, while the number of cars sold dropped by 5.6 percent to 908,000, reported the Financial Times on Friday.

Once currency moves were stripped out, revenues fell by 2.7 percent.

The group does not disclose profits when reporting first-quarter results but the company on Friday reaffirmed its guidance for the year to reach a six-percent margin, increase revenues at constant exchange rates and generate positive cash.

The report comes days after Renault’s alliance partner Nissan downgraded its profit expectations for the second time this year after weak performance in the US and China.

Renault’s sales were hit by the collapse of markets in Argentina and Turkey, which both dropped by near-50-percent, as well as its decision to withdraw from Iran last year to avoid US sanctions.

Sales rose two percent in Europe, and were flat in Russia.

Car sales are dropping worldwide as the cycle of car buyers turns in the major strongholds of China, the US and Europe.

Renault is not exposed to the US, and has very limited operations in China, but is heavily reliant on Europe and exposed to emerging markets such as Brazil, Argentina, India and Russia, which is its largest market after France.

 

PSA revenue decline

Peugeot maker PSA Group reported a 1.1 percent decline in first-quarter revenue, as a sales decline outside Europe and currency challenges outweighed pricing improvements.

The French carmaker’s shares fell after it said revenue dropped to €17.98 billion in the January-March quarter from €18.2 billion a year earlier, Reuters reported.

PSA “remains fully focused” on its medium-term performance plan while pursuing the integration of the Opel-Vauxhall business acquired from General Motors in 2017, chief financial officer Philippe de Rovira said.

While the Opel deal has bolstered PSA’s European position, overseas sales have suffered from a sustained collapse at its Chinese joint ventures and have been compounded by the carmaker’s withdrawal from Iran last year.

Revenue at the core automotive division fell 1.8 percent to €14.16 billion, as vehicle sales by Opel to its former parent tailed off. Exchange-rate setbacks also weighed on revenue to overcome a 3.6-percent boost from improved pricing and mix, which reflects a sales shift to plusher models.

Those metrics, driven by PSA’s performance in Europe, bode well for its future earnings, some analysts said. “Investors might be willing to look through the weak headline figure, given how key mix is for profitability,” Evercore ISI analyst Arndt Ellinghorst said in a note to clients.

Global sales volumes fell 15.7 percent to 886,400 vehicles in the quarter. Excluding Iran, deliveries fell 6.1 percent, weighed down by a 30-percent decline in Latin America.

Overall revenue was broadly in line with analyst estimates in an Infront Data poll, and PSA reiterated its medium-term guidance for an average 4.5 percent automotive operating margin over the 2019-2021 period.

The company said it now expects the Latin American auto market to shrink two percent in 2019.

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