Renault cuts 2009 sales target, H1 margin up

By Marcel Michelson

BOULOGNE-BILLANCOURT, France (Reuters) - French automaker Renault (RENA.PA: Quote, Profile, Research) cut its 2009 sales target citing a tougher market in Europe on Thursday after joining European peers by reporting a stronger-than-expected first-half operating profit margin.

Europe's sixth largest automaker cut its expectations for 2009 sales by 300,000 vehicles and said it would be forced to deepen its cost cutting plans to cope with a toughening economic situation which "far exceeded the worst-case scenarios envisaged" at the launch of its profit recovery plan two years ago.

Renault shares were down 0.9 percent at 57.32 euros by 0902 GMT (5:02 a.m. EDT) after spiking as much as 7.2 percent to an intraday high of 61.99 euros.

"A spot of relief but uncertainty and rising debt levels remain a risk," Morgan Stanley said in a brokerage research note. It kept an "underweight" rating on Renault shares.

Renault's first-half margin was 4.1 percent, up from 3.4 percent last year and just above the 4.0 expected on average by 10 analysts polled by Reuters.

On Wednesday, results from Volkswagen (VOWG.DE: Quote, Profile, Research), Peugeot-Citroen (PEUP.PA: Quote, Profile, Research) and Fiat (FIA.MI: Quote, Profile, Research) topped market expectations and they retained their targets, although all acknowledged tougher times lay ahead.

"In a difficult environment, Renault has resisted well," Finance Director Thierry Moulonguet said.

However, Renault said that if the global economy deteriorated further it would be more difficult to hit its 2008 target of 4.5 percent and 2009 target of 6.0 percent.