Despite profits rise, Renault to cut jobs, raise prices (Roundup)

Business News

Jul 24, 2008, 12:40 GMT

Paris - Faced with a weakening automobile market and rising costs for raw materials and transport, French auto maker Renault said Thursday it would cut jobs to reduce overhead costs by 10 per cent. The move was to be based primarily on what the company said would be 'voluntary departures,' most of them in Europe. The announcement was made as Renault announced excellent first-half profits and sales results. In a telephone press conference, Renault chief Carlos Ghosn said that the overhead cost savings would amount to 470 million euros (742 million dollars), and that part of it would be accomplished by what he called 'head count reduction.' However, he refused to provide details about the number of jobs involved until talks with trade unions had got under way. French radio station RTL reported Thursday that some 7,000 jobs would be slashed, most of them in France, and that Ghosn had discussed the step with French President Nicolas Sarkozy late Wednesday. Ghosn warned that additional cuts, beyond those now foreseen, could come if the European car market deteriorated more than expected. 'We are expecting minus 4 per cent in the European car market in 2008 and the same thing in 2009,' Ghosn said. 'And we have taken the appropriate measures to weather the storm. But if the market goes south of this, we will have to take additional measures.' Renault also said it would reduce investment in research, freeze hiring in Europe and raise the prices of its automobiles to set off the effects of the high price of crude oil, which was weakening the European automobile market, and high raw material costs. On Thursday, Renault also reported that estimated profits in the first half of 2008 had risen by 36.7 per cent, to 1.467 billion euros, compared to the same period last year. First-half turnover was up by 2.3 per cent, to 20.94 billion euros, with automobile sales rising 2.2 per cent, to 19.89 billion euros.

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