PARIS, July 25 (Reuters) - French carmaker Renault SA on Thursday raised its operating margin target for the full year as it reported a sharp rise in first half core profits thanks to cost cuts and an improving performance in Europe.
On the strength of first half results, Europe's fourth largest carmaker said it was aiming for an operating margin of two percent this year. Previously, the company had said it hoped its margin would be positive in 2002.
In a complex set of results that were affected by a change to internationally accepted accounting standards, Renault said core profits tripled to 912 million euros.
Approximately 350 million euros of that figure resulted from the change, which allowed Renault to shift new product development costs out of its operating expenses and amortise them as non-fixed assets over five years.
Before the accounting change, operating profit totalled 570 million in the six month period against 304 million last year.
That was good for an operating margin of 3.0 percent, up from 1.6 percent in the first half of 2001 when Renault was struggling with an ageing model line-up.
The company is now rolling out new models across its line-up, including the Laguna II hatchback, the Vel Satis luxury saloon and the eagerly anticipated Megane mid-sized car, which hits the market this autumn.
Sales for the first half of 2002 outstripped forecasts, rising 4.1 percent on a like-for-like basis to 19.01 billion euros.
Net profit for the period, boosted by a 425 million euro contribution from Japanese partner Nissan Motor , came in at 894 million euros after the accounting changes versus 779 million last year.
Renault holds a 44.4 percent stake in Nissan, which is thriving under the leadership of former Renault executive Carlos Ghosn. Ghosn is slated to replace Louis Schweitzer as chief executive of Renault in 2005.
The French firm's bottom line was helped in the first half by a 13 percent year-on-year decrease in research and development costs as well as lower administrative expenses.
The company also pointed to the performance of Renault Samsung Motors, its South Korean subsidiary. Samsung sales grew by 82.8 percent in the period to 53,699 units.