Don’t expect a sudden turnaround on supply chain problems

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Renault has said that there will be no sudden let up in the supply chain shortages that have dogged the autos industry.

Sameer Al-doumy | Afp | Getty Images

Renault’s CEO said Friday that there will be no sudden let up in the supply chain shortages that have dogged the autos industry, even as the carmaker dubbed its “emergency” period over.

Luca de Meo told CNBC that that the sourcing of raw materials was likely to continue to be an issue for automakers, but added that the company was now better placed to handle such disruptions.

“We don’t anticipate a sudden, complete improvement of the situation. But, in the meantime, we have learned to manage this complexity,” de Meo told CNBC’s Charlotte Reed.

He added that the company could now ensure 80% of its raw material needs from now to 2030.

Supply chain issues have weighed heavy on the autos industry, with parts shortages stalling production amid increased demand. But de Meo said there had been signs in recent months that constraints were easing.

“We think the situation [is] getting better; May and June were not so bad. But, of course, we are missing full transparency on supply chains because the world is becoming more complicated in general,” he said.

The French automaker on Friday reported a 1.36 billion euro ($1.39 billion) net loss for the first half of 2022, owing to a 2.2 billion euro writedown of its Russian business following Moscow’s unprovoked invasion of Ukraine, as well as ongoing chip shortages.

However, Renault upgraded its full-year outlook, pointing to improving profitability elsewhere in the business. It now expects to make 5% margin this year, compared with estimates of 3%. It will also produce around 1.5 billion euros of free cash flow, it added.

De Meo dubbed the results “probably the best result we did in a semester in 10 years amid difficult circumstances,” adding that the carmaker could now “turn the page” on earlier shortcomings.

“I think we can turn the page on emergency and move to a new phase for this company, no matter what happens outside,” he said.

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