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With Nissan dragging it down, Renault predicts a worsening year

PARIS — Renault warned revenue may decline this year, scrapping a previous goal, after first-half profit was hit by weakening car demand and an earnings collapse at alliance partner Nissan in the wake of the Carlos Ghosn scandal. Net income slumped by more than half to 970 million euros ($1.08 billion) in January-June as revenue fell 6.4% to 28.05 billion, the French carmaker said on Friday. Operating profit also dropped 13.6% to 1.65 billion euros. "Given the degradation in demand, the group now expects 2019 revenues to be close to last year's," Renault said — abandoning an earlier pledge to increase revenue before currency effects. A broad-based auto sales downturn has rattled the sector, prompting profit warnings and compounding challenges for Renault and Nissan as they struggle to turn the page on the Ghosn era. Their former alliance boss is now awaiting trial in Japan on financial misconduct charges he denies. Renault's bottom line was hit by an 826 million-euro drop in earnings from its 43.4%-owned partner. Nissan is cutting 12,500 jobs globally after an earnings collapse that it is keen to blame on Ghosn's leadership. But Renault's own performance - reflected in an operating margin that declined to 5.9% from 6.4% the year before - compares less favorably with domestic rival PSA Group. The Peugeot maker bucked the downturn with a record 8.7% profit margin unveiled on Wednesday. Alliance tensions flared after Ghosn's November arrest, worsened when Renault tried in vain to merge with Nissan then Fiat Chrysler, and may be affecting operational performance, investors fear. Citi analyst Raghav Gupta-Chaudhary flagged a lower-than-usual 258 million euros in joint purchasing savings for Renault. "We thought this would be weak in light of the well-documented difficulties with the alliance," he said. Renault blamed falling sales in France, as well as Turkey and Argentina, for a 7.7% revenue drop at its core automotive business, whose profit margin slid to 4% from 4.5%. Operating free cash flow also suffered, coming in at a negative 716 million euros as investment jumped by 742 million euros to 2.91 billion. Renault, which is counting on model launches including a new Clio mini to boost performance in the second half of 2019, nonetheless reiterated pledges to deliver positive full-year cash flow and a margin close to 6%. Renault shares were down 0.5% at 52.02 euros as of 0800 GMT in Paris, after initially falling as much as 2.7%.

Nissan Sentra, Buick LaCrosse to headline LA Auto Show

We're less than a month away from the start of the Los Angeles Auto Show, and automakers have been lining up their debuts for the upcoming left-coast expo. The latest announcement comes from the show's organizers who are eager to tout the global debuts slated for next month. Chief among them will be new versions of the Buick LaCrosse and Nissan Sentra. So far all we've seen of the 2017 LaCrosse is a glimpse at the front grille, but it's already promising to bring elements of the Avenir concept to the street. The original LaCrosse was launched in 2004 and was replaced in 2010 with the current model. The Sentra nameplate has been around much longer, but the current model was launched more recently in 2013. The new version spied recently while undergoing testing is promised to be a substantial update on that model, not a complete replacement, bringing it up to speed with the latest equipment and revised styling. This represents the first official confirmation we've received of when Nissan will be unveiling the new Sentra. Mitsubishi will also be on hand with its new Outlander Sport, as well as the redesigned Mirage. They'll be joined as well by new versions of a couple of high-end models that promise to resonate with the local crowds in tinseltown. Land Rover has chosen the LA show as a suitable venue to unveil the production Range Rover Evoque Convertible that will drop the top on one of the most stylish luxury crossovers on the market. And Porsche, as we know, is gearing up to hit the track with the new Cayman GT4 Clubsport - a customer racing version of the company's little two-seat, mid-engined sports car that's been lightly modified for motorsport competition. Of course these won't be the only new metal on display at the Californian auto expo. They'll be joined as well by the likes of the new Infiniti QX30, Hyundai Elantra, Kia Sportage, and Jaguar F-Pace - many of which we've already seen. Meanwhile companies like Fiat, Ford, Mazda, Mercedes, Subaru, Volvo, Volkswagen, and Elio Motors are keeping their plans under wraps for the time being. But with mere weeks to go, it won't be long before we see what they've got in store as well.

Carlos Ghosn was on verge of release — so prosecutors file new allegation

TOKYO — Japanese prosecutors added a new allegation of breach of trust against Nissan's former chairman Carlos Ghosn on Friday, dashing his hopes for posting bail quickly. Ghosn and another former Nissan executive, Greg Kelly, were arrested Nov. 19 and charged with underreporting Ghosn's income by about 5 billion yen ($44 million) in 2011-2015. They also face the prospect of more charges of underreporting Ghosn's income for other years by nearly 10 billion ($80 million) in total. The breach of trust allegations were filed a day after a court rejected prosecutors' request for a longer detention of both men. The new allegation only applies to Ghosn, and Kelly could still be bailed out. A request for bail by Kelly's lawyer is pending court approval, according to the Tokyo District Court, but his release will have to wait until next week since the request was still in process after office hours Friday. Prosecutors in a statement Friday alleged that Ghosn in 2008 transferred a private investment loss worth more than 1.8 billion yen ($16 million) to Nissan by manipulating an unspecified "swap" contract. Ghosn also profited by having the company transfer a total of $14.7 million to another company to benefit himself and that company's owner, who helped in the contract manipulation, prosecutors said. Shin Kukimoto, deputy chief prosecutor at the Tokyo District Prosecutors Office, refuse to say if the two transactions were related or how Ghosn illegally profited. He also declined to identify the collaborator or whether the transactions were made overseas. Ghosn and Kelly are only charged with underreporting Ghosn's pay over five years, in violation of the Financial Instruments and Exchange Act. They have not been formally charged with an additional allegation of underreporting another 4 billion yen ($36 million) for 2016-2018, for which their first 10-day detention was to expire Thursday. Prosecutors have been criticized for separating the allegations as a tactic to detain Ghosn and Kelly longer. They say Ghosn and Kelly are flight risks. The maximum penalty for violating the financial act is up to 10 years in prison, a 10 million yen ($89,000) fine, or both. Breach of trust also carries a similar maximum penalty. The conviction rate in Japan is more than 99 percent for any crime. Ghosn was sent by Renault in 1999 to turn around Nissan, then on the verge of bankruptcy, and he led its rise to become the world's second-largest automaker.