Automobile manufacturer Dacia made a net profit in excess of 100 million euros last year, an increase of over 76% compared with the previous year, as a result of a surge in Logan exports.
"The increase in the production capacity and implicitly in production allowed us to achieve a better industrial performance, which translated in cost cuts," explains Fran'ois Fourmont, Dacia general manager.
Under the circumstances, the profit growth clearly outpaced the growth of sales, which reached almost 1.55 billion euros last year, almost 30% more than in the previous year.
"We took advantage of a better product mix. We stopped making Solenza (more than 5,700 cars in 2005 according to the statistics of the Association of Automotive Manufacturers and Importers - APIA, i.e.), but started production on the Logan MCV (more than 8,500 units in 2006, i.e.). In addition, we offered several engine versions for Logan models," Fourmont adds. Therefore 2006 becomes the second year of profit for Dacia since Renault took over, after a five-year streak of losses worth more than 360 million euros. The increase in Dacia's profit is almost completely Logan's doing, which accounted for approximately 95% of production last year.
"We increased the number of shifts and the working hours to be able to cope with the very high demand for Logan from the foreign markets and will reach a production capacity of 350,000 units by the beginning of next year," Fourmont adds.
The high production capacity usage rate allowed Dacia to achieve an operating margin of 107 million euros last year (or 6.9% of the turnover), that is one tenth of the value recorded across the entire Renault group.
With a 6.9% operating margin, Dacia is doing better than the recorded average of the Renault group - 2.6% last year, and even better than Renault's goal for 2009, 6%. The production of the Logan model is what made it possible to achieve such results.
"We're seeing a really high demand for exports of the Logan MCV model, which has by far exceeded our expectations. Already, I can say we're talking of a waiting time of a matter of months for a Logan MCV in Western Europe. Even if we wanted to make more, we are limited by the capacity of our suppliers. In other words, they cannot supply the parts as fast as we need them to."
Logan's production integration is 64% at the moment, up from 60% a year ago.
"This is one of the ways to boost our profitability. We constantly try to improve the extent of local integration in such countries as Romania; our goal is to have approximately 80% of acquisitions integrated in low-cost countries," the Dacia official explains.
He estimates a stable automotive market for Romania this year and implicitly sales that can compare to the 2006 level. Production growth will be driven by exports, though.
"We anticipate sales of 100,000-110,000 units for the domestic market, while more than 100,000 cars will go to foreign markets," Fourmont says.
Dacia made over 177,000 Logans last year (according to APIA statistics), almost 80,000 of which were exported.
The most important foreign markets are not only the emerging countries, as Renault officials anticipated four or five years ago, but also the developed markets in Western Europe.
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