Renault Samsung Turns $134 Million Profit

SEOUL, South Korea March 11, 2003; Renault Samsung Motors Corp. posted a 2002 net profit, achieving profitability ahead of schedule, due in part to strong domestic sales of its cars as well as cost-cutting efforts.

Renault Samsung had a net profit of 166 billion won ($133.8 million).

Sales jumped 60% in 2002 to 1.775 trillion won compared to a year earlier, with a total of 117,087 car units sold locally and abroad, the auto maker said in a statement. Renault Samsung said it secured 9.4% of the South Korean automobile market in 2002, by selling 116,793 units in the country.

Chief executive Jerome Stoll said the Renault unit had expected to reach its break-even point in 2004 at the earliest.

Mr. Stoll declined to reveal its net profit target for 2003, only saying, "We are expecting a net profit this year."

The company said it aims to sell 136,000 units in 2003, bringing its total sales to 1.968 trillion won. Renault Samsung sells two car models, the midsized SM5 and the smaller SM3, which was introduced in September last year.

To achieve its sales target, Renault Samsung started a two-shift system at its plant in Busan in early February, enabling the company to make as many as 240, 000 cars a year, compared with last year's production of 117,000 units.

The car company also plans to increase its exports by "taking full advantage of the global Renault-Nissan alliance network," it said in a statement.

Renault and Japan's Nissan Motor Co. formed a full-scale alliance in 1999, and they are cooperating in development, production and business planning.

Renault Samsung has decided to introduce a large luxury car as its third model. Mr. Stoll said the company is working to develop a fourth model and didn't rule out the possibility that it may be a sports utility vehicle.

Renault Samsung plans to hire 800 new workers this year to bolster its 5,000 work force in a bid to strengthen its research and development, production and sales divisions.

Regarding its shareholding structure, Mr. Stoll said, "There is no reason to change the current shareholding for the time being."

Renault owns 70.1% of Renault Samsung and South Korea's Samsung Group's two affiliates, Samsung Capital and Samsung Card, hold a combined 19.9%. Creditors of former Samsung Motor Co. own the remaining 10% stake.