Renault tracks down profit formula

OXFORDSHIRE-BASED Formula One team Renault has turned in its first profit since the carmaker bought the company from Benetton in 2002.

Its 2004 profit was £2.7m on turnover up 41% on the £94.8m of the previous year, when the company had an £8m loss. The numbers suggest the cost of running a top Formula One team is now about £150m a year.

Renault's on-track performance has also moved up a gear. In 2004, the team finished third in the Formula One World Championship - its highest position under the carmaker's ownership. It is doing even better this season, leading the championship after winning four of the first five races.

Renault's Giancarlo-Fisichella was victorious in the first race of the year, and teammate Fernando Alonso notched up a hat-trick of victories before taking second in the Spanish Grand Prix at the wwekend.

The move into profit in 2004 was largely down to sponsorship deals with companies including Spanish telecoms giant Telefonica, Japanese 3G service i-Mode and Italian fashion brand Guru.

The team's operating expenses increased 23% year-on-year to £92.6m. This does not include the huge investment made by parent Renault Group in providing the team's engines. These are estimated to cost more than £60m but are not shown on the accounts because 'the directors do not believe it is possible to provide a reliable estimate of their cost'.

Managing director is Flavio Briatore, who last month renewed his contract with the team until the end of 2006. The only other board member is Patrick Faure, former Renault Group executive committee member.

The directors did not pay the £2.7m profit as a dividend to the carmaker but added it to the deficit on the profit-and-loss account. Renault's carmaking division increased its revenues by 8.5% to €40.7bn (£27.7bn) in 2004 as net income leapt 43% to €3.5bn.