Renault's results were far stronger than those of crisis-stricken PSA Peugeot Citroen which has reported a 2012 loss of 5.0 billion euros owing mainly to writedowns to reflect weakness in the French auto market.
The price of shares in Renault jumped by 6.47 percent in early trading to 45.98 euros, with traders welcoming the profit outcome and positive comments by the company for its finances this year.
The capital gain from the stake in AB Volvo was 924 million euros.
Renault was also boosted by results at its associated companies, Nissan of Japan and Avtovaz of Russia, as well as Volvo. These contributions amounted to 1.5 billion euros, the same as in 2011.
Sales fell by 3.2 percent to 41 billion euros.
Renault said that it had cleared its debts and had a net positive cash position of 1.49 billion euros at the end of 2012.
Renault, which also sells under the brands of Dacia and Samsung Motors, does about half of its business outside France and is less dependent that Peugeot on the European market which is depressed.
Renault chief executive Carlos Ghosn said in a statement: "In Europe, in a very difficult context, particularly in France, the group kept to a rigorous commercial policy and began to renew its range (of vehicles."
Operating profit amounted to 122 million euros from 1.2 billion euros in 2011. The company had to make writedowns owing to the fall of the Iranian currency and for restructuring charges.
Cash flow for the auto division was positive for the fourth year running, at 597 million euros.
The company, which intends to pay a dividend of 1.72 euros per share, has set a target of raising sales this year
It is also counting on a positive margin in its auto division and a positive cash treasury position from auto activities, provided that the European and French markets do not turn out to be weaker than expected.