UPDATE 1-Renault net profit plunges, sees worse 2009

* FY like-for-like sales down 7 percent at 37.791 bln euros

* FY net profit 599 mln euros vs 2.734 mln euros in 2007

* Inventory 5.3 bln euros at year-end

* Sees market conditions worsening in 2009

PARIS, Feb 12 - French carmaker Renault posted a sharp decline in 2008 net profit sales on Thursday due to a "financial and economic crisis of massive proportions" and dropped key 2009 targets as it expects the market to get worse.

The company said in a statement its volume and operating margin targets for 2009 were now "unachievable" and it would focus on cutting inventories by a further 800 million-1 billion euros ($1.29 billion) in 2009.

France's second-largest carmaker is, along with competitors, battling a global car sales crisis as the credit crunch and deteriorating economic outlook slashes consumer spending.

Net profit fell to 599 million euros from 2.734 billion in 2007. Earnings before interest and tax fell to 212 million, missing the average forecast of 794.43 million euros in a Reuters Estimates poll of analysts.

It beat a target of cutting stocks of unsold vehicles to year-end 2007 levels by December 2008, ending the year with 5.3 billion euros of inventories, it said, after cutting production twice as fast as sales fell in the fourth quarter.

Net debt at the group's automobile division stood at 7.944 billion euros at year-end, representing 40.9 percent of shareholders' equity, compared with 9.5 percent a year earlier, the company said.

Group sales for the full year 2008 fell 7 percent on a like-for-like basis to 37.791 billion euros, compared with a Reuters Estimates poll figure of 38.858 billion euros, based on 24 analysts' forecasts.

The group said it would step up its policy of cutting fixed costs in 2009 and would seek to "strengthen operational synergies" with alliance partner Nissan Motor Co, by converging the engine range and working together on electric vehicles.

Japan's Nissan warned on Monday it would make its first annual loss since Chief Executive Carlos Ghosn took the reins a decade ago.

On Monday French President Nicolas Sarkozy announced a 3 billion euro loan for each of France's two car manufacturers in return for a controversial pledge to safeguard French jobs.

France's largest carmaker PSA Peugeot Citroen on Tuesday posted a surprise full-year net loss after the decline in worldwide markets forced it to rapidly cut production, leading to almost a billion euros in restructuring charges.