Renault’s 2020 vision clouded as ‘tough’ year leads to first loss in a decade
PARIS (Reuters) – Renault (RENA.PA) reported its first loss in a decade and cut its 2020 margin target on Friday, as it attempts to draw a line under the Carlos Ghosn affair and reboot its Nissan alliance.
The logo of French carmaker Renault is seen before the company’s 2019 annual results presentation at their headquarters in Boulogne-Billancourt, near Paris, France, February 14, 2020. REUTERS/Gonzalo Fuentes
The French carmaker is trying to move on from the internal turmoil sparked by the scandal involving its former boss Ghosn with a management shake-up. Meanwhile, it is also grappling like other automakers, including Japan’s Nissan (7201.T), with tumbling auto demand in some key markets like China.
“It has been a tough year for Groupe Renault and the alliance,” acting Chief Executive Clotilde Delbos told a conference call, adding that the broader autos downturn had hit the company “right when we were facing internal difficulties.”
Renault posted a loss of 141 million euros ($153 million) for the group share of net income, in part as a result of charges linked to some of its Chinese joint ventures.
The contribution from Nissan, in which Renault has a 43% stake, also fell and it was hit by a French deferred tax charge.
Nissan this week had its first quarterly loss in nearly ten years and cut its operating profit forecast.
Renault set a 2020 operating margin target of between 3% and 4%, down from 4.8% in 2019, and sliced its proposed dividend against 2019 by almost 70% from a year earlier.
Renault shares were down 4.3% at 0831 GMT.
Luca de Meo, who used to run Volkswagen’s Seat brand, is set to join as CEO in July, taking over from Delbos, who is also Renault’s financial chief.
She stepped into the CEO role on an interim basis after Thierry Bollore, a long-standing Ghosn ally, was ousted in October.
Ghosn, who ran Renault and oversaw its alliance with Nissan, was arrested in Japan in late 2018 on financial misconduct charges, but fled to Lebanon in December.
He has denied wrongdoing and hit out at his past employers, saying the Renault-Nissan alliance was all but dead without him.
Renault executives repeated assurances that the Nissan alliance was on track. Delbos acknowledged that investors were still skeptical, but said that the firms would provide meatier joint goals by May.
Carmakers have posted contrasting performances in an industry hobbled by falling global demand, squeezed by high investment costs for cleaner models, and now facing supply chain problems due to China’s coronavirus outbreak.
However, Italy’s Fiat Chrysler (FCHA.MI) posted higher fourth-quarter profit due to a strong North American business.
Renault forecast that the global auto market would fall in 2020, with sales in Europe and Russia down around 3%.
It stumbled in several countries, including Argentina, and said it needed to fix its operations in China, where it has a partnership with Dongfeng (0489.HK) on electric vehicles and with Brilliance China Automotive Holdings on commercial cars.
Renault said its goals did not take into account possible impacts from the coronavirus crisis in China, where it has a factory in Wuhan, the epicenter of the epidemic, which has been in lockdown to contain the spread of the virus.
It has also suspended operations for at least four days at its South Korean subsidiary due to supply chain hiccups.
Renault’s group sales fell 3.3% to 55.53 billion euros in 2019, beating an average 55.24 billion-euro forecast expected by 20 analysts polled by Refinitiv. Sales were down 2.7% at constant exchange rates.
Reporting by Gilles Guillaume and Sarah White; Editing by Tom Hogue, Shri Navaratnam and Alexander Smith