Renault, Hit by Nissan, Posts Loss -- WSJ
February 15 2020 - 3:02AM
Dow Jones News
By Cristina Roca
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (February 15, 2020).
Renault SA swung to a 2019 net loss -- its first in a decade --
and slashed its dividend, as the French auto giant absorbed sharply
lower income from alliance partner Nissan Motor Co. and struggled
with falling sales in China.
The results cap a tumultuous year for the car maker. It spent
much of 2019 embroiled in conflict with its partner Nissan, after
the late-2018 arrest in Japan of Carlos Ghosn. Mr. Ghosn forged the
partnership between the two auto makers and led it for years.
Renault also spent weeks discussing a possible tie-up with Fiat
Chrysler Automobiles NV.
Nissan and the French government failed to give full support for
a merger, ending talks. Fiat Chrysler then turned to a French
rival, Peugeot maker PSA Group, which agreed to a deal.
Last year "has been a tough year for Renault and the alliance,"
said acting Chief Executive Clotilde Delbos. "Our 2019 is where we
told you it would be, but it's not where we want it to be. We are
not satisfied with our results."
Ms. Delbos temporarily assumed the top job in October after her
predecessor, Thierry Bolloré, seen as a close ally of Mr. Ghosn,
was ousted by the board.
Renault posted a net loss of EUR141 million ($153.1 million) for
the year, a significant drop from its EUR3.3 billion profit the
year before. Analysts expected a steep drop in profit, but not a
loss. Shares fell sharply, more than 4% in early trading in Paris,
before recovering strongly. They were up more than 3% midday.
Renault's earnings were also hit by a large expense related to
the discontinuation of deferred tax recognition in France. And it
took a charge related to the weak performance of its business in
China, where group unit sales dropped 17%.
The company told analysts restructuring costs would be higher
than normal next year. Last month, the heads of the alliance
companies, which also includes Mitsubishi Motors Corp., said they
would stop duplicating efforts on research and engineering, and
build more products at each other's plants.
Ms. Delbos said Renault is aiming to cut structural costs by at
least EUR2 billion in three years. Analysts at Deutsche Bank
estimate Renault's structural costs to be around EUR10 billion
today. Ms. Delbos was asked about the possibility of shutting
plants, including in France. "We're not ruling anything out," she
said.
Renault said alliance partner Nissan contributed EUR242 million
to results -- a steep drop from the EUR1.51 billion it contributed
the previous year. The two sides have squabbled over mutually
shared suspicions of a power grab in the absence of Mr. Ghosn. The
poor performance at both car companies has added to the strain.
Mr. Ghosn faces allegations in Japan of financial wrongdoing,
charges he denied. He had vowed to fight the charges in a trial
that was expected to start this year, but instead fled the country.
He is now in Lebanon.
Mr. Ghosn has filed lawsuits against Nissan and Renault over the
circumstances of his dismissal from both car markers following his
arrest. Both companies have said they will fight the suits.
Renault revenue fell 3.3% to EUR55.54 billion, broadly in line
with analysts' expectations. The company said last month that it
sold fewer cars in 2019 amid a contracting global market, and had
guided for a 3% to 4% decline in revenue. Operating margins for the
year were 4.8%. Renault had guided for a margin of around 5%.
Renault said it will propose a dividend of EUR1.10 a share, down
from EUR3.55 for 2018.
For 2020, the car maker said it targets revenue in line with
2019, at constant exchange rates, as well as an operating margin of
3% to 4% and positive automotive operational free cash flow before
restructuring costs. The company said the coronavirus has blurred
visibility for 2020, and that its guidance for the year excluded
the effects of a possible hit from the viral outbreak.
Nick Kostov contributed to this article
Write to Cristina Roca at Cristina.Roca@dowjones.com
(END) Dow Jones Newswires
February 15, 2020 02:47 ET (07:47 GMT)
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