Renault, Hit by Nissan, Posts Loss -- WSJ

Date : 02/15/2020 @ 8:02AM
Source : Dow Jones News
Stock : Peugeot SA (PK) (PUGOY)
Quote : 12.85  -0.02 (-0.16%) @ 9:55PM

Renault, Hit by Nissan, Posts Loss -- WSJ

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By Cristina Roca 

This article is being republished as part of our daily reproduction of 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


(END) Dow Jones Newswires

February 15, 2020 02:47 ET (07:47 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.

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