Renault reports lower-than-expected operating profit and increases dividend From Reuters

©Reuters. FILE PHOTO: Groupe Renault CEO Luca de Meo gives a speech during Groupe Renault’s capital market day for its new electric vehicle unit Ampere, in Paris, France, November 15, 2023. REUTERS/Gonzalo Sources/file Photo

By Gilles Guillaume and Nick Carey

(Reuters) -French car manufacturer Renault (EPA:) on Wednesday reported slightly lower-than-expected full-year 2023 net profit, but reported margin and revenue gains and offered more liquidity to investors with a huge dividend increase.

Renault said it will propose a dividend of 1.85 euros ($1.98) for 2023, compared to a payout of 0.25 euros for 2022, joining U.S. automakers Ford (NYSE:) and General Motors (NYSE: 🙂 in giving more liquidity to investors.

The stronger cash position and margin growth are the latest sign that the automaker’s turnaround under CEO Luca de Meo is paying off.

To boost sales, Renault reduced its vehicle range and refocused on the most profitable markets and models.

“The proposed dividend distribution illustrates our confidence in our ability to continue growing,” Renault finance chief Thierry Pieton told reporters.

Renault reported an operating margin of 7.9%, up from 5.5% in 2022. The company said it expects an operating margin of around 7.5% in 2024 and is on track to meet its 2030 target of double-digit margins by 2030.

The results come after Renault reported 9% growth in global sales volumes for 2023, following four consecutive years of decline.

Bernstein analyst Daniel Roeska said the 7.9% margin is slightly above market expectations and is encouraged by forecasts for 2024 and a strong dividend on the back of healthy free cash flow.

Like other European automakers, Renault has struggled with stiff competition from U.S. rival Tesla (NASDAQ) and cheaper Chinese models at a time of slowing sales growth and declining government support for electric vehicles.

The French automaker is betting on new electric models in its home battle, with plans to launch 10 new models this year, including two fully electric cars, the Scenic and the R5, and two hybrids.

“These results (…) reflect the success of our Renaulution strategy. Our fundamentals have never been stronger and we will not stop there,” de Meo said in a statement.

However, de Meo’s overhaul slowed down last month when the company suddenly canceled plans to list its electric vehicle business, Ampere, citing unfavorable market conditions.

The IPO had been a key part of its strategy to extract more value from the business and separate it from the combustion engine business, called Horse.

The creation of Horse contributed approximately 90 basis points to the 2023 margin increase.

De Meo is also under pressure to revive the company’s value: its market capitalization of 11 billion euros is much lower than that of European rivals, and its 12-month price-to-earnings ratio – a key metric for valuing shares – at 2.9, also the lowest ever. the sector.

For 2023, the automaker reported a net profit of 2.315 billion euros ($2.48 billion) versus a 2022 loss of 716 million euros, which included the automaker’s exit from Russia.

Net profit was not estimated at an average of 3.52 billion euros by analysts surveyed by LSEG.

The consensus did not foresee a capital loss of around 900 million euros resulting from the sale of an initial share of its stake in Nissan (OTC:).

Revenue for 2023 increased by 13% to 52.38 billion euros. Analysts had expected sales of 52.88 billion euros.

($1 = 0.9323 euros)

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