RNO.PA - Renault SA

Paris - Paris Delayed price. Currency in EUR
26.50
-0.73 (-2.70%)
At close: 5:39PM CET
Stock chart is not supported by your current browser
Previous close27.23
Open26.00
Bid0.00 x 0
Ask0.00 x 0
Day's range25.23 - 26.69
52-week range25.23 - 64.20
Volume4,424,368
Avg. volume1,763,987
Market cap7.674B
Beta (5Y monthly)1.51
PE ratio (TTM)N/A
EPS (TTM)-0.52
Earnings date14 Feb 2019 - 18 Feb 2019
Forward dividend & yield1.10 (4.04%)
Ex-dividend date30 Apr 2020
1y target est84.17
  • Reuters - UK Focus

    Motor racing-Mercedes head for Australia as top team in F1 testing

    Formula One champions Mercedes will head to Australia for the March 15 season-opener as the top team in testing but with rivals Ferrari and Red Bull hinting at hidden pace. Valtteri Bottas produced the quickest lap from the six days of testing at the Circuit de Catalunya outside Barcelona and also on the final Friday. "It feels good to wrap up testing at the top of the leaderboard and end two intense weeks for the team with a decent final day on track," said technical director James Allison.

  • Carmakers gear up for Geneva Motor Show amid coronavirus turmoil
    Yahoo Finance UK

    Carmakers gear up for Geneva Motor Show amid coronavirus turmoil

    Expect stunning supercars, even as coronavirus concerns linger heavily over the premium auto show.

  • The Man Who Made a Failing Carmaker Beat Mercedes
    Bloomberg

    The Man Who Made a Failing Carmaker Beat Mercedes

    (Bloomberg Opinion) -- The word that Peugeot SA boss Carlos Tavares comes back to time and again to describe the daunting challenges facing the auto industry is a deliberately frightening one. Carmakers face a “Darwinian” period, he reminded investors on Wednesday, implying that some of the French group’s less robust peers won’t survive the epochal shift from combustion to electric vehicles.That battle for survival has just been made even more difficult by the spread of coronavirus, which threatens to shutter plants and sap demand for new vehicles across the industry. The shares of auto companies —  even very profitable ones like Peugeot — have been hammered this week. But if anyone can steer a safe path across this vertiginous chasm, surely Tavares can.For various reasons the big European carmakers have all changed their CEOs recently, but Peugeot has clung to its leader since 2014, and he’ll be in the driving seat when the company merges with Fiat Chrysler Automobiles NV.  The strong full-year results that Tavares unveiled on Wednesday show why his services are in such demand; the contrast with struggling French rival Renault SA is telling. Peugeot’s car operations achieved an 8.5% adjusted operating margin in 2019, whereas Renault managed just 2.6%.(1)While Renault’s net cash is dwindling, forcing it to slash its dividend, Peugeot’s has swelled to more than 10 billion euros ($10.9 billion), allowing it to pay shareholders more.The cost-conscious Tavares has made a virtue of doing more with less and he’s been willing to make unpopular decisions to turn around under-performing businesses. Under General Motors Co.’s ownership, the European carmaker Opel/Vauxhall consistently lost money, but having joined the Peugeot stable it now boasts a 6.5% adjusted operating margin. That’s better than Mercedes-Benz.Wages costs as a percentage of sales have improved — a big achievement considering the workforce is heavily unionized — and Tavares has been ruthless about unlocking cash from inventories and invoices. Reassuringly, he thinks Peugeot could still break even if revenues fell by half.He’s achieved this without neglecting the urgent task of cutting vehicle emissions. Thanks to new electrified products, he’s confident Peugeot will meet the European Union’s tough pollution targets this year and thus avoid regulatory fines.Peugeot isn’t perfect. The company is struggling in inflation-hit Argentina and its performance in China has been poor. But its negligible China market share is an advantage right now. The company has less to lose from coronavirus shockwaves than many peers.What Peugeot lacks in economies of scale — its 3.5 million yearly car sales are one-third of what Volkswagen sells — it makes up for by being more agile. It’s almost a pity that Tavares is about to complicate the “small is beautiful” story by merging with Fiat. Peugeot’s shares have declined by almost 30% since the deal terms (highly favorable to Fiat and its Agnelli family owners) were announced in October.  In fairness, Fiat is also performing well. Together, the two companies generated about 5 billion euros in free cash flow last year and the tie-up should bring substantial cost savings. Yet Peugeot’s shareholders aren’t willing to credit those benefits just yet. Antitrust official might raise objections and history shows there’s plenty else that can go wrong in complicated cross-border mergers.A generation of celebrated auto executives, such as Daimler’s Dieter Zetsche and Renault’s Carlos Ghosn, have departed the stage just as conditions became difficult. (Fiat’s Sergio Marchionne tragically died before he could complete the job). Tavares, who’s 61, isn’t the retiring type. He still has much to prove. (1) Peugeot's profit margins are adjusted for large restructuring costs.To contact the author of this story: Chris Bryant at cbryant32@bloomberg.netTo contact the editor responsible for this story: James Boxell at jboxell@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Renault says reserves the right to seek damages depending on Ghosn probe
    Reuters

    Renault says reserves the right to seek damages depending on Ghosn probe

    Renault said on Monday it had filed a civil-party petition after French prosecutors last week opened a formal investigation into alleged misappropriation of funds at the French carmaker. "Renault (...) will continue to fully cooperate with the judicial authorities", the company said in a short statement, adding it reserved "the right to seek damages based on the outcome of the investigation". Last week, French prosecutors stepped up their investigation into alleged misappropriation of funds at Renault by former boss Carlos Ghosn, saying a judge had now been assigned to the case to launch a formal investigation.

  • Renault shares fall after Moody's cuts its debt to 'junk' status
    Reuters

    Renault shares fall after Moody's cuts its debt to 'junk' status

    Renault's shares fell on Wednesday after Moody's cut its rating on the French carmaker's debt to "junk" status, citing weaker profitability as the company restructures and grapples with falling demand. Like some rivals, and its Japanese alliance partner Nissan , Renault is under pressure as demand dwindles in markets like China. It is also bedding down a new management team after a scandal surrounding former boss Carlos Ghosn.

  • Macy’s, Renault Add to Fallen Angel Fear With Downgrades to Junk
    Bloomberg

    Macy’s, Renault Add to Fallen Angel Fear With Downgrades to Junk

    (Bloomberg) -- The credit-rating downgrades of Macy’s Inc. and Renault SA to junk status are rekindling fears among investors of a potential uptick in so-called fallen angels after a run of relative tranquility in the U.S. corporate bond market.The American retailer and French carmaker each lost an investment-grade rating Tuesday, affecting billions of dollars of debt. They follow Kraft Heinz Co., the iconic U.S. packaged-food company, which was downgraded to junk by two credit raters on Friday as its turnaround shows little signs of progress.Even though Macy’s and Renault were downgraded for idiosyncratic reasons and will still trade in investment-grade indexes unless another credit-rating company follows suit, their cuts bring back to the fore what had been a central concern among investors less than two years ago: That a slowing global economy could hamper companies’ ability to service their obligations, especially those that had taken on significant debt loads to finance deals.While many firms took actions to reduce debt levels in 2019, several are still proving to be susceptible to ratings risk. Kraft Heinz alone, with around $21 billion of debt leaving the Bloomberg Barclays investment-grade index at the end of this month, nearly eclipses last year’s fallen angel volume of just under $22 billion, according to Bank of America Corp. strategists. Macy’s has about $8 billion of total debt, while Renault’s roughly $66 billion is predominantly denominated in euros and yen, according to data compiled by Bloomberg.By year-end, the volume of fallen angels is likely to dwarf that of 2019, according UBS Group AG strategists led by Matthew Mish. They predict there could be as much as $90 billion of investment-grade debt downgraded to high yield this year. Guggenheim Partners has said as much as 20% of BBBs in the U.S., or $660 billion, will get cut to junk in the next downgrade wave.Macy’s was cut one notch to BB+ by S&P Global Ratings, which said the department store chain is failing to keep up with changing consumer habits. Of its total debt outstanding, just under $2 billion trades in the Bloomberg Barclays investment-grade index. Renault was downgraded to an equivalent Ba1 rating at Moody’s Investors Service after the company posted its first annual loss in a decade.To contact the reporter on this story: Molly Smith in New York at msmith604@bloomberg.netTo contact the editors responsible for this story: Nikolaj Gammeltoft at ngammeltoft@bloomberg.net, Boris Korby, Dawn McCartyFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Bloomberg

    Renault Cut to Junk, Capping Disastrous Year Without Ghosn

    (Bloomberg) -- Renault SA had its credit rating cut to junk by Moody’s Investors Service after the French carmaker posted its first annual loss in a decade and indicated operating margins are set to shrink.Moody’s lowered Renault’s long-term debt rating one step to Ba1, a level below investment grade. The automaker is still rated above junk by Standard & Poor’s.“Based on the company’s 2020 guidance anticipating a further decline in the group’s operating margin and the continuing weakness of the market environment, we do not expect that Renault will be able to restore healthy operating margin levels in the medium term,” Moody’s said in a statement Tuesday.The carmaker, suffering from slumping sales in key markets and a dismal performance at partner Nissan Motor Co., will conduct a review of its Chinese assets and explore plant closures to rein in costs, acting Chief Executive Officer Clotilde Delbos told reporters at a press conference Friday.Renault and Nissan saw their operations deteriorate last year as they bickered over terms of their alliance. The partnership became frayed after the arrest of Carlos Ghosn, who led both companies through force of personality, over allegations of financial wrongdoing in Japan. The case took another twist at the end of last year, when Ghosn, who denies the charges, escaped to Lebanon.Ample CashAt the Friday press conference, Delbos also said the company had some 16 billion euros ($17.3 billion) of available cash.“We’re very confident that there is no topic on cash availability within the group,” she said. “It’s amply sufficient to face movement in working capital, restriction needs, et cetera.”Spokeswoman Astrid de Latude declined to comment when reached by Bloomberg News.The decision by Nissan to scrap its year-end dividend represented a big financial hit for Renault, which owns 43% of the Japanese carmaker. The French company will cut its own payout by more than two-thirds to 1.10 euros a share, it said on Friday.Nissan is rated A3 by Moody’s, four steps above junk.Credit Default SwapsRenault has 6.4 billion euros of bonds outstanding, with 531 million euros coming due in July. Its notes maturing in June 2025 are indicated at 99.9 cents on the euro, down from a record high of 103 cents in August, data compiled by Bloomberg show.Credit default swaps, which protect against the borrower failing to repay its debts, are indicated at 129 basis points, up from a low of 48 basis points in April 2018, Bloomberg data show.For 2020, Renault sees annual revenue in line with 2019, leaving aside currency swings, and a group operating margin of between 3% and 4%. That compares with 4.8% last year and 6.3% in 2018.\--With assistance from Rudy Ruitenberg and Irene García Pérez.To contact the reporter on this story: Frank Connelly in Paris at fconnelly@bloomberg.netTo contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Alan KatzFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • French finance minister warns Renault against job cuts, factory closures
    Reuters

    French finance minister warns Renault against job cuts, factory closures

    French Finance Minister Bruno Le Maire warned Renault on Tuesday against shutting factories in France and cutting jobs there after the carmaker announced "no taboos" cost cuts last week. Renault reported on Friday its first loss in a decade which triggered a commitment to cut costs by 2 billion euros ($2.2 billion) over the next three years, in a plan that could also hit plants in France, its interim chief said. "The state will play its role as shareholder in Renault to make sure that the choices which will be made will not go against jobs and factories in France," Le Maire told journalists in Brussels, adding the government would talk with the carmaker and remain "very vigilant" on its cost cuts strategy.

  • Reuters - UK Focus

    LIVE MARKETS-Closing snapshot: V-day of records

    * STOXX 600 hits fresh record highs * German GDP disappoints * EDF tops STOXX 600 after beating forecast * RBS shares drop after results Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters. You can share your thoughts with Thyagaraju Adinarayan (thyagaraju.adinarayan@tr.com), Joice Alves (joice.alves@tr.com), Julien Ponthus (julien.ponthus@tr.com) in London and Danilo Masoni (danilo.masoni@tr.com) in Milan. CLOSING SNAPSHOT: V-DAY OF RECORDS (1640 GMT) Here it comes a good reason to celebrate this Valentine's Day: the STOXX 600 hit record highs today, again!

  • Reuters - UK Focus

    LIVE MARKETS-A rate cut every five days

    * STOXX 600 hits fresh record highs * German GDP disappoints * EDF tops STOXX 600 after beating forecast * RBS shares drop after results * Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters. You can share your thoughts with Thyagaraju Adinarayan (thyagaraju.adinarayan@tr.com), Joice Alves (joice.alves@tr.com), Julien Ponthus (julien.ponthus@tr.com) in London and Danilo Masoni (danilo.masoni@tr.com) in Milan. A RATE CUT EVERY FIVE DAYS (1405 GMT) When Mexico decided to cut rates yesterday little did they know they'd be the 800th to do so since the global financial crisis (H/T to BofA on the rate cut count).

  • Reuters - UK Focus

    GLOBAL MARKETS-European stocks climb to record on hopes of limited coronavirus economic hit

    Stock markets across the world ticked higher on Friday, as investors bet that the damage to the global economy from China's coronavirus outbreak would not be long-lasting. Europe's broad Euro STOXX 600 hit a record high, gaining 0.1% to mirror gains in Asia after a choppy start to the day. Indexes in London and Frankfurt gained 0.1% and 0.2% respectively, with the former moving higher after AstraZeneca shares turned positive.

  • Renault plans $2.2 billion 'no taboos' cost cuts after first loss in a decade
    Reuters

    Renault plans $2.2 billion 'no taboos' cost cuts after first loss in a decade

    Renault's first loss in a decade triggered a no-taboos commitment to cut costs by 2 billion euros ($2.2 billion) over the next three years from the carmaker on Friday, as it tries to put the Carlos Ghosn affair behind it. As ex-Volkswagen brand manager Luca de Meo prepares to take over as chief executive of the French automaker, which has been rocked by the Ghosn scandal, it did not exclude job cuts in a promised review of its performance across all factories. Like many auto industry rivals, including its alliance partner Nissan, Renault is grappling with tumbling demand in key markets like China, and said it expects the sector to be hit further this year, including in Europe.

  • Reuters - UK Focus

    LIVE MARKETS-Much love for France on Valentine's Day

    * STOXX 600 hits fresh record highs * German GDP disappoints * EDF tops STOXX 600 after beating forecast * RBS shares drop after results * Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters. You can share your thoughts with Thyagaraju Adinarayan (thyagaraju.adinarayan@tr.com), Joice Alves (joice.alves@tr.com), Julien Ponthus (julien.ponthus@tr.com) in London and Danilo Masoni (danilo.masoni@tr.com) in Milan. MUCH LOVE FOR FRANCE ON VALENTINE'S DAY (1157 GMT) If you look at the top movers today, there is an eye-catching French utility topping the pan-European index: EDF - the stock gained more than 9% after the company beat forecasts.

  • Reuters - UK Focus

    GLOBAL MARKETS-European shares hit record even as coronavirus shows no signs of peaking

    Stock markets across the world ticked higher on Friday, even as investors debated whether China's coronavirus outbreak would cause long-lasting damage to the global economy. Europe's broad Euro STOXX 600 hit a record high, gaining 0.2% to mirror gains in Asia after a choppy start to the day. Indexes in London and Frankfurt gained 0.2% and 0.3% respectively, with the former moving higher after AstraZeneca shares turned positive.

  • Bloomberg

    French Giant Looks at Tesla With Burning Envy

    (Bloomberg Opinion) -- On one side of the Atlantic, Tesla Inc. is capitalizing on its soaring share price by selling $2 billion in stock so it can build more electric vehicles. On the other, French manufacturer Renault SA has been forced to cut its dividend by 70% and announce a big reduction in fixed costs so it can afford to do the same.Dwindling profits and Renault’s drastic remedies were mirrored this week by its Japanese alliance partner Nissan Motor Co., as well at Daimler AG. (Renault has an engineering partnership with Daimler and owns a small stake in the German car and truck maker.) Their problems aren’t identical but all three had expanded their workforces in anticipation of demand that hasn’t materialized and now they have to tighten their belts to pay for expensive electric vehicles, for which demand remains uncertain.  Renault’s shares are near their lowest level in eight years, which means the company is capitalized at barely 10 billion euros ($11 billion), a sum that includes the 43% stake Renault owns in Nissan. Needless to say, that’s a sliver of what Tesla is worth, even though the U.S. company’s annual output is still almost a rounding error for the Renault-Nissan alliance.  This juxtaposition sends a crystal clear message: Carmakers that grew fat and happy producing combustion engine vehicles won’t get any help from the stock market now that they’ve decided to embrace an electric future. Instead the gasoline gang are going to fund these changes themselves and it’s going to be painful, for both employees and shareholders.Long-established automakers have decided that their salvation is to be found in alliances and partnerships, which spread the cost of developing expensive technology over a greater number of car sales. It’s why Renault tried to merge with Fiat Chrysler Automobiles NV, before Peugeot-owner PSA Group beat them to it.  But in Renault’s case its links to other manufactures are amplifying its problems right now, not solving them. Relations with Nissan fell apart when former alliance boss Carlos Ghosn was arrested and remain fragile now that he’s free to settle scores. Both sides have since hired new CEOs but their shareholders aren’t yet ready to buy the story that harmony has been restored.With its own profits slumping, Nissan can’t afford to pay big dividends to Renault and the French are also earning less from the Daimler partnership. The upshot is that Renault is a bit squeezed for cash — net cash at the automotive unit dwindled to just 1.7 billion euros at the end of December (though gross liquidity, including available credit lines, was a more respectable 16 billion euros). One way Renault could free up some money would be to sell part of its Nissan stake, which might have the added benefit of helping to re-balance the alliance in Nissan’s favor, something the Japanese have long sought. The trouble is Nissan’s shares have halved in value over the last two years so selling now wouldn’t provide Renault with nearly as much as it once would. Interim CEO Clotilde Delbos all but ruled out such a move on Friday.So it’s no wonder that Renault has opted to drastically scale back its own dividend and will try to cut costs by 2 billion euros in the next three years. Delbos, who’s also the chief financial officer, didn’t go into much detail about how those savings will be delivered but the company plans to review its “industrial footprint,” which suggests plant closures are a possibility. (Alliance partner Nissan has already announced 12,500 job cuts, while Daimler is targeting at least 10,000.)Lowering costs won’t be straight forward. New Renault CEO Luca de Meo, a former Volkswagen AG executive, doesn’t start until July and French unions aren’t known for championing efforts to slash jobs. In the near term, restructuring costs will also put further pressure on Renault’s cash flow and the coronavirus could yet create unexpected problems. But unlike at Tesla, Renault doesn’t have a queue of wealthy supporters clamoring to help fund this epochal clean-vehicle transition. One way or other, employees and existing shareholders will end up paying.To contact the author of this story: Chris Bryant at cbryant32@bloomberg.netTo contact the editor responsible for this story: Melissa Pozsgay at mpozsgay@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Renault Looks to Cut Costs After Slashing Dividend, Posting Loss
    Bloomberg

    Renault Looks to Cut Costs After Slashing Dividend, Posting Loss

    (Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.Renault SA moved to reassure investors by dangling the prospect of cost cuts and assets sales after posting its first annual loss in a decade and slashing its payout to shareholders.The French carmaker, suffering from slumping sales in key markets and a dismal performance at partner Nissan Motor Co., will conduct a review of its Chinese assets and explore plant closures to rein in costs, acting Chief Executive Officer Clotilde Delbos told reporters at a press conference near Paris Friday.“Considering the situation of the global market and considering that we maybe had too much capacity for volume goals that were higher than what we have today, we don’t exclude any taboo, whether in the world or in France,” Delbos said.The stock rose as much as 4% following her remarks, more than reversing its earlier plunge to a seven-year low in the wake of the carmaker’s disappointing annual results.Renault and Nissan, linked in an uneasy alliance for the past two decades, have been dogged by infighting and instability since the arrest of former leader Carlos Ghosn 15 months ago. While Renault last month picked former Volkswagen AG executive Luca de Meo as its new CEO, he doesn’t start until July.In the meantime, Renault will press ahead with a plan to trim structural costs by at least 2 billion euros ($2.2 billion) over three years, Delbos said, adding the company doesn’t have the “luxury” of waiting for De Meo’s arrival.Nissan ImpactNissan’s decision to scrap its year-end dividend represented a big financial hit for Renault, which owns 43% of the Japanese carmaker. The French company will cut its own payout by more than two-thirds to 1.10 euros a share, the lowest level since 2011.Renault lowered its guidance for 2019 revenue and profit in October, saying weakening economies weighed on car sales in key markets while tougher rules on emissions pushed up costs. A deteriorating performance at Nissan has also hit results. Its contribution to Renault’s results plunged to 242 million euros last year from 1.51 billion euros the year before.Read more: Nissan Is Worth Less Than Subaru After Shares PlummetWhen De Meo takes the helm, he’ll join Chairman Jean-Dominique Senard in trying to shore up Renault’s at times acrimonious relationship with Nissan. Sorting out their differences is crucial as automakers face the costly and uncertain transition to electric vehicles.For 2020, the carmaker sees annual revenue in line with 2019, leaving aside currency swings, and a group operating margin of between 3% and 4%. It also forecasts positive automotive operating free cash flow before restructuring expenses, while adding that expected volatility in Europe in light of new emissions rules and the potential impact of the coronavirus cloud the outlook.What Bloomberg Intelligence Says:Renault’s guidance for 2020 is disappointing and below our expectations, with a 25% cut in consensus operating profit estimates needed to meet the midpoint of new 3-4% margin guidance vs. the 4.8% in-line result in 2019. The 70% cut in Renault’s dividend is less of a surprise after Nissan cut its dividend to zero. Indeed, Renault pays out the whole dividend received from Nissan to shareholders that amounted to 86% of Renault’s dividend last year.\-- Michael Dean, BI automotive analystThe coronavirus outbreak, centered in the key Chinese auto-making region of Hubei, forced Renault to halt production at a Korean plant for four days this week, and more stoppages are possible -- even at European plants -- because of parts shortages, Delbos said.“The problem is we have no visibility, and I don’t think anybody has any visibility, of the real impact,” she said.Get more:See statementFY revenue 55.5 billion euros vs 55.4 billion-euro estimateFY group operating margin 4.8% vs 6.3% in 2018FY positive automotive operational free cash flow 153 million eurosRenault books a 753 million-euro charge related to the discontinuation of the recognition of deferred tax assets on tax losses in FranceFY net income group share falls to loss of 141 million euros vs profit of 3.3 billion euros in 2018\--With assistance from Caroline Connan.To contact the reporter on this story: Angelina Rascouet in London at arascouet1@bloomberg.netTo contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Frank Connelly, Andrew NoëlFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Nissan’s Slumping Profit, Dividend Foreshadow Renault Decline
    Bloomberg

    Nissan’s Slumping Profit, Dividend Foreshadow Renault Decline

    (Bloomberg) -- Nissan Motor Co.’s efforts to halt declines in key markets are faltering, forcing the automaker to cut its full-year profit outlook a second time and scrap its year-end dividend to investors, including top shareholder and partner Renault SA.The earnings sent the French carmaker’s shares down to their lowest intraday level in seven years and highlighted the companies’ inter-dependence. Renault, which owns 43% of Nissan and relies on its dividends, is expected to report weaker 2019 earnings and a cut to its own payout on Friday compared with the previous year.The partners have been dogged by instability in their most senior management ranks over the past 15 months following the arrest of former Chairman Carlos Ghosn. Nissan on Thursday reduced its full-year operating profit forecast to 85 billion yen ($774 million) from an earlier estimate of 150 billion yen, as the manufacturer faces falling sales in the U.S., Japan and Europe.By slashing its dividend payment to the lowest level since 2011 and pursuing a previously announced plan to cut 12,500 jobs globally, Nissan is trying to free up cash for investment in next-generation technology needed to stay competitive in areas such as electric vehicles and self-driving cars.“Unfortunately, our business performance has worsened more than we anticipated, and there’s no letting up on investing in the future,” Chief Executive Officer Makoto Uchida said at a press conference at the company’s Yokohama headquarters. “In order to invest in growth, we ended up with this dividend.”The results and outlook underscore the challenges facing Uchida, who took over as CEO in December and promised to unveil a revised midterm plan in May for Nissan and its two-decade alliance with Renault, which itself recently appointed a new CEO.Recession-Level DividendThe shares of Renault fell as much as 3.8% before regaining some ground to trade 0.6% lower at 34.60 euros by 5:03 p.m. in Paris. Nissan shares fell 1.5% to close at 568.5 yen before the earnings release, but after a report foreshadowing the poor results.What Bloomberg Intelligence Says:‘Nissan’s worse than expected 3Q result and dividend will clearly have a knock on effect on Renault’s own pre-tax result and dividend payout, but the key task going forward for the two new CEOs is to provide an update of their 5-year plans and put in place a recovery strategy for Nissan.’\-- Michael Dean, senior European auto analystNissan had initially projected an operating profit of 230 billion yen for the fiscal year through March, but trimmed that last quarter. A year ago, it earned 318 billion yen — which at the time marked its lowest annual income in a decade.Nissan’s total dividend for the current fiscal year is on track to be 10 yen a share, including the prior payout. In November, the Japanese company withdrew its dividend outlook after cutting it in May — the first reduction since it suspended dividends in 2009 amid an industrywide recession.Executives sought to downplay concern about its negative free cash flow, which ballooned to minus 256 billion yen last quarter compared with minus 70 billion yen a year ago.Rakesh Kochhar, a senior vice president in charge of global treasury and automotive sales finance operations, told reporters that liquidity isn’t an issue. “If we need to borrow more money we can do so, and at the right time we will also issue financial bonds,” he said, a reference to an issuance originally anticipated last fall.North America SlumpFor its latest three-month period, Nissan posted an operating profit of 23 billion yen, short of analysts’ average estimate for 59 billion yen. Quarterly sales fell 18% to 2.5 trillion yen, missing analysts’ prediction for 2.7 trillion yen.“There’s no magic potion,” said Bloomberg Intelligence analyst Tatsuo Yoshida. “They’re going to have to make bold cutbacks in production.”Revenue and income fell in all of Nissan’s core sales regions, including in China and its home market of Japan. In North America, its largest and most lucrative market, profits fell by more than 25% compared to a year ago to 21.6 billion.“We know exactly what the problem is,” said Ashwani Gupta, Nissan’s chief operating officer. “We are confident that the U.S. will come back” once eight new models are launched over the next two years, he said.Ghosn DragWorldwide sales volumes at Nissan slid 8.4% to 5.18 million vehicles last year, pulling down its combined performance with Renault to third place globally after top-ranked Volkswagen AG and — for the first time since 2016 — Japanese rival Toyota Motor Corp. For the year through March, Nissan cut its automobile sales outlook by 3.6% to 5.05 million units.The results are beginning to overshadow Nissan’s other big headache, the charges against Ghosn on alleged financial crimes. Sluggish profits, stuck near a decade low, also weaken the Japanese company’s position in its three-way carmaking alliance.Ghosn, who has denied all charges, fled trial in Japan late last year, making his way to Lebanon in a private jet. The former executive and Nissan are now suing each other.After years of sales incentives that eroded margins and pushing businesses to buy cars, CEO Uchida said Nissan needs to rebuild its brand image and focus on appealing to retail customers.China ImpactUchida, Nissan’s third CEO since 2017, joined Nissan in 2003 from metals and machinery company Nissho Iwai Corp. He was most recently in charge of the Japanese automaker’s operations in China.The CEO said that Nissan plans to reopen three of its Chinese factories shuttered by the coronavirus outbreak from Feb. 17 and two others from Feb. 20. Those plants have been closed since late January as a planned break for the Lunar New Year was extended amid concerns about the spread of the contagion.“Considering that we won’t resume production until mid-February, that will have some impact” on income and revenue in the current quarter, Uchida said.\--With assistance from Tsuyoshi Inajima.To contact the reporters on this story: Chester Dawson in Southfield at cdawson54@bloomberg.net;Tara Patel in Paris at tpatel2@bloomberg.netTo contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net, Reed Stevenson, Frank ConnellyFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Bloomberg

    Christine Lagarde's $186 Billion Coronavirus Fear

    (Bloomberg Opinion) -- An infection typically hits the vulnerable hardest — and in the new coronavirus outbreak this might apply economically too. For all the geographical distance between Europe and China, the euro zone has much to fear from its spread.The disease is another challenge to the export-driven model of the monetary union, which was already struggling with the global lurch towards protectionism. It could be the first big test for Christine Lagarde, the European Central Bank’s new president, who has been a tad too optimistic about the euro area’s prospects.Coronavirus will affect Europe’s economy in three ways. First, there’s demand: China is the third-largest importer of goods and services from the euro zone, after the U.S. and the U.K. The bloc’s exports to China nearly trebled between 2007 and 2018, to 170.3 billion euros ($185.8 billion) from 60.5 billion. Over the same period, sales to the U.S. increased by about 63%. These figures matter because Europe relies extensively on global demand to drive its prosperity, as shown by its large external surplus. A slowdown in China sales will cause trouble in a number of industries such as luxury.Then there’s supply. Europe's manufacturing supply chains are less exposed to China than is the case for other regions of the world, according to a report by Oxford Economics, a consultancy. However, it notes that some industries might be more exposed: The Wuhan area, where the virus originated, is a major automobile hub and home to production sites of carmakers including Peugeot SA and Renault SA.Finally, there’s the effect of the outbreak on confidence. Europe’s financial markets have been resilient so far: The Stoxx Europe 600 index is still marginally up since the start of the year. It’s possible some companies will benefit from the disruptions, as producers have to look for alternative suppliers. However, coronavirus could weigh on investment decisions in the euro zone. An investment slowdown would create long-term economic damage, even if supply and demand in China rebounded quickly.These factors matter for every economy in the world, not just the euro zone. But the monetary union’s economy is already very weak. Growth slowed to just 0.1% in the last three months of 2019, the worst quarterly performance since 2013. From Germany to Italy, the industrial sector had a terrible end to the year. Unemployment continues to fall and wage growth remains solid, which should support internal demand. However, the euro area has been exposed to a succession of external shocks. The longer the coronavirus episode lasts, the higher the risk it spills into the domestic economy.The ECB is yet to react, and is still in wait-and-see mode after cutting rates and relaunching quantitative easing in September. Lagarde had even dropped some hints of optimism over inflation, which has stubbornly stayed well below the central bank's target of close to but below 2%.The waiting game may not last for long. As well as holding back growth, the virus may also force inflation down too. Oil prices have plummeted because of the slump in demand from China. The OPEC+ group of oil-producing countries is struggling to agree a new cut in production to help support prices.The euro zone mostly imports crude, so in theory any fall in its price should be good for its economy: Consumers would have more cash to spend on other goods, and companies would see their energy bills fall. In any case, central banks usually prefer to look through changes in energy prices and concentrate on “core” inflation.Yet the memories of 2014-2015 linger in the mind of policymakers. A sharp fall in oil prices at the time contributed to a bout of deflation, which threatened to turn the euro zone into Japan. In response, the ECB launched — for the first time — a program of massive and unconditional bond purchases.Unfortunately, this time around the ECB has already used several of its weapons to combat deflation. The balance sheet of the Eurosystem — made up of the ECB and national central banks — has hit nearly 4.7 trillion euros. The ECB has pushed its main refinancing rate to zero, and its deposit rate to -0.5%. “This low interest rate and low inflation environment has significantly reduced the scope for the ECB and other central banks worldwide to ease monetary policy,” Lagarde said last week.This slightly defeatist language contrasts with Lagarde's more pugnacious predecessor, Mario Draghi, who left the ECB with the words “never give up.” It’s also as worry that the euro zone governments with low debts, including Germany, seem to feel no pressure to relax fiscal policy sufficiently to combat the slowdown.It’s still possible that the economic threat from the coronavirus will fade. A strong policy response in China could create additional demand, which would help foreign companies. But the euro zone’s poor state doesn’t leave room for error. After a quiet start for Lagarde, the difficult decisions could be fast-approaching.To contact the author of this story: Ferdinando Giugliano at fgiugliano@bloomberg.netTo contact the editor responsible for this story: James Boxell at jboxell@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Ferdinando Giugliano writes columns on European economics for Bloomberg Opinion. He is also an economics columnist for La Repubblica and was a member of the editorial board of the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

By using Yahoo, you agree that we and our partners can use cookies for purposes such as customising content and advertising. See our Privacy Policy to learn more