Dividend is slashed by 70% to €1.10
Renault’s 2019 deliveries, revenue and EBIT numbers were only slightly lower than we had anticipated, but net income was a mediocre €19m and, after minority interest, this number turned around from +€3.3bn generated in 2018 to a loss of €141m last year. This is the result of a €190m loss from at-equities (€1.54bn profit in 2018) and a doubling of income tax charges to €1.45bn.
14 Feb 20
As expected, vehicle deliveries fell in 2019
The group’s worldwide deliveries fell by 3.4% or 131k to 3.75m last year. Excluding deliveries of the Chinese joint-ventures, the number also fell by 3.4% or 127k to 3.59m. We had expected a worldwide number of 3.77m, i.e. the discrepancy is only marginal. Excluding the CKDs delivered to Iran in 2018, the rate of decline was 0.8%.
17 Jan 20
Revenue continued falling in Q3, but the ASP was slightly up
Renault’s delivery volume continued falling and this brand continued losing market share in Europe. On the other hand, the group gained market share in Russia as new Renault products plus the continuing success of Lada contributed positively.
25 Oct 19
Year-to-August sales down in every region
The Renault Group has lost market share in the last month (-0.4pp to 3.87%) and ytd (-0.08pp to 4.30%). These shares are based on worldwide car sales although the company is not active in Nafta and hardly so in China. Its Chinese market share is in the vicinity of 0.75%, i.e. its vehicles are little recognised there.
18 Sep 19
Operating profit down and Nissan's contribution was negative
Renault’s own problems are reflected in a delivery fall of 6% to 1.94m vehicles and an ASP fall of 1% to around €13,600. This has caused the group’s operating earnings to fall by 14% to €1.65bn. On top come Nissan’s problems. Its at-equity contribution to Renault’s accounts turned around from a profit of €805m in H1 18 to a loss of €21m. Nissan has never contributed negative earnings since H1 09.
26 Jul 19
FCA propose a 50/50 merger with Renault
Including Nissan, a potentially merged FCA/Renault-Group would be the world’s largest producer of passenger cars and light trucks. However, is size that important? Possibly yes, in a market segment that includes an almost unlimited number of me-too products.
27 May 19
Nissan contributed an at-equity loss to Renault’s Q1 earnings
During the years from 2013 to 2018, Nissan’s at-equity profit contribution was at least €1.5bn and it culminated in a contribution of €2.8bn in 2017. All of this has gone, most probably as a result of the turmoil at the helm of the company. Whereas Renault’s underlying fundamentals have hardly suffered, Nissan has.
15 May 19
Europe was good in Q1, but the rest was poor
The Renault Group achieved delivery growth in Europe (+2%), but the numbers were down in all other regions. This negative development was particularly strong in APAC (-18%) and even more so in MEA & India (-31%). Lastly, the Chinese joint-ventures have also suffered from weak demand for passenger cars (-55%), whereas deliveries of light commercial vehicles were up by 8%.
26 Apr 19
2018 operating earnings rather disappointing
The number of units sold was up by 3.2% to 3.88m in the full-year (-10% to 914k in Q4) which resulted in revenue of the Automobile division of €54.2bn (-3.6%). As a result, the ASP fell by almost 7% to just below €14,000. The group’s consolidated turnover was down by 2.3% to €57.4bn (+2.5% currency-adjusted). Instead of a higher EBIT number (we had projected almost €4bn), it fell by 6.3% to €3.61bn. Total at-equity profits were down by more than €1.2bn to €1.54bn which was nevertheless, higher than our projected €1.3bn. All combined, net earnings after minorities were down by almost €2bn to €3.3bn, while we had expected marginally more than €4.0bn. The proposed dividend is unchanged at €3.55 instead of our projected €3.70.
14 Feb 19
Nissan has lowered its full-year net profit guidance
Management has reduced the number from Y500bn for the March 2019 fiscal year to Y410bn. This profit number was Y747bn in the last fiscal year, i.e. the new guidance is, expressed in yen, about 45% below last year’s. As the yen has appreciated against the euro during the last twelve months, the setback is less pronounced when expressed in euros. We are currently seeing the at-equity profit contribution in Renault’s 2018 accounts falling from almost €1.8bn to €1.3bn or by a good 25%. It will release its 2018 numbers on 14 February. Whether our number is entirely wrong remains to be seen. In fact, a simple translation of the new guidance into euros (almost €3.3bn) and multiplied with Renault’s Nissan stake of 43.4% gives a profit contribution of some €1.4bn.
12 Feb 19
2018 deliveries were short of our projections
Including the Chinese joint-venture that was set up in 2017 (it operates Jinbei and Huasong light commercial vehicle brands), deliveries amounted to 3.88m, an increase of 3.2% compared to the 2017 number which excluded any joint-venture deliveries. Excluding this volume of 166k LCVs, deliveries fell by 1.2% to 3.72m in 2018. We had expected 3.9m units. This gap of almost 5% or around 180k units is not insignificant. Africa, the Middle East, India was the weak spot last year. Regional deliveries fell by 16% to 449k and, outside France, deliveries fell by 0.6% to 1.23m in Europe (the number was up by 2.4% to 690k in France). Finally, APAC was another weak spot with deliveries down by 16% to 164k when the joint-venture is excluded. Renault experienced some growth of 2% to 748k in Eurasia (i.e. Russia and surrounding countries) and strong growth in LatAm (+12% to 437k). Management sees the volume increasing slightly in 2019, but positive growth is not expected to start in H1.
18 Jan 19
Carlos Ghosn apparently reported wrong corporate salaries from Nissan
According to Asahi Shimbun, the Japanese newspaper, Carlos Ghosn was questioned today by Tokyo prosecutors. They accuse him of having understated his corporate salary by several hundred million yen. The newspaper speculates that today’s questioning might result in his arrest. Carlos Ghosn is not only Chairman of Nissan but also of Mitsubishi and CEO and Chairman of Renault. In addition, he oversees the alliance of these companies which now also includes Russian Avtovaz.
19 Nov 18
The king is dead, long live the king!
Corporate governance has long been an issue at Renault. When a company, or in this instance a group of companies, is dominated by one individual, jealousy can pop up easily. What has happened in Japan today seems to be the result of information being leaked by one or more whistleblowers.
19 Nov 18
Good volume but lower than expected 9M revenue number
Excluding the Chinese joint-venture with Brilliance, total registrations fell by 1.7% to 852k in the last quarter but were up by 3.5% to 2.85m through to September. Simultaneously, consolidated revenue fell by 6% to just below €11.5bn in Q3 and by 0.8% to €41.4bn through to September. To reach our full-year projected volume number the group needs to deliver just above 1m vehicles in Q4 which might be realistic. However, to reach our full-year expected revenue, Q4 turnover has to increase by 6.5% to more than €18bn which seems unrealistic.
23 Oct 18
We had expected better results
Renault’s operating result has not been a major disappointment, but the bottom line was. A considerable drop in Nissan’s profit contribution has translated into net earnings (€1.95bn) that were well below our projection (€2.16bn). In addition, car demand has started to weaken in MEA-East India and certain parts of APAC.
27 Jul 18
Vehicle sales were up by 10% in H1 18
Renault saw its car sales rising to more then 2.06m in H1 18. However, about half of the absolute growth number of 185k units was the result of the first-time consolidation of the new Chinese joint-venture with Brilliance. Excluding this, the growth rate was 5.3%. In fact, excluding this number from the total reported for APAC, the regional sales number was down by 15% to 85k instead of the reported growth rate of 70% to 170k. Nevertheless, Renault’s sales growth rate accelerated in Europe in Q2 18 (+5.8%) compared to Q1 (+2.8%). The regional number represented 52% of all vehicles sold worldwide. This was primarily but not exclusively driven by strong demand in France where the H1 sales number was up by 5.8% to 389k. The other all-important market is Eurasia, i.e. Russia. Sales in that region were up by 22% in Q1 and by 10% in Q2 which has brought the H1 number to 372k vehicles, an increase of 15%.
16 Jul 18
Emission problems force Daimler to recall cars equipped with Renault engines
Daimler uses Renault 1.6L diesel engines for both vans and passenger cars. As the software contains defeat devices, according to German KBA, the cars have to be recalled. Daimler is not willing to accept the recall and intends to go to court. Daimler states that the engines are sourced from Renault and it re-engineers them. It is unclear whether this exclusively concerns the hardware or also the software or only the software. Nevertheless, as Daimler has received KBA’s permission to use these engines, it has been blamed by the authority.
28 May 18
Surprisingly low Q1 revenue number
FX changes had a more severe impact on the group’s Q1 revenue number than we had anticipated. As a result, its ASPs fell in both Russia and the RoW. In addition, deliveries were down by a good 5% in Africa/Middle East/India which we had not foreseen.
27 Apr 18
A new management layer for the Renault-Nissan-Mitsubishi alliance?
Management has set up a group of six managers who have the task of bringing the three companies closer together in terms of engineering, manufacturing & supply chain, purchasing, quality, aftersales, and business development. Once the consultations with the respective employee representatives of the three companies have been finalised, a new organisational structure will be reviewed. A first step is Mitsubishi joining the alliance’s purchasing, business development, and quality organisations as early as from 1 April 2018. CEO Ghosn expects this future closer cooperation to lead to a revenue and profitability boost by joining purchasing functions and by producing some nine million vehicles on four common platforms compared to two million on two platforms in 2016. Simultaneously, he sees the annual sales volume of the three to increase from 10.6m vehicles in 2017 to 14m in 2022. This translates into an annual growth rate of almost 6% which we find very ambitious indeed. It remains to be seen whether the above projects will eventually lead to changes in the shareholding structures of the three companies and in new management responsibilities. As the contract of CEO Ghosn has been extended to 2022, he will be responsible for achieving the above goals.
01 Mar 18
A very mixed set of 2017 accounts
Renault’s 2017 earnings below the EBIT line were rather disappointing. Excluding the more than €1bn positive impact from the US income tax reform to Nissan’s at-equity contribution and, although the absolute amount of income tax charges for the group was down by some €160m, net profit after minorities of €4.09bn was lower than our projected €4.22bn. In fact, Nissan contributed almost nothing in Q4 when the US tax impact is excluded.
16 Feb 18
Worldwide 2017 deliveries were slightly short of our expectations
The total was up by 8.5% to 3.76m which, for the first-time, includes Lada which is now fully consolidated. Excluding this number from Renault’s re-stated 2016 number, the growth rate was 18%. We had expected deliveries of 3.83m. Deliveries in Europe were up by 5.6% to 1.91m whereas we had expected just above 1.9m, i.e. Renault did better than we had expected in this region. However, deliveries in all other regions were below our projections. This is particularly true for APAC where we had anticipated 234,000 deliveries, but the final number was below 200,000 (+17%). Including Lada in both years, deliveries increased by 14% to 732,786 in Eurasia, but our projection was 743,000. In fact, excluding Lada from the 2016 number translated into a growth rate of 101%. The numbers were 532,391 for Africa/Middle East/India and 389,419 for LatAm. Again, these final numbers were 20,000 and 11,000, respectively, below our projections.
15 Jan 18
Renault sets up joint-venture for LCVs in China
The partner is Brilliance China Automotive Holdings Ltd, which is BMW’s partner for the production of passenger cars. Renault will own a 49% stake and Brilliance the other 51% in this joint-venture which is expected to produce 150,000 light commercial vehicles by 2022. The share of electric powertrains is unclear as the press release only talks about ‘an acceleration of electrifying powertrains’.
15 Dec 17
Nissan’s earnings are under some pressure
Nissan’s at-equity contribution to Renault’s Q3 accounts was €469m (-11%) and the 9M number was €1.76bn (+38%). We currently see total 2017 at-equity profits for Renault reaching €2.2bn, i.e. €562m more than last year’s. This seems to be slightly on the optimistic side.
08 Nov 17
We were slightly too optimistic for Q3 17
Renault’s car deliveries were up by 20% to 866,000 vehicles in Q3 which brought the ytd number to 2.75m, an increase of 20%. Consolidated revenue was up by 16% to €12.2bn and 17% to €41.8bn, respectively. Finally, the respective Automobile revenue numbers were +16% to €11.6bn and +17% to €39.9bn. These numbers suggest that the ASP was down by 3.2% to less than €13,400 in Q3 and 2.4% to slightly more than €14,500 in 9M17.
25 Oct 17
Re-inspecting 1.2m Nissan vehicles registered in Japan
Because of improper final inspections before the cars were delivered, Nissan has to re-call 1.2m vehicles delivered between October 2014 and September 2017. The company has also temporarily terminated any registrations of new cars in Japan. According to management, this will cost the company Y25bn, or some €190m. We do not have any explanation why something this weird could ever happen. It might be a reflection of the immense cost pressure the auto industry is experiencing and top management’s advice to the ranks and files to reduce costs wherever possible.
02 Oct 17
Extremely ambitious targets for 2022
The Alliance of Renault, Nissan and Mitsubishi intends to increase the volume from around 10m to 14m vehicles, i.e. the annual growth rate is expected to be around 6%. It aims to increase annual turnover from $180m to $240m, which translates into an annual growth rate of almost 5%. Finally, annual synergies are expected to reach €10bn (or $12bn), up from the €5bn achieved through to the end of 2016, i.e. additional savings of €5bn are envisaged. This plan is based on the expectation that the Alliance will remain a leader in electric vehicles and become a leader in autonomous driving technology. It also intends to become an operator of robo-vehicle ride-hailing services. The projected synergies are based on the strategy of reducing the total number of engines from 38 to 31 and that 22 of these engines will be used by all three partners. In addition, 9m of the above mentioned 14m cars will be built on four common platforms. At the end of 2016, two million vehicles were built on two common platforms.
15 Sep 17
Superb H1 17 numbers
Renault has consolidated Russian Avtovaz for the first time. Based on the numbers the group released for H1 16, car registrations increased by 20% to 1.88m, Automobile revenue by 18% to €28.3bn, and EBIT by 18% to €1.82bn. Finally, net profit was up by 58% to €2.38bn as the at-equity contribution almost doubled to €1.32bn. This latter number was positively impacted by a sizeable increase of Nissan’s contribution (+72% to €1.29bn) and the disappearance of the Avtovaz loss of €75m.
28 Jul 17
Nissan delivered good earnings for 2016/17 but expects them to fall
Nissan increased deliveries by almost 10% to 1.27m vehicles in its final quarter (through to March 2017), whereas the ASP fell by 3% to Y2.72m. As a result, revenue was up by 6.4% to Y3.46tn and EBIT by 16% to Y239bn. Thanks to a Y112bn gain from the disposal of investment securities, net earnings increased from Y71bn in Q4 15/16 to Y249bn.
12 May 17
Avtovaz is now fully consolidated
This accounting change added 66,000 vehicles to Q1 17 deliveries and a net €569m to revenue. As a result, the group’s delivery number increased by 26% to 874,000 and revenue by 25% to €13.13bn. Automobile revenue was up by 26% to €12.51bn, i.e. the ASP was unchanged at €14,311. Management’s 2017 guidance concentrates on the group without Avtovaz, which is expected to suffer a loss. Based on this, management sees revenue and operating earnings increasing while we expect the new group’s accounts to show strong sales growth but hardly any operating profit growth and the margin is expected to fall.
28 Apr 17
Carlos Ghosn steps down as Nissan's CEO
Renault’s CEO will remain Chairman of Nissan’s Supervisory Board and CEO of both Renault and Mitsubishi, in which Nissan bought a 34% stake in 2016. Carlos Ghosn successfully restructured Nissan late in the last century, but the company has taken over a minority stake in ailing Mitsubishi and, in late 2016, Renault acquired a majority stake in loss-making Russian Avtovaz. As Ghosn’s track record has been so positive, investors believe that he can also restructure these two latest ventures so that both will eventually generate positive earnings. While the Mitsubishi numbers are consolidated at-equity by Nissan and its results at-equity by Renault, the 2016 Avtovaz balance sheet has been consolidated on 31 December 2016, but the P&L will start to burden Renault’s operating earnings from this year onwards. The Russian car producer does not expect positive operating earnings before impairments and restructuring charges before 2018.
23 Feb 17
Good results also stemming from Avtovaz and a higher dealer inventory
Renault sold a total of 3.18m vehicles (+13%) in 2016 and, as the ASP was up by 0.3% to €15,395, revenue of the Automobile division increased by 14% to €49.0bn. Consolidated revenue increased by 13% to €51.2bn and both revenue numbers were some €1.5bn below our projections. The group shows an operating result of €3.28bn (+38%) and net earnings of €3.42bn (+21%) and these numbers are €230m and €370m, respectively, higher than we had anticipated. Consequently, management proposes a dividend of €3.15 (2015: €2.40) while we had expected €2.75.
10 Feb 17
Avtovaz expected to be FCF positive after 2020
Renault consolidated its 37.3% indirect stake in Russian Avtovaz at-equity earlier last year but has increased this stake further late last year. As a result, it is expected to fully-consolidate it with the release of the final 2016 accounts.
17 Jan 17
Nissan’s profit fall accelerates with yen appreciation
Car deliveries increased by a good 3% in both the last quarter and H1 (FYE 31 March) to 1.05m and 2.05m units, respectively. However, as the yen’s appreciation accelerated (its average was up by 9% from April through to May and some 15% from July through to September), Nissan’s revenue fall accelerated from -8.4% in Q1 to -12% in Q2. The same holds true for profits. EBIT was down by 9% to Y176bn in Q1 and by 19% to Y164m in Q2, i.e. expressed in euros it also fell in the last quarter. The company’s respective net earnings were -11% to Y136bn and -16% to Y146bn. As the Q2 net profit fall expressed in yen was similar to the yen’s appreciation against the euro, the at-equity contribution to Renault’s Q3 accounts should have been in the vicinity of last year’s €524m. It had been down by 23% to €749m in H1 16. Nissan’s deliveries fell by 20% to 201,942 in H1 in Japan and 0.3% to 355,466 in Europe but they were up by 8.3% to 1.06m in Nafta and 50% to 203,144 in Asia. Sharply rising volume in Asia has allowed at-equity profits (overwhelmingly from China) to increase by 32% to Y75bn. Simultaneously, exchange losses (including gains and losses from derivatives) fell from Y28bn in H1 15/16 to Y22.6bn. In spite of higher at-equity profits and lower exchange losses, net earnings were down as the operating result was lower (see comment above).
07 Nov 16
Mercedes-Benz starts pick-up production, but not for Nafta and Asia
Daimler’s CEO Dieter Zetsche stated at the Paris Motorshow that the cooperation between Daimler and Renault-Nissan has been expanded during the course of 2016. He focused on four topics: Smart cars will eventually also be available as full-electric cars using Renault’s engines and Daimler’s batteries. The Smart fortwo is to continue to be produced in Daimler’s Hambach/Alsace factory while the forfour is to be produced in Renault’s Slovenian plant along with the Renault Twingo. Daimler and Nissan have laid the foundation for a car plant in Mexico in 2015. Starting in 2017, this plant will produce premium compact cars for the Infiniti brand and from 2018 for the Mercedes-Benz brand. An all-new Mercedes-Benz pick-up will be produced in Renault’s Argentine plant and in Nissan’s Spanish plant. The car will be based on Nissan’s NP300 but, according to Daimler, will look different. It intends to sell the pick-up in all markets outside North America and Asia. We believe that this limitation is a Nissan request and wonder how many of these cars can be sold outside these two regions. A Nissan engine plant in the USA has been producing 2L, 4-cylinder gasoline engines for Daimler since 2014. This plant is currently being expanded to increase capacity. During the last two years, it has produced some 250,000 engines for Daimler and these are used in cars for the Nafta market as well as for Africa. Additionally, engine components are shipped to Germany.
30 Sep 16
Q2 was superb
Renault increased registrations by 18% to 876k vehicles in the last quarter which brought the H1 number to 1.57m, an increase of 13%. Although the ASP was down by a good 2% in Q2, consolidated revenue was up by 15% to €14.7bn (+14% to €25.2bn in H1). This has allowed the group to increase H1 EBIT by 44% to €1.54bn while net income increased by ‘only’ 9% to €1.50bn. All these numbers are better than we had expected.
28 Jul 16
Strong yen has started to bite into Nissan’s accounts
Nissan’s full-year 2015/16 numbers are reasonable, but the last quarter has shown that growth rates have moderated. This is true for both the delivery volume and revenue number, but in particular for the profit numbers. Management sees revenue and profit numbers falling in 2016/17.
12 May 16
Mega investment in Morocco
Renault intends to build a third factory in Morocco for €900m. A plant in Casablanca is currently producing passenger cars for the European market and a second plant is in Tangier for the African market where the group generates around 10% of its revenue (including India). Eventually, the local government believes that some 50,000 people will be employed, which we find extremely high unless the cars are assembled manually. Revenue growth in this region was disproportionately strong until Europe started to recover in 2015. To push regional sales further, the new plant is needed. However, an investment of almost €1bn seems to be high and must lead to the production of at least another 250,000 vehicles annually. Unfortunately, management has not given any number for capacity.
11 Apr 16
Lada boss to be fired
Avtovaz, the producer of Lada passenger cars and indirectly controlled by Renault (37%), has scheduled a Supervisory Board meeting later this month. One topic is the dismissal of Swedish CEO Bo Andersson. He joined Avtovaz about two years ago after he had restructured the Russian truck producer GAZ. Andersson has not been able to restructure Avtovaz successfully.
08 Mar 16
Is Renault in need of cash?
Nissan intends to have a share buy-back between 29 February and 22 December of this year. Renault’s management made it clear that it intends to maintain the 43.4% stake in Nissan, i.e. it will sell Nissan shares if the share buy-back happens. Renault showed net debt of €26.5bn at the end of 2015 while Nissan’s interim Q3 report showed net debt of Y6.67tn (c. €53bn), i.e. both companies have substantial amounts of net debt on their books.
26 Feb 16
Much better operating earnings, but huge loss in Russia
Renault’s deliveries increased by 3.3% to just above 2.8m in 2015. Automobile revenue went up by 11% to €43bn and consolidated revenue by 10% to a good €45bn. This has allowed the group to generate EBIT of €2.32bn, an increase of 44%. Simultaneously, cash from operations (based on management’s definition) increased by more than 50% to a new record number of €6.0bn. All these numbers are, at a glance, better than we had expected. However, at-equity profits from Nissan and Avtovaz were unchanged at €1.37bn whereas we had expected €1.95bn. In fact, Nissan’s contribution of €1.98bn is an increase of ‘only’ €417m whereas we had expected an increase of €600m. The contribution from Avtovaz is a negative €620m compared to a loss of €182m shown for 2014. Of this total, €395m is the ‘contribution’ from that company’s net loss and €225m is an impairment charge on the stake’s value. As a result, Renault’s net profit after minorities was up by 49% to €2.82bn, still €265m higher than our projected €2.56bn.
12 Feb 16
Renault and Nissan in stalemate
The influence of the French State will not change and Nissan will not increase its stake in Renault, i.e. everything remains as it has been for many years. Although the French State verbally states it will limit its number of voting rights to 20%, it is not willing to give up its total voting rights of 28% when it comes to ‘important’ decisions. These include the dividend, the nomination of State Representatives to the Supervisory Board, and significant ownership changes. In addition, Nissan continues to have no voting rights at all, although it controls 15% of Renault.
13 Dec 15
At-equity profits unlikely to reach our projection in 2015
Nissan has contributed €524m to Renault’s Q3 earnings, an increase of 20%. The ytd number now stands at €1.5bn, 23% higher than in 9M 14. Assuming this profit contribution will be up by another 20% (to €400m) in Q4, the total will amount to €1.9bn. We are expecting total at-equity profits of €1.95bn for the full-year. However, this total also includes the loss contributed by Avtovaz and other minor investments (€197m in 2014). As the loss of the Russian joint-venture is likely to be much higher in 2015 than it was last year, our projection ís possibly some €250m too high.
03 Nov 15
Reasonable Q3 volume and revenue numbers
Renault increased deliveries by 1.2% to 620,525 in the last quarter which brought the ytd number to almost 2m, an increase of 0.9%. As the respective ASPs were up by 8.9% to €14,185 and 10.8% to €14,957, the Automobile division’s turnover increased by 10.2% to €8.8bn and by 11.8% to almost €30bn. Consolidated revenue increased by 9.4% to €9.3bn and by 11.2% to €31.5bn.
30 Oct 15
Alliance with Nissan to be restructured?
According to Bloomberg, Nissan wants the partnership with Renault to be more evenly split, i.e. Renault to reduce its Nissan stake from 43.4% and Nissan possibly increasing its stake from 15%. Assuming Renault reduces its Nissan stake to below 40%, Nissan will have voting rights which are currently prohibited under French law. Carlos Ghosn, CEO of both Renault and Nissan, seems to be sitting between both stools. However, he is certainly not happy with the French State’s stake of almost 20% (more than 20% of the votes) in Renault. By changing the structure of the alliance, these numbers would fall, which is unlikely to be in the interest of France. In fact, French Economy Minister Emmanuel Macron stated that the balance must not be jeopardised. Assuming Ghosn will press for a new structure, he is likely to incur problems with the State, but whether its influence is strong enough to oust him remains to be seen.
27 Oct 15
Russian Avtovaz to be consolidated in 2016
Renault’s CFO made it clear that the company expects to consolidate Avtovaz from next year onwards. It currently controls an indirect 37.25% stake in the ailing car producer, with Nissan and Russian Technologies owning the remainder of Alliance Rostec Auto BV. Renault and Nissan initially intended to take full control of Avtovaz in 2014 which was then delayed until 2015 and is now proposed for next year. The full consolidation of Avtovaz will allow Renault to reach its 2016 revenue goal of more than €50bn but it is unlikely to allow it to generate the envisaged EBIT margin of 5%. Avtovaz’s operating loss based on Western accounting standards is not known but is likely to be significant. The sharp collapse of the Russian auto market does not allow the company to fill its production capacities and other car producers are not expecting the market to find its bottom before H2 16.
18 Sep 15
ASP +12% to €15,305
Based on the number of cars registered (+0.8% to 1.38m), the group’s Automobile revenue (+12% to €22.2bn) divided by this number was up by the aforementioned double-digit. However, global production was up by 17% to more than 1.5m vehicles which indicates that management uses production numbers rather than sales numbers to account for revenue. Nevertheless, the sharp revenue increase allowed EBIT to increase by 47% to €1.07bn and net profit by 86% to slightly less than €1.4bn. This latter number was also supported by a tax rate fall from 25% in H1 14 to 13.8% which benefited from a €41m gain from a change in unrecognised deferred tax assets. Whereas EBIT is some €200m higher than our projected number, net profit is €365m higher.
30 Jul 15