(BFM Bourse) – The automaker has raised its forecast for operating margin as well as cash generation for the current financial year. Its financial director, Thierry Piéton has also indicated that the moment to launch the IPO of Ampere would probably take place more in the first half of 2024 than at the end of this year.
Renault has, in the past, sometimes issued warnings about its results, especially in the fall of 2019. This “profit warning” was then resounding.
On Thursday, the car manufacturer on the contrary reserved a good surprise for the market by raising its objectives for the 2023 financial year, due to half-year results ahead of its forecasts.
Renault will unveil its full half-year accounts on July 27. But the manufacturer already indicates that its operating margin for the first six months of the year will be more than 7% while the operating cash flow (cash-flow) of the automotive industry will be around 1.5 billion euros. euros, an amount which includes 600 million euros in dividends paid by its captive (i.e. its financing division which has a banking licence) Mobilize Financial Services.
By way of comparison, in the first half of 2022, Renault had generated an operating margin of 4.7% and an automotive operating cash flow of 956 million euros.
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Successful launches
In view of these better than expected performances, Renault is therefore revising its ambitions upwards, expecting an operating margin for 2023 of between 7% and 8%, against a rate expected at least 6% previously. Automotive operating cash flow is now expected to be at least 2.5 billion euros versus at least 2 billion euros previously.
On the Paris Stock Exchange the action soars, taking 6% at the end of the morning to 38.65 euros and signing the strongest progression of the CAC 40.
“Thursday’s announcement of the outlook upgrades is very reassuring, because fears surrounded Renault in the face of the deterioration of the environment in Europe (demand, price). They provided an excellent response to the market”, considers Michael Foundoukidis , analyst at Oddo BHF.
“This revision is mainly explained by the quality of the mix of its sales in connection with the success of the new launches and the continuation of the commercial policy focused on value”, explained the group.
This year, Renault is reaping the full impact of new models marketed last year, in particular the Megane E-TECH, the group’s technological showcase, which is supposed to embody its know-how in electrical and software, as well as the Renault Austral, a SUV. A new Renault Espace went on sale in June and a new Clio will arrive in the third quarter.
“The success of Austral is important because this model has a positive impact on the sales mix, especially since it is sold mainly in high-end finishes”, analyzes more specifically Michael Foundoukidis.
“Renault is in the process of making a massive move upmarket, causing a price cycle that will lead to a significant improvement in profits,” explained Bernstein, in a note published on June 20.
“This product offensive, across all our brands, has only just begun and will further improve the group’s performance, while leading a unique transformation to become the next generation automotive company”, also warned Luca de Meo, the general manager of Renault, quoted in a press release.
Ampere’s IPO more likely in the first half of 2024
Bernstein also pointed out in his note that investors feared a delay or even a failure of the IPO of Ampere, the future electric subsidiary of Renault, which posed a barrier to investment in the action.
This Thursday, Thierry Piéton, Renault’s financial director, told financial analysts that the group was waiting for “the right window of opportunity” to carry out this operation, which should “probably” occur in the first half of next year. The diamond group previously mentioned a launch of this IPO no earlier than the end of 2023.
“Ampere’s IPO is not a foregone conclusion, due to competition with Chinese groups in the electrical sector in particular. But by carrying out this IPO in the first half of 2024 and not at the end of 2023, Renault would probably offer greater visibility in the market,” says Michael Foundoukidis.
“The group would reduce the delay in terms of calendar compared to the financial equilibrium targeted on Ampere (2025 on the margin and cash flow, editor’s note). And the operation could then be based on the launches, planned at the beginning year, of two key electric models, namely the new Scenic and the Renault 5”, completes the analyst.
Julien Marion – ©2023 BFM Bourse
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