by Gilles Guillaume and Piotr Lipinski
PARIS (Reuters) – Renault published its first profit in three years on Friday and announced that its financial director Clotilde Delbos would devote herself full-time to the group’s new mobility activity, a double sign of an acceleration of the strategy of electrification of the French manufacturer.
The diamond group, which has also announced that it is studying the creation of two separate entities for its electrical activities on the one hand, thermal-hybrids on the other, resumed last year with a net profit, group share, of 888 million euros, whereas in 2020 it had suffered a historic net loss of 8.008 billion euros due to a drop in sales and, in turn, similar difficulties encountered by its partner Nissan.
The previous year, he had suffered a loss of 141 million euros, his first in ten years.
“We are in the process of achieving one of the fastest turnarounds in recent auto industry history, if you compare the situation to what it was just a year ago, you have to recognize that something something magical is happening at Renault,” Chief Executive Luca de Meo said during a conference call with analysts.
On the Paris Stock Exchange, the Renault share gained 4.58% to 38.005 euros ten minutes after the opening, moving to its highest since April 2021. It rose by around 0.7% in the middle of the afternoon.
“The forecast is in line, but should be considered a minimum floor,” Jefferies commented in a note titled “some progress.”
To achieve these results, Renault has undertaken a drastic restructuring with two billion euros in fixed cost reductions in two years and a refocusing on its most profitable models and markets.
Ahead of the objectives of the “Renaulution” plan which it will update during an investor day next fall, the manufacturer has reached an operating margin of 3.6% in 2021 and is aiming for a figure greater than or equal to 4% in 2022, against an initial objective of more than 3% in 2023.
It also intends to repay the entire loan guaranteed by the State during the Covid crisis by the end of 2023 at the latest.
TOWARDS A DEDICATED THERMAL ENTITY BASED OUTSIDE OF FRANCE
To support the shift to electric – the Renault brand will no longer sell petrol or diesel-powered cars in Europe in 2030 – the manufacturer has also announced that it is considering the creation of two entities, one for electrics based in France, a another for thermal and hybrid engines based abroad.
Other manufacturers have so far been reluctant to go that far. In a presentation, the French group specified that each entity would be open to partnerships.
Asked if this project could modify the structure of the alliance with Nissan and Mitsubishi, which has just detailed a joint plan of 26 billion dollars of investment in electrification, Luca de Meo replied that it was of a project that Renault was able to carry out on its own.
“Of course, we will leave the door open to our partners if they too are interested in such a change in the structure of companies,” he added.
Sources familiar with the matter told Reuters that Nissan and Mitsubishi had only recently learned of the plan. In almost identical statements sent to Reuters by email, the two Japanese groups said “that in their eyes, this step must constitute a preparation for the next stages of the Renaulution plan”, and that they “will continue to collaborate as partners of covenant”.
Shaken at the end of 2018 by the arrest of Carlos Ghosn, long iconic CEO of Renault and architect of the alliance with Nissan and Mitsubishi, Renault has turned its back on an ambitious volume strategy to return to the path of profitability.
This turnaround is imperative as the industry as a whole needs to fund massive investments in vehicle electrification and software for increasingly connected cars.
While he was the forerunner of electric cars with Nissan at the beginning of the previous decade, Renault was left behind by newcomers like Tesla, or by Volkswagen’s offensive.
In the short term, the market environment will however remain affected this year by the rise in raw material prices and by the semiconductor crisis, with a total loss of production estimated at 300,000 vehicles, especially in the first half, compared to approximately 500,000 last year.
The group has also turned a page since Clotilde Delbos, financial director for six years and on the front line in the transition with the Ghosn era and in the restructuring that followed, will give way on March 1 to her deputy Thierry Piéton.
She will now devote herself full-time to the Mobilize subsidiary, which brings together the group’s car-sharing, VTC and data activities in energy and new modes of travel.
“It’s a transition that’s been on my mind for a number of months,” she said during a press conference call. “But you can’t do everything, there comes a time when you have to be able to focus on a choice (…) and I’m doing it now too because I think we’re on the right track.”
(Report Gilles Guillaume and Piotr Lipinksi, with Norihiko Shirouzu in Beijing and Nick Carey in London, edited by Jean-Stéphane Brosse)