Renault promises drastic savings after a dark year

To raise the bar, the diamond group plans to reduce its structural costs by at least two billion euros in three years, a drop of about 20%, by optimizing its industrial tool, by reviewing its relations with its sub -treaters and by reviewing its non-strategic assets.

This plan, which does not preclude the closure of factories in France or around the world, will be presented next May because Renault must act quickly and cannot afford the luxury of waiting for the arrival of new general manager Luca from Meo in July.

“We have no taboos and we do not exclude anything, given that we may have had a little too much capacity for visions in terms of higher volumes than what we have today,” said Clotilde Delbos , Executive Director by interim, at a press conference.

This message helped to correct the Renault share price. At around 1:00 p.m., the title gained 1.7% to 35.41 euros when it had opened in sharp decline, and for one time showed the sharpest drop in the CAC 40 index (-0.17%).

“It is clear that we will not be able to reduce the costs in this way without affecting the slightest person among the 180,000 employees of Renault,” added Clotilde Delbos. “Unfortunately it will be obvious. We will work on it in an always human, united and collaborative way with the social partners.”

LOW VISIBILITY IN 2020

The diamond group in 2019 recorded a net loss, group share, of 141 million euros, while the previous year, it posted a profit of 3.3 billion.

It is its first loss since the financial crisis of 2007-2008, when the net result, share of the group, came out negative of 3.1 billion in 2009.

Renault’s net profit was reduced by a drop in the contribution of its partner Nissan as well as by a tax charge of € 753 million linked to the suspension of the medium-term strategic plan launched by Carlos Ghosn.

The more international of the two French manufacturers has also suffered from the drop in sales of cars in several of its emerging strategic markets, and that of diesel engines its partners Nissan and Daimler, two recipes that have made Renault successful.

The manufacturer, which is also counting on the relaunch of its alliance with Nissan to reduce its costs, held reassuring on its cash reserves, the deputy financial director Thierry Piton stressing that almost 16 billion euros, they far exceed the level required to cover the group’s needs for the coming years.

Renault also managed to maintain a positive operational free cash flow of 153 million euros (454 million less than the previous year), but thanks to a sharp increase in the dividend paid by RCI banking activity.

The manufacturer also reduced by two thirds, 1.10 euros per share, its dividend for the past financial year, and said to target for the current year a decrease in its margin 3-4%, against 4.8% in 2019 .

Renault had lowered its 2019 margin target by around 5% at the end of October, whereas it had so far expected around 6% (compared to 6.3% in 2018).

The group also warned Friday that the year 2020 remained marked by low visibility, linked to the hardening of the objectives of reducing CO2 missions in Europe, and by the weight of investments to prepare for the future.

If he anticipates a positive operational free cash flow from the automobile this year before restructuring costs, he also specifies that his annual objectives do not take into account any impact linked to the coronavirus health crisis.

(Edit by Jean-Stphane Brosse and Jean-Michel Blot)

by Gilles Guillaume and Sarah White