Renault reduces dividend and lowers profit target for 2020

Renault, the French carmaker, reported its first loss in a decade and cut its 2020 margin target as it tries to move past the Carlos Ghosn scandal and reboot its Nissan alliance. The company posted a loss of 141 million euros ($153 million) for the group share of net income, partly due to charges linked to its Chinese joint ventures.

Acting Chief Executive Clotilde Delbos acknowledged the challenges faced by Renault in 2019, citing internal difficulties and a tough market environment. The broader autos downturn, along with internal governance issues and excessive spending on R&D and capex, contributed to the company’s struggles.

Nissan, in which Renault holds a 43% stake, also reported its first quarterly loss in nearly ten years and revised its operating profit forecast. Renault set a 2020 operating margin target of 3% to 4%, down from 4.8% in 2019, and reduced its proposed dividend by almost 70% from the previous year.

Despite skepticism from investors, Renault executives reiterated their commitment to the Nissan alliance and promised to provide more joint goals by May. The global auto market is expected to decline in 2020, with Renault forecasting sales in Europe and Russia to drop by around 3%.

Renault’s struggles reflect the challenges facing the auto industry, including falling global demand, high investment costs for cleaner models, and supply chain disruptions due to the coronavirus outbreak in China. The company has suspended operations at its South Korean subsidiary and faces uncertainties related to the epidemic’s impact on its operations in China.

Overall, Renault’s financial performance in 2019 underscores the need for strategic restructuring and cost management as it navigates a challenging market landscape.