Renault Shares Get a Boost after News of Higher Dividend

On Thursday 15th of February, Renault’s shares popped after the carmaker said it would propose increasing its dividend for each share to €1.85 ($1.99) for the financial year, up from €0.25 previously. The higher dividend of €1.85 will be proposed to the vote of the Annual General Meeting on the 16th of May, 2024.

Renault : Strong financials for 2023

A day earlier, the company reported a full-year group operating margin of 7.9%, which landed at the top end of its previous guidance. The automaker restated its target of double-digit margins by 2030.

Renault Group’s revenue increased by 13% to €52.4 billion, while net profit came in below forecasts.

CEO of the Renault Group, Luca de Meo said:

“Today, Renault Group is posting record results. These results are the outcome of tremendous teamwork and reflects the success of our Renaulution strategy. Our fundamentals have never been stronger, and we will not stop there. In 2024, we will benefit from an unprecedented number of vehicle launches, showcasing Renault Group’s renewal while continuing to optimise our cost structure.

At the same time, we are leading at an incredible speed the in-depth transformation of the Group with important steps achieved for our major projects and an acceleration of our EV and software strategy. Our organisation brings flexibility and boosts performance. This is a strength in a challenging environment!”

2024 targets

Renault is targeting a group operating margin at or above 7.5% and free cash flow of €2.5 billion in 2024, which is lower than 2023’s €3 billion euros. The company stated that it will concentrate on its 10 upcoming vehicle launches, on optimising expenditure structure and on boosting its electric vehicle (EV) and software strategy.

In January, Renault shares increased after the company abandoned plans to publicly list its new electric vehicle and software business Ampere.

Challenging market

Back in February, Group CEO Luca de Meo told CNBC’s “Squawk Box Europe” that Renault’s guidance was “relatively prudent” due to a challenging market.

He noted: “I think there will be a lot of pressure on EV, reduction of pricing that we already see since a few months… But we are also on the other side optimistic because we’ll be launching 10 models, basically one model every month, so we enter into a very favourable product lifecycle, including EV cars.”

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “Renault shareholders have cheered the proposal to raise the dividend and are also clearly encouraged by progress on the improvement of operating margins to 7.9%.”

She added: “It’s no secret that it’s still pretty tough in the EV space at the moment, and CEO Luca de Meo did not shy away from the difficulties. Motorists are increasingly cost-conscious amid the economic headwinds and competitors have been driving down prices.”

Renault’s CEO calls for a European alliance to counter Chinese competition

According to a Reuter’s article published on the 19th of March, Renault Group CEO Luca de Meo is pushing for an Airbus alliance to support European automakers in their fight against the competition of cheaper Chinese-made electric vehicles.

Luca de Meo is also the president of the Association of European Automobile Manufacturers (ACEA) and on Tuesday (19 March) sent an open letter to Europe’s policymakers calling for cooperation to compete against Chinese electric vehicle makers.

He highlighted that carmakers’ efforts can be achieved through joint partnerships between the public and private sectors. He praised Airbus and said that the ecological transition was a “team sport.” He compared the attitude of both European and Chinese manufacturers and explained that in Europe manufacturers are forced to deliver short-term profits rather than focusing on long term investments.

On the other hand, what China is doing better and more successfully is its focus on a single goal and using all its forces, including financial institutions, to deliver on its targets.

He added that Europe can learn from Chinese manufacturers who are ahead in terms of electric vehicle performance and costs. Relations with China will need to be managed and he expressed the view that closing the door to them would be the worst possible response.

EU investigators to inspect China’s BYD, Geely and SAIC

Back in October, a probe was launched which was scheduled to last 13 months, to determine whether cheaper, Chinese-made EVs benefitted unjustly from state funding. The investigation was described by China as protectionist and has led to increased tensions between Beijing and the EU. European Commission investigators will inspect various Chinese automakers and decide whether to impose punitive tariffs to protect European electric vehicle (EV) makers. European Commission documents for the probe noted that verification visits are due by 11 April.

Cheaper Chinese cars

Europe’s auto industry is expecting fierce competition from a wave of cheaper Chinese models with superior EV battery technology which will arrive in Europe. Renault’s CEO suggested that one way to respond to this is to launch ten major European projects in strategic areas, such as small cars, smart charging and critical material supply.

Inspired by China’s special economic zones, De Meo expressed his support for establishing

green economic zones by providing a mix of funding and investments for EV makers for ten years.

New generation of electric vans

According to the latest news in April 2024, Renault Group and Volvo Group received regulatory approval to launch a joint venture which includes developing a new generation of electric vans.

The new company will be based in France and will attempt to respond to the increased demand for decarbonised and efficient urban logistics.

Flexis vans to be produced by 2026

The production of the first software-defined vehicle is planned for 2026. Both carmakers will spend €300 million (£256.3 million) while French shipping firm CMA CGM Group will inject the venture with another €120 million. Renault and Volvo will have a 50% stake in the firm each, with CMA CGM joining as a partner later.

The production of the Flexis vans will create 550 new jobs at the plant.

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