Renault lowers dividend and records first net loss in decades

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Renault SA has cut its annual dividend and recorded its first net loss in a decade after sales declined and partner Nissan Motor Co.’s revenues decreased. The shares fell.

Renault’s dividend for 2019 will drop by more than two-thirds to 1.10 euros per share, it said on Friday. The French automaker owns 43% of Nissan, which canceled its own payout to investors at the end of the year. Renault posted a net loss of 141 million euros in 2019.

“We are not satisfied with our results,” said acting managing director Clotilde Delbos in a presentation to analysts.

The slump comes after 15 months of upheaval at the French automaker, which began with the departure of Chairman and CEO Carlos Ghosn after his arrest in Japan for financial misconduct. Ghosn, who denied the allegations, was on trial in Japan until he dramatically fled to Lebanon in late December.

Renault even fell 4.7% and fell 4% to EUR 33.41 at 9:05 a.m. in Paris.

For 2020, the automaker sees annual sales in line with 2019, apart from currency fluctuations and an operating group margin between 3% and 4%. It predicts positive free cash flow for automotive operations before restructuring costs, adding that expected volatility in Europe is clouding prospects given new emissions regulations and the potential impact of the corona virus.

The company is aiming to reduce “structural costs” by EUR 2 billion over the next three years, Delbos said. Renault will announce details of the cuts in May and does not have the “luxury” to wait for the new CEO Luca De Meo to arrive in July.

Nissan Impact

Renault lowered its sales and earnings forecast for 2019 in October, saying weaker economies were hurting car sales in key markets, while stricter emissions regulations drove costs up. Deteriorating performance at Nissan has also led to results. The contribution to Renault’s earnings fell last year from EUR 1.51 billion in the previous year to EUR 242 million.

Nissan’s total dividend for the fiscal year ending March is expected to be 10 yen (9 cents) per share, including an earlier interim payment. This corresponds to 57 yen in the previous year.

Last month Renault appointed the former CEO of Volkswagen AG, De Meo, as CEO. He and chairman Jean-Dominique Senard are accused of turning the page in a difficult time and strengthening Renault’s alliance with Nissan. Sorting out their differences is critical as automakers face the costly and uncertain transition to electric vehicles.

Read more: Nissan is worth less than Subaru after the shares fall

Now the industry is facing a challenge from the corona virus. While Renault sells relatively few cars in China, it operates a factory with partner Dongfeng Motor Co. in Wuhan, the city at the epicenter of the outbreak. The supply chain also depends on the country. Fiat Chrysler Automobiles NV said last week that a European plant may need to be temporarily closed over the next few weeks if the effects of the outbreak worsen.

Get more:

See the list of sales in the financial year 55.5 billion euros compared to an estimate of 55.4 billion euros. Estimation of the operating margin of the group in financial year 2018 4.8% compared to 6.3% in financial year 2018 Positive operating free cash flow for motor vehicles 153 million euros in tax losses in France The share of the net profit group for the financial years drops to 141 million euros compared to a profit of 3.3 billion euros in 2018

To contact the reporter about this story: Angelina Rascouet in Paris at arascouet1@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Frank Connelly

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