Renault sets lower profit goal in crunch reboot year

PARIS (Reuters) – French carmaker Renault (PA:) on Friday posted its first profit loss in 10 years and set a lower operating margin goal for 2020, a crunch year for its planned reboot alongside partner Nissan (T:) after a scandal surrounding former boss Carlos Ghosn.

The company is trying to move past internal turmoil with a management shake-up, but it is also grappling like some peers, including Japan’s Nissan, with tumbling auto demand in some key markets like China.

Renault made an annual profit loss of 141 million euros ($153 million) – its first in 10 years – for the group share of net income, penalized by charges linked to some of its Chinese joint ventures and as Nissan’s contribution shrank.

It was also hit by a deferred tax charge in France.

The company set an operating margin target for this year of between 3% and 4%, down from 4.8% in 2019, and sliced its proposed dividend against 2019 by almost 70% from a year earlier.

“Visibility for 2020 remains limited due to expected volatility in demand,” interim Chief Executive Clotilde Delbos said in a statement, adding that the new guidance did not take into account possible impacts from China’s coronavirus crisis.

Renault has a factory in China’s Wuhan, the epicenter of the epidemic, which has been in lockdown to contain the spread of the virus. It has also suspended operations for at least four days at its South Korean subsidiary in Busan due to supply chain hiccups.

Renault’s group sales fell 3.3% to 55.53 billion euros in 2019, in line with its guidance and beating an average 55.24 billion-euro forecast expected by 20 analysts polled by Refinitiv. Sales were down -2.7% at constant exchange rates.

Japan’s Nissan, Renault’s alliance partner, and in which it has a 43% stake, earlier this week posted its first quarterly loss in nearly a decade and cut its operating profit forecast, hit by a slump in vehicle sales.

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