Renault reports first annual profit in three years

Renault reported its first annual profit in three years on Friday and said finance chief Clotilde Delbos would move to lead its car sharing and data business full time as it steps up the shift to an electric and greener future.

The company, announcing its turnaround was ahead of plan and it would repay pandemic-era state loans early, also said it might set up a separate entity for its internal combustion engine and hybrid cars to highlight its electric ambitions.

Rocked by the 2018 arrest of Carlos Ghosn, the architect of its alliance with Japan's Nissan, Renault was then hit hard by the Covid-19 pandemic.

But new chief executive Luca de Meo responded with a “Renaulution” plan to cut costs and emphasise value over volumes, which is now bearing fruit, allowing the company to focus on catching rivals like Tesla and Volkswagen in electric cars.

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Last month, Renault and Nissan said they would work more closely together on electric vehicles, as they detailed a five-year, $26 billion (€22.9 billion) investment plan. The Renault brand aims to be fully electric by 2030.

Sources familiar with the matter told Reuters that Nissan and other alliance partner Mitsubishi Motors were only recently informed that Renault might move its internal combustion engine and hybrid operations into a separate entity.

But they said in almost identical emailed statements to Reuters that they “believe this step to be a preparation for the next stages of the Renaulution plan,” adding they would “continue to collaborate as an alliance partner.”

Asked whether the plan might change the alliance structure, Mr de Meo said: “It’s a project that on paper we are capable to do on our own, we don’t need anyone to do it, but obviously we will leave the door open to our partners in case they are interested in making the company’s structure evolve.”

Renault also said its finance chief of six years, Clotilde Delbos, would move to lead full-time its Mobilize business, part of its strategy to achieve carbon neutrality in Europe by 2040. She will continue as deputy to Mr de Meo and be succeeded as finance chief by her deputy, Thierry Pieton.

Back in the black

Renault reported a bigger than expected net profit of €888 million for 2021, and an operating margin of 3.6 per cent. The “Renaulution” plan had aimed for a margin of above 3 per cent in 2023.

The company cut fixed costs by €2 billion between 2019 and 2021, one year ahead of plan.

Helped by the improved finances, Renault said it aimed to repay the €4 billion of state aid it received during the pandemic by the end of 2023, ahead of the 2024 deadline.

It did not propose a dividend for 2021, while it prioritises the turnaround plan and repaying the state loan.

For this year, the company is targeting an operating margin of more than 4 per cent, and an automotive operational free cash flow of at least €1 billion.

Jefferies analysts applauded the progress on profitability, and said the outlook should be considered “a floor”. - Reuters