December 6, 2022

Bobbys Brane

Bobbys Brane – Business & Tech Blog

Renault raises planned operating margin goal, to reinstate dividend By Reuters

2 min read


© Reuters. FILE PHOTO: A logo on the Renault exhibition space at the Viva Technology conference dedicated to innovation and startups at Porte de Versailles exhibition center in Paris, France June 15, 2022. REUTERS/Benoit Tessier

By Gilles Guillaume

PARIS (Reuters) -French car maker Renault (EPA:) plans to raise operating margins to 8% by 2025 and reinstate dividends from next year after a three-year hiatus thanks to an overhaul of its business that includes spinning off its electric vehicle unit.

Renault, ahead of a long-waited investor presentation on Tuesday, set the 8% goal for 2025, with this rising to more than 10% in 2030, from 5% expected this year.

It also aims for an operating cash flow of more than 2 billion euros a year between 2023-25 from more than 1.5 billion this year, rising to more than 3 billion euros in the following five years.

But the group still needs to give details about its electric vehicles unit, in which Nissan (OTC:) is expected to take a stake whose size is still being discussed, and a separate combustion engine business which it said on Tuesday it would split 50-50 with Chinese rival Geely.

The electric vehicles business is due to be spun off via a market listing next year, it said.

Renault is pursuing a complex two-pronged restructuring. On one hand, it is aiming to revamp its alliance with Nissan and convince the Japanese automaker to invest in a new electric car unit called Ampere.

At the same time, it also plans to separate out its gasoline-car business, code-named “Horse”, selling a large part of it to Geely.

Investors will be looking for more details on the state of play of the process on Tuesday when Renault Group Chief Executive Luca de Meo delivers an update on strategy and financial projections. But details have been sketchy so far, and Renault’s statement on Tuesday morning only said discussions with Nissan were ongoing.