Renault announces a historic loss of 7.3 billion euros in the first half of the year

Renault announced a record loss of 7.3 billion euros in the first half of Thursday, July 30. A result that the French carmaker explains by the difficulties with its Japanese partner Nissan and the health crisis.

During the first half of the year, the French car giant Renault suffered the heaviest net loss in its history, to 7.3 billion euros, due to the difficulties of the Japanese partner Nissan and the health crisis in connection with Covid-19.

The group, which was already in trouble before the coronavirus pandemic, and which had announced by the end of May 15,000 job cuts worldwide (including 4,600 in France), indicated, on Thursday, July 30, that it waived any forecast of financial results for 2020 introduces uncertainties about health, while promising a recovery.

“The situation is unique, it is not without appeal,” the new CEO, Luca deMeo, commented in a conference call. “I have every confidence in the group’s ability to bounce back,” he added.

The Covid-19 pandemic “had a strong impact on the group’s results during the first half of the year and was added to our previously existing difficulties”, explained on his side Deputy CEO ClotildeDelbos.

The historical loss is mainly due to the contribution from the car manufacturer Nissan, 43% owned by Renault. He punished the diamond group for 4.8 billion euros.

Covid-19: Renault announces the worst loss in its history

A new strategic plan “over six or seven years”

These figures contrast with the French rival PSA (Peugeot, Citroën) which managed to make money in the first half of the year despite the crisis, with a net profit of 595 million euros.

Renault (which also includes the Dacia, Lada, Alpine and Samsung Motors brands) suffers from overcapacity worldwide. He was therefore particularly affected by the fall in the market.

But the manufacturer has planned to reduce its costs by 2 billion euros over three years, including 600 million this year. In January, he announces a new strategic plan “over six or seven years”.

“We are currently touching on the low point of a negative curve that began several years ago,” said LucadeMeo, referring to the race for volumes attributed to former boss Carlos Ghosn, who was pulled out after being arrested in Japan for alleged fraud and who took refuge in Lebanon.

By defining himself as a “man of products”, the new boss, who took office at the beginning of the month, emphasized that he would now “promote value over volumes” and renew the manufacturer’s range by aiming at “profitability linked to the success of our models” .

PSA model

He acknowledged that the strategy of Carlos Tavares, who took over PSA from the brink of bankruptcy and spectacularly reversed it from 2014, was an “inspiration”. Like its competitor, Renault now wants to focus “on profitable and growing market segments”.

He believes that the potential of the diamond group was “underestimated from the outside” and praised the quality of the new E-TECH hybrid models and the new electric platform for the alliance with Nissan and Mitsubishi, top industry according to him.

The city car Clio and the small SUV Captur “are number one in their segment”, the Dacias sell well, he said. Zoe’s sales have increased by 50%, enabling Renault to become Europe’s leader in electronics, a thriving niche.

“We are not naive and we know that a recovery will take time,” said Delbos. “We believe the third quarter will be good but we have no visibility in the fourth.”

During the first six months of the year, sales fell by 34.3% to EUR 18.4 billion. The operating loss reached 2 billion.

This figure includes an impairment loss of EUR 445 million to take into account “volume revisions” revised “down” for certain vehicles “, as well as provisions for restructuring costs of EUR 166 million. “mainly linked to the early departure plan in France”.

Finally, the group’s failure in China is reported in the accounts with EUR 153 million in capital loss on the sale of Renault’s shares in the joint subsidiary with DongfengMotorCorporation. Renault had announced that it was abandoning the sale of cars with internal combustion engines in this country to focus on commercial vehicles and electric vehicles.

On the Paris Stock Exchange, Renault shares lost 3.46% around 11:30 to 23.15 euros, in a market down 1%.

With AFP