Wednesday, March 3

Renault closes 2020 with record losses: 8,000 million euros | Economy


Workers in a Renault factory in Moscow (Russia).
Workers in a Renault factory in Moscow (Russia).Mikhail Japaridze / GETTY

Renault’s annual figures are lousy and nobody seeks to make up for them. In fact, they are, “historically”, as the French press agreed to characterize them, the worst ever recorded by the automobile giant: in 2020, one of the main flagships of the French industry recorded losses of 8,008 million euros, a situation derived In large part of the losses caused by its partner Nissan, but also by the fall in its own activity, fully affected by the coronavirus crisis, the company revealed this Friday.

Despite this, the French Government, which less than a year ago warned that Renault could “disappear” and granted it a loan guaranteed by the State of 5,000 million euros, has assured after knowing the results that it “trusts” so much in the new leaders of Renault and the strategy they have presented to overcome a difficult situation that dragged on since before the health crisis dealt the last big blow. The ray of hope is, they assure both from Boulogne-Billancourt and in Paris, in the best performance in the second half of the year, which although it did not come out of the red then, with a negative net result of 660 million euros, considers as “the first step in the recovery” of Renault.

“The Group’s resurrection has begun,” declared its CEO, Luca de Meo, in a meeting with analysts, the newspaper quotes The echoes.

“After a first semester impacted by covid-19, the group has managed to significantly reverse its performance in the second half of the year. This result is the result of the efforts of all employees, the successful acceleration of our cost cutting plan and the improvement of the pricing policy, ”he also stated in the statement issued by Renault presenting the results. De Meo insisted that the priority for the future is to improve “profitability and cash generation”, as announced during the presentation of the strategic plan Renaulution. This project, presented in mid-January, seeks to confirm the change in strategy carried out by the company in the time of Carlos Ghosn, to go definitively “from volume to value”, as De Meo, at the head of the Renault Group, said at the time. since July of last year.

All in all, the results are dizzying. Due to its own problems, in 2020 Nissan weighed down the income statement of its partner Renault, which has 43% of the Japanese company, with 4,970 million euros. With regard to its own activity, the French manufacturer also received a negative operating result of 1,999 million euros, compared to the positive 2,105 million it obtained in 2019. It is true that this operating loss was entirely concentrated in the first half of 2020 and that in the second semester managed to obtain a meager 8 million euros. The operating margin was a negative 337 million euros, 0.8% of its turnover.

The main reason for the Renault debacle is the free fall in car sales, which only reached 2.95 million units. This represents a drop of 21.3% in 2020 (-6.8% in the second half). In turn, this translated into a 21.7% drop in turnover, to € 43,474 million (compared to € 55,537 million in 2019).

For this year, the company doesn’t even dare to set targets. “2021 is going to be difficult, given the uncertainties related to the health crisis and the shortage of electronic components,” De Meo warned.

In spite of everything, Renault considers that it begins to raise the head of the water. As announced, the savings plan of 2,000 million euros in fixed costs presented last May is more advanced than initially planned. In 2020 it was already 60% fulfilled, double what was expected. In January, De Meo announced a new budget cut but assured that it would not be accompanied by layoffs. The goal is to save 2,500 million euros by 2023 and up to 3,000 million by 2025. As a sign of this belt tightening: the board of directors will propose, at the shareholders’ meeting to be held at the end of April, that “dividends should not be paid compared to 2020 ”, he announced this Friday.

By 2023, the Group says it can “confirm” the goals set in its strategic plan Renaulution which aims to achieve an operating margin of more than 3%, something that it already achieved last semester.

Speaking to journalists, the French Minister of Economy, Bruno Le Maire, assured that the Government of Emmanuel Macron continues to “trust” the strategy of Renault, of which the French State is a shareholder, and of its managers. “Renault has announced a transformation plan that is compelling. I am convinced that it will give results in the long term “, he asserted and warned against being impatient with the reforms:” You cannot expect results in a few days or weeks, only in a few months you will see results (…) As a State, we trust strategy, especially in electrification (of vehicles), and we already see that in the second semester the results are better. We must continue there, it is the right direction ”, he added.

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