Renault splits into 5 businesses in drive to boost profit

  • Renault will be split into five businesses in a major overhaul
  • Detach the EV unit to form a joint venture with Geely
  • Shares fall amid lack of progress in talks with Nissan

PARIS, NOVEMBER 8, ARMENPRESS. French carmaker Renault ( RENA.PA ) has announced a major overhaul that will see it separate its operations into five businesses, deepen ties with China’s Geely and spin off its electric car unit via a stock exchange listing. the year.

In a long-awaited investor presentation on Tuesday, Renault said it aimed for an operating margin of 8% by 2025 and to reach more than 10% by 2030, up from 5% expected this year.

It also plans to resume dividends from 2023 after a three-year hiatus and generate more than €2 billion in cash a year from 2023-25, rising to more than €3 billion over the next five years.

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Renault, an early mover in the electric car race, has fallen behind newer, faster rivals like Tesla. After needing emergency government cash during the coronavirus pandemic, the group is looking to extend the turnaround after losses in 2019 and 2020 and raise the valuation of its various parts.

But big questions remain over its strained relationship with longtime Japanese partner Nissan as Renault looks for other outside investors for each of its divisions.

A key focus of the automaker’s strategy is to separate its combustion engine business, which will partner with Geely in a 50-50 joint venture also announced on Tuesday, from the electric vehicle unit, which will be launched in the second half of next year.

Nissan ( 7201.T ) is expected to take a stake in the EV venture, codenamed Ampere, along with other investors, although Renault will retain a majority stake.

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A logo in the Renault exhibition area at the Viva Technology conference dedicated to innovation and startups at the Porte de Versailles exhibition center in Paris, France, June 15, 2022. REUTERS/Benoit Tessier

Talks with Nissan are dragging on amid Japanese reservations about sharing the technology with others, including Chinese rival Geely, sources told Reuters.

Shares in Renault were down 2% by 1254 GMT after falling more than 4% earlier as it gave few details on the state of discussions on the future of its partnership with Nissan.

Renault chief executive Luca De Meo said the group wanted to give the alliance a strong future and “a new opportunity”. But she also said that, as with marriage, “it’s important for us to have our own hobbies and our own lives.”

The companies had initially set a Nov. 15 target for a deal, but no announcement on that date is now expected, according to people familiar with the negotiations.

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In addition to the Ampere EV unit and the combustion engine division, Renault will have three other businesses: the Alpine sports car brand, financial services and the new mobility and recycling activities.

“We are creating independent businesses focused on structurally more profitable activities, open to external investment, each built around indigenous technologies,” De Meo told investors.

Using a sports metaphor, he compared the “old” Renault to a pentathlon athlete who would compete to win gold medals in all five sports.

By partnering with the best available partners in each of its 5 businesses, “Renault hopes to win medals in those different sports instead of being average in all 5,” he said.

Additional reporting by Maki Shiraki in Tokyo; Writes Sylvia Aloise; Editing by David Evans

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