Renault restores dividends thanks to ‘cleaned fundamentals’

FRENCH carmaker Renault announced a dividend for the first time in four years, as its ongoing revamp is starting to bear fruit, with better-than-expected operating margins.

Though the company swung back to a loss due to its withdrawal from Russia, its group operating margin for 2022 doubled from the previous year to 5.6 per cent, thanks to a strategy that focused on new launches, electric vehicles (EVs) and fewer discounts, it said on Thursday (Feb 16).

“Renault Group’s fundamentals have been thoroughly cleaned up, and there will be no turning back,” chief executive Luca de Meo said. “(The) 2023 financial outlook and the return of a dividend illustrate this.”

Renault, which is revamping its 24-year-old alliance with Nissan, is now targeting a group operating margin of 6 per cent or more this year.

It also proposed a dividend of 0.25 euros (34 Singapore cents) per share – the first since a payout of more than three euros per share in 2019 – to be approved at the annual general meeting on May 11.

Renault’s automotive operational free cash flow, which is under scrutiny from analysts, reached a record 2.1 billion euros last year, beating a 1.68-billion-euro analyst consensus provided by the company.

The carmaker, which had returned to profit in 2021 after two years in the red, said that net income without the disposal of its former Russian unit Avtovaz rose by 1.1 billion euros from 2021 to 1.6 billion euros.

Renault sold its majority stake in Avtovaz to the Russian state last year, reportedly for only one rouble, but with a six-year option to buy it back.

Under a deal announced this month, Renault will cut its stake in Nissan to 15 per cent from 43 per cent, in a reboot of their long and sometimes contentious alliance. The lopsided relationship between the two carmakers was deeply strained by the 2018 arrest of its architect and former chairman, Carlos Ghosn, amid a financial scandal.

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