(BFM Bourse) – The diamond brand clearly exceeds the CAC 40 since the start of the year. As its Capital Market Day looms on Tuesday, the manufacturer still has various means to electrify its action.
In the face of many storms, Renault resist. Since the beginning of the year, the automaker has suffered far less from the CAC 40registering a 0.8% drop in price when the Parisian market’s flagship index lost 12.7% over the same period. This despite the exit of Russiawhich deprived him of about 10% of his income.
At a time when the group is preparing to celebrate Capital Market Day on Tuesday, the diamond brand still has power in its engine to raise the price of its stock. Overview.
> Successful launches of new models
CEO Luca de Meo’s policy of prioritizing value over volume has paid off. This is demonstrated by the latest publication of the group, quarterly turnover, with an increase in revenues (excluding Russia) in one year of almost 22% in the third quarter with a contribution from price increases to an all-time high of almost 13%. The group redirected its volumes to more profitable channels, namely sales to individuals, as opposed to sales to rental companies.
The objectives defined in the “Renaulution” plan at the beginning of 2021 are about to be achieved three years in advance. Renault it should generate an operating margin of at least 5% in 2025. If the diamond group respects the prospects communicated to the market at the end of July, it will reach it this year.
Renault must, however, stay on course as Deutsche Bank expects the wind of price hikes to wear off next year. This will go through new financial targets which are expected to be disclosed on Tuesday. “We would prefer it Renault indicates an “all-season” profitability goal. [c’est-à-dire à l’épreuve de tous les évènements adverses]“, Warns UBS.
The group can count on successful launches so far. The Arkana SUV, marketed last year in Europe, and the Dacia Jogger have so far recorded 60,000 and 65,000 orders since the beginning of the year. The electric Megane E-Tech, a highly strategic vehicle for the group, has collected 37,000 units since its inception in the second quarter. In the period 2023-2025 21 new vehicles of the group will arrive on the market. For Credit Suisse, continued success with new model launches is a catalyst for action.
> Set “Ampere” and “Horse”
Since the beginning of 2022, Renaut had indicated that he was studying this project which consists of the creation of two companies. The first (with the code name “Ampère”) would group its activities of marketing and production of electric vehicles and the second (“Horse”) would be dedicated to the development and production of engines and thermal and hybrid transmissions. The group will present the results of this project on Tuesday.
This measure would not amount to a split because these two entities would each bring together only about 10,000 employees, knowing that Renault it employed more than 110,000 people in 2021 excluding Russia. “Ampère” could go public in the second half of 2023, Renault however, wanting to retain majority control. “Cavallo” could for its part be based abroad e Renault plans not to keep the majority of the capital, thus opening this entity to partners. The press had talked about the end of August in particular discussions with Chinese carmaker Geely and Saudi oil group Aramco.
This potential new organization appears to be satisfying the market. Advances reported by various media have helped raise the Renault share price. In a mid-October note, Stifel estimated that this separation should allow each entity to achieve higher valuation multiples, improve capital allocation and ultimately return to shareholder. In particular, a partial IPO of the “Ampère” perimeter should “crystallize the value and finance future developments” of this company, the design office wrote. Stifel has estimated that “Ampère” could generate more than 40 billion euros in revenue in 2030, almost as much Renault in 2021. The financial intermediary valued the division at € 23.5 per share Renault (7 billion euros in total) against 1.5 EUR for “Cavallo” and € 31 for the rest of the group’s activities, such as sales financing or central functions.
> Rebalance the structure of the alliance with Nissan
This file must not be mentioned directly by the management of Renault On Tuesday, the event is dedicated to the progress of the “Renaulution” plan. But the general manager, Luca de Meo, and the chief financial officer, Thierry Piéton, will probably not escape the questions on this topic.
According to various media including BFM Business, Renault And Nissan they are discussing both a potential entrance to Nissan in the capital of “Ampère” and a rebalancing of the cross holdings between the two groups. The two producers confirmed the first part in a statement in October without explicitly commenting on the second. “Further communications will be made, in due course, by the members of the Alliance”, they indicated.
Right now, Renault holds 43.4% of the capital of Nissan which for its part owns 15% of Renault but without the right to vote. This asymmetry has sometimes been a source of tension on Yokohama’s side. Renault may eventually agree to lower its long-term stake, the Japanese group wants the diamond producer to drop to 15%, according to several media outlets.
Financial analysts have long advocated such a rebalancing. “Too much capital is invested in collaboration Nissan (about 7 billion euros) “while” it is no longer necessary because the cooperation finally works “, judges Stifel. The financial intermediary explains in particular that if Renault agreed to go below 40%. Nissan, the Japanese group would recover its voting rights under the French Commercial Code. “The largest company in the Alliance would therefore no longer see itself as the junior partner,” writes the research department.
According to the latter, Renault it could free up around 2.8 billion euros by lowering its stake to 25%, which could be used, for example, for shareholder return measures. Last month, the Royal Bank of Canada calculated, for its part, that the move from 43.4% to 15% could allow Renault to “monetize” around 4 billion euros. The Canadian bank warned, however, that this amount could very well be reinvested in the group’s electric business rather than being returned to shareholders in the form of a special dividend.
Julien Marion – © 2022 BFM Stock Exchange