(News Bulletin 247) – The diamond group unveiled its annual results this Thursday, with a profit weighed down by an accounting loss on a sale of Nissan shares.

Renault ended 2023 on a high note which allowed it to accelerate its recovery and post record profitability. Over the whole year, the group returned to profit, generating a net profit of 2.2 billion euros, compared to a loss of 354 million euros in 2022 due to the exit from Russia.

However, Renault’s net profit was penalized by an accounting loss of 1 billion euros from sales of Nissan shares representing around 5% of the capital.

The company’s revenues increased by 17.9% excluding currency effects to reach 52.4 billion euros.

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Driven by price increases

Automotive sales alone increased by 16.5% excluding the impact of currencies. Although volumes certainly contributed to this growth, to the tune of four percentage points, lower restocking at dealers nevertheless limited their impact.

The group mainly benefited from its price increases on all vehicles (7.4 points). The “product mix”, i.e. the company’s ability to direct its sales towards more expensive and more recent models, contributed up to one percentage point, thanks in particular to the success of the Austral SUV launched in 2022. Sales to partners such as Nissan and Mercedes supported growth by 2.1 points.

The manufacturer led by Luca de Meo above all displays a record operating margin of 7.9% compared to 5.5% in 2022. According to UBS, analysts expected on average a margin of 7.8%.

It should be noted, however, that this profitability includes an exceptional element, linked to the deconsolidation of the activities of Horse, a division of the group specializing in thermal and hybrid technologies and which will become a joint venture with the Saudi Saudi Aramco and the Chinese Geely.

Excluding the impact of this exceptional item of 482 million euros, the margin stands at 6.9%. The margin for automotive activities alone also stands at a record 6.3% in 2023.

Cash generation exceeded the group’s expectations, amounting to a record €3.02 billion, compared to a target of more than €2.5 billion.

Many launches in 2024

Without too much surprise, Renault is proposing to significantly increase the dividend to 1.85 euros for 2023 compared to 25 cents for the previous year.

Concerning its prospects, the manufacturer seems to be showing a certain caution. It expects an operating margin greater than or equal to 7.5%, which would therefore mark a decline of 0.4 points over one year.

Renault intends to defend its profitability via an impressive and unprecedented number of new vehicle launches, namely ten in total in 2024, including the R5, the electric Scénic and the Rafale.

The group also plans to generate free cash flow of at least €2.5 billion.

Let’s see how the market will react on Thursday to the opening of the Parisian market, while many other companies (Orange, Stellantis, Airbus, etc.) will also have published their results. For now, ADR – a product that allows American investors to bet on foreign groups – is growing by 4.4% on Wall Street.