(News Bulletin 247) – The car manufacturer generated a turnover of 11.71 billion euros over the first three months, which is higher than market expectations, thanks to its financing activities. Renault renews its 2024 outlook.

The year 2024 presents itself under the best auspices for Renault. At the beginning of February, the car manufacturer delighted the market with 2023 annual results, marked by solid margins and impressive cash generation.

And today’s publication is supposed to further support the market’s confidence in Renault. The automobile manufacturer announced sales above expectations in the first quarter, and renewed its 2024 objectives as announced last February. However, Renault shares are down 0.8%, at 47.08 euros around 11:50 a.m., but remain up 27% since the start of the year.

“The group’s revenues are higher than expectations but are mainly driven by FinCo (financing activities for Renault car sales, editor’s note). Otherwise, the turnover is only very slightly higher than the consensus, which does not allow not in the action of progress”, especially since it has had an excellent run in recent weeks, analyzes a financial intermediary based in London.

Revenues above expectations

Over the period from January to the end of March, the automobile manufacturer indicated this Tuesday morning that it had generated revenues of 11.707 billion euros, which reached a five-year high. Revenue increased over one year by 1.8% on a reported basis and by 5.9% at constant exchange rates.

Investors were slightly less optimistic about the overall turnover, and were targeting 11.52 billion euros, according to a consensus cited by Stifel.

Concerning its automotive division, its core business, things are getting a little worse. Sales stood at 10.446 billion euros, and fell 0.7% year-on-year. But they remain very slightly above the consensus which stood at 10.39 billion euros.

Revenues included a negative exchange rate effect of 447 million euros, due to the devaluation of the Argentine peso and, to a lesser extent, the Turkish lira. At constant exchange rates, the dynamic is positive over one year, with a 3.6% increase in sales in this division.

Several contrary elements have come to punctuate Renault’s activity. The group certainly benefited from a higher price effect (via more profitable sales channels such as individuals as opposed to rental companies or corporate fleets), which supported the automobile division’s revenues by 4, 1 percentage points. In other words, Renault sold its models for the Renault, Dacia and Alpine brands more expensively. It also sold more products to its partners (like Nissan).

However, the automotive division’s revenues suffered from a negative volume effect of 4.6 percentage points. Renault explains this trend by a destocking of the network of “stronger” independent dealers over the past quarter than in the first quarter of 2023.

“As expected, inventories continued to decline (reaching 530,000 globally), resulting in a negative volume effect (and below consensus expectations),” notes Stifel.

Financing activities (rental with purchase option, long-term rental and auto credit) drove Renault’s growth at the start of the year. Mobilize Financial Services (formerly RCI Bank) saw its turnover exceed one billion euros, at 1.25 billion euros, reflecting an increase of 27.9% over one year, driven by the increase interest rates.

“The little surprise comes from financial services,” adds HSBC, while revenues from this division clearly exceeded expectations, standing at 1.12 billion euros.

2024 forecasts renewed

The outlook for the 2024 financial year is renewed at the end of this quarterly activity update, despite the price war raging in electric vehicles.

On this subject, Tesla has just lowered the price of its various models in several markets around the world. In France, the Model 3 has seen its price reduced by 2,000 to 3,000 euros depending on the version. The aim being for the American manufacturer to give a boost to sales which have been slipping for several quarters.

Renault does not intend to adopt such an aggressive pricing policy, despite a 10.5% decline in sales of electric vehicles on European soil. The diamond brand prefers to defend its profitability, and still expects an operating margin rate of at least 7.5%. This profitability should be supported this year by a wave of launches of new, more profitable vehicles. No less than ten are planned for 2024, including the Scenic E-Tech, the Rafale, the Renault 5, and even a new Dacia Duster. Free cash flow is still expected to be greater than or equal to €2.5 billion.

Renault’s management “is keeping its promises on its policy of ‘value rather than volume’ by setting high prices and focusing on further cost reductions”, appreciates HSBC.

By Sabrina Sadgui with Julien Marion