(News Bulletin 247) – The diamond group is one of the rare European automobile groups not to have issued a profit warning. But that didn’t stop its stock price from storming.

Volkswagen, Mercedes-Benz, BMW, Stellantis, Aston Martin. Here is the (long) list of profit warnings that the automotive sector experienced in September.

Obviously, each of these groups was punished by the market after lowering its outlook. Stellantis thus plunged 14.7% on Monday, showing the biggest drop in its young stock market history (the group was born in January 2021 from the merger of PSA and Fiat Chrysler).

The Italian-French-American manufacturer slashed its profitability and cash generation forecasts, with a magnitude that surprised even the most cautious analysts, such as Deutsche Bank.

UBS “believes that the performance of the automotive sector in the coming weeks and months will be limited by deteriorating fundamentals through 2025, regardless of the ‘value’ argument (the fact that automotive groups trade at courses appreciated)” following these multiple warnings on results.

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Absence in China and the United States

Among all its competitors, Renault, for its part, has not lowered its prospects. In the first half, the company even seemed a little ahead of its plan, with an operating margin of 8.1% when the group is targeting at least 7.5% for the whole of 2024. Moreover, the absence of raising targets had been cited by certain analysts to explain the fall in the stock following the announcement of its half-year results.

Renault also has the double advantage of not being present either in China, a region which harms German groups and premium brands due to strong local competition, nor in the United States, where high stocks penalize Stellantis but are starting to also to be important on the Ford side.

However, the diamond group has clearly suffered from a contagion effect and the fears weighing on the entire sector. Its action lost 13% during sessions from Monday to Thursday. This Friday, however, it regained some momentum, gaining 3.45% around 3:20 p.m.

So much so that its action is now moving in the red over the whole of 2024, whereas it had posted a good performance over the first six months of 2024 (+29.6%, the fifth strongest in the SBF 120).

A point of satisfaction in a “ravaged sector”

“The fall in the stock is probably due to the fact that the market fears a warning on results from the group. Because, apart from Ferrari, they are the only ones not to have lowered their outlook,” explained Tuesday to News Bulletin 247 Adrien Brasey, analyst at the Alphavalue research firm.

“Now, while we cannot completely rule out a warning, the company’s management appeared confident during the latest discussions, which was not the case with those of other manufacturers. Moreover, the latest figures on the European market, or 70% of their revenues, show a certain resilience on the part of Renault,” he underlined.

In mid-September, Stifel was rather reassuring about the action, following an event organized by the group. The bank reported in particular that the financial director, Thierry Piéton, estimated that the margin in the second half would mark an improvement over one year, excluding the accounting impacts linked to the deconsolidation of “Horse”, a joint venture launched on May 31 with the Chinese Geely , specialized in thermal engines and whose capital will soon be opened to the Saudi giant Saudi Aramco.

Stifel also underlined that Renault “should do better than the market with its new models”, thanks to 10 launches in 2024 and 8 in 2025. “After rigorous and practical inventory management over the last four quarters, volumes (deliveries) should recover in the third quarter and also constitute a tailwind in 2025,” she wrote. “Renault remains a positive point in a ravaged industry,” concluded Stifel.

UBS, which also attended the same event as Stifel, noted that “the tone (of management, Editor’s note) remains optimistic and confident, which increasingly contrasts with other manufacturers.”

Renault will publish its turnover on October 24, and will then have the opportunity to take stock of its prospects. Confirmation of targets for 2024 could help the market regain appetite for the stock.