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Renault splits into 5 businesses to boost profits According to Reuters


© Reuters. FILE PHOTO: A logo on the Renault exhibition space at the Viva Technology conference dedicated to innovation and entrepreneurship at the Porte de Versailles exhibition center in Paris, France June 15, 2022. REUTERS / Benoit Tessier

By Gilles Guillaume and Silvia Aloisi

PARIS (Reuters) – French car manufacturer Renault (EPA:) announced a major overhaul that will help it split its operations across five businesses, deepen its relationship with China’s Geely, and spin off its electric vehicle unit through listed on the stock exchange next year.

At a long-awaited investor pitch on Tuesday, Renault said it aims for an operating profit margin of 8% for 2025 and rising to more than 10% by 2030, from 5 % expected this year.

It also plans to reinstate its dividend from 2023 after a three-year hiatus and generate more than €2 billion in cash annually between 2023-25, growing to more than €3 billion over the next five years.

As a leader in the electric car race, Renault has fallen behind newer, nimble rivals like Tesla (NASDAQ:). After urgently needing state cash during the COVID pandemic, the group is looking to expand its turnaround following losses in 2019 and 2020, while also increasing the valuation of its various divisions.

But big question marks remain about the automaker’s strained relationship with its longtime Japanese partner Nissan (OTC:), as Renault is looking for other outside investors for each of its divisions.

The key plan in the automaker’s strategy is to separate the combustion engine business – which will partner with Geely in a 50-50 joint venture, also announced on Tuesday – from the electric vehicle business, which will listed in the second half of next year.

Nissan is expected to participate in the EV venture, codenamed “Ampere”, along with other investors, although Renault will keep the majority stake.

Negotiations with Nissan have been protracted amid Japanese reservations about sharing technology with others, including a Chinese rival like Geely, sources told Reuters.

Shares of Renault fell 2% at 1254 GMT after falling more than 4% earlier as it gave little detail on the status of discussions with Nissan about the future of their partnership.

Renault CEO Luca De Meo said the group wanted to give the alliance a strong future and a “new opportunity”. But he also says that – as in a marriage – “it’s important that we have our own interests and our own lives.”

The companies had initially set a target of November 15 to reach an agreement, but no announcement is currently expected on that date, according to people familiar with the negotiations.

In addition to the Ampere EV division and the internal combustion engine division, Renault will have three additional businesses – the Alpine sports car brand, financial services and new mobility and recycling operations.

“We are creating independent businesses, focusing on activities that are more structurally profitable, open to outside investments, each built,” De Meo told investors. built on a set of native technologies.

Using a sports metaphor, he compared the “old” Renault to a pentathlon who would struggle to win a gold medal in all five sports.

“By collaborating in its five new businesses with the best partners available,” Renault hopes to win medals in those different sports rather than just being average, he said. in all 5″.

(additional reporting by Maki Shiraki in Tokyo; Writing by Silvia Aloisi; Editing by David Evans)



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