Renault restores dividends thanks to 'cleaned fundamentals'

BOULOGNE-BILLANCOURT, France, Feb 16 (Reuters) – French carmaker Renault (RENA.PA) announced a dividend for the first time in four years as its ongoing revamp starts to bear fruit with better then expected operating margins.

Though the company swung back to a loss with the hit from its withdrawal from Russia, 2022 group operating margin doubled from the previous year to 5.6% thanks to a strategy focused on new launches, electric vehicles and fewer discounts, it said on Thursday.

“Renault Group’s fundamentals have been thoroughly cleaned up and there will be no turning back,” Chief Executive Luca de Meo said in a statement. “(The) 2023 financial outlook and the return of a dividend illustrate this.”

Renault, which is revamping its 24-year old alliance with Nissan (7201.T), is now targeting a group operating margin of 6% or more this year.

It proposed a dividend of 0.25 euros per share – the first since a more than 3 euros per share payout in 2019 – to be approved at the annual general meeting on May 11.

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Renault’s automotive operational free cash flow, under scrutiny from analysts, reached a record 2.1 billion euros ($2.25 billion) last year, beating a 1.68 billion euro analyst consensus provided by the company.

The carmaker, which had returned to profit in 2021 after two years in the red, said net income without the disposal of its former Russian unit Avtovaz rose by 1.1 billion euros from 2021 to 1.6 billion euros.

Renault sold its majority stake in Avtovaz (AVAZI_p.MM) to the Russian state last year, reportedly for only one rouble but with a six-year option to buy it back.

Under a deal announced this month, Renault will cut its stake in Nissan to 15% from 43% in a reboot of their long and sometimes contentious alliance.

The lopsided relationship between the two carmakers was deeply strained by the 2018 arrest of its architect and former chairman, Carlos Ghosn, amid financial scandal.

The agreement, which came after months of tense talks, will also see Nissan buy a stake of up to 15% in Renault’s electric vehicle business Ampere.

($1 = 0.9341 euros)

Reporting by Gilles Guillaume
Writing by Ingrid Melander
Editing by David Goodman

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