Renault shares rallied as investors cheered a colossal dividend increase and substantial margin gains, the latest sign the French carmaker’s turnaround under chief executive Luca de Meo is bearing fruit. The company, whose stable includes the low-cost Dacia and sporty Alpine brands, posted a full-year 2023 net profit slightly below forecasts but reported margin and revenue gains and offered more cash to investors with a considerable dividend increase. “This was an imposing set of results and, in the wake of the market reaction, investors feel encouraged by progress,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
Renault’s operating margin rose to 7.9% from 5.5% in 2022, and the company stood by its target of double-digit margins by 2030. The company has benefited from the success of new vehicles, including the Renault Megane E-TECH electric and Dacia Jogger, as well as price increases. It also has a better mix of more profitable cars and a lower cost base after shrinking its vehicle range and refocusing on its most profitable markets and models.
Its boosted earnings and dividend were enough to lift the Renault share index to its highest since July. The stock was up 6% at 0945 GMT, outpacing the 0.9% rise in Paris’ CAC 40 index.FCHI. The benchmark’s gains were also aided by a rebound in oil prices after falling to six-month lows.
Investors also welcomed Renault’s 2024 guidance and reassurances that it can weather a volatile global economy and car price wars. The company aims to boost its operating margin to around 7.5% this year, up from about 7.4% in 2022.
It expects to cut production costs per car by 30% for thermal vehicles and 50% for electric ones between now and 2027. It aims to reach sales of 10 electric cars this year, which will help it to achieve its 2020 target of 20% of its total sales in Europe.
The company also has a lot of cash on its balance sheet and plans to return some to shareholders. In addition to the hefty dividend increase, it said it would propose a further buyback of up to 3 billion euros.
