Renault restores dividends on improving outlook

PARIS -- Renault announced a dividend for the first time in four years, flagging improving margins and earnings as well as a full order book as its ongoing revamp starts to bear fruit.

Last year, Renault swung back to a loss with the hit from its withdrawal from Russia but group operating margin doubled from the previous year to 5.6 percent as it focused on new launches, electric vehicles and fewer discounts.

"We are out of the emergency room and back in the game, ready to fly and to race," CEO Luca de Meo said on an analyst conference call on Thursday after the automaker reported full-year results.

Renault is now targeting a group operating margin of 6 percent or more this year, above analyst expectations of 5.5 percent.

The company 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.

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 automaker, 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  to the Russian state last year, reportedly for only one ruble but with a six-year option to buy it back.

Earlier this month Renault signed a landmark deal to reshape its troubled alliance with Nissan. As part of the agreement Renault will cut its stake in Nissan to 15 percent from 43 percent. The lopsided relationship between the two automakers was deeply strained by the 2018 arrest of its architect and former Chairman, Carlos Ghosn, amid financial scandal.

The agreement will also see Nissan buy a stake of up to 15 percent in Renault's electric vehicle business Ampere. Renault plans an initial public offering of the carved-out electric-vehicle business in Paris as soon as the second half this year, depending on market conditions.

Full order book

Renault has been revamping its model lineup including higher-returning specs. Orders for new models such as the all-electric Megane e-tech, Arkana and Dacia Jogger and high prices helped boost automotive revenue last year, Renault said.

Orders at the end of last year for Europe were equivalent to three-and-a-half months of sales, the company said.

Last year, semiconductor shortages shaved Renault's production by about 300,000 vehicles with automakers struggling to source enough components. Renault, like its peers, has been selling fewer vehicles at higher prices as factories ground to a halt.

Automakers have been pointing at stretched order books to cushion any slowdown but there are questions over when consumers, who are being hit by a cost-of-living crisis might start to cancel on long-standing deals.

While microchip shortages are easing, Renault still faces logistics troubles paired with a weakening outlook in Europe, its mainstay market.

De Meo said the environment will remain challenging for the car industry in 2023, mainly surrounding supplies and logistics.

De Meo is moving ahead with a split of the business in five units as he seeks outside investors to help fund a costly shift to electrification.

This month’s agreement with Nissan will also allow the company to proceed with plans to work with new partners, such as China’s Zhejiang Geely Holding.

Renault's stock is up 38 percent year-to-date, the top performance in Europe’s Stoxx 600 Automobiles & Parts Index, giving Renault a market value of 12.8 billion euros.

Bloomberg contributed to this report