The French car manufacturer Renault suffered in the first half of the year the heaviest net loss in its history, at 7.3 billion euros, weighed down by its Japanese partner Nissan and the health crisis, he announced Thursday, July 30 in a statement. Over 2019 as a whole, it had already suffered a much smaller loss of 141 million, its first in ten years, for group sales of 55 billion euros.
The uncertainty is such that the group “believes that it is unable to provide a reliable forecast of results for the year”. Renault, already in difficulty before the pandemic due to the coronavirus, announced at the end of May 15,000 job cuts worldwide.
“The situation is unprecedented, it is not without appeal,” commented new CEO Luca de Meo, who took office earlier this month. “I have every confidence in the group’s ability to bounce back,” he added, quoted in the statement. Its drastic savings plan amounts to two billion euros over three years, and intends to reduce its global production capacity to 3.3 billion, turning its back on the ambitious volume strategy carried by former CEO Carlos Ghosn, who fell out of favor in the fall of 2018.
In June, in the face of the difficulties, the government agreed to grant the historic builder a state-guaranteed loan of 5 billion euros. In an interview with Le Monde, its new president, Jean-Dominique Sénard, had defended the plan to cut jobs because of the “competitive gap between Renault and its main competitors” which “seriously threatens the future of the group”. At the end of June, French-speaking Italian Luca de Meo took charge of Renault.
Losses also caused by partner Nissan
The historic loss is mainly explained by the contribution of the car manufacturer Nissan, in which Renault owns 43% of the capital. This participation penalized the diamond group to the tune of 4.8 billion euros. On Tuesday, Renault’s Japanese partner, Nissan, announced a net loss of 670 billion yen in its 2020-2021 fiscal year, or 5.4 billion euros, similar to that suffered in 2019-2020.
Renault’s colossal losses contrast with the results of French rival PSA (Peugeot, Citroën) which managed to make money in the first half despite the crisis, with a net profit of 595 million euros.
But Renault, which also brings together the brands Dacia, Lada, Alpine and Samsung Motors, suffers from production overcapacity worldwide. He was particularly struck by the fall in the market linked to the health crisis. Turnover plunged 34.3% in the first six months of the year, to 18.4 billion euros. The operating margin fell sharply in the red, at -1.2 billion euros. Renault estimates the negative impact of the health crisis at 1.8 billion. This margin was positive at 1.7 billion euros in the first half of 2019.
The manufacturer has announced asset write-downs for 445 million euros, in order to take into account “revised volume assumptions” “for certain vehicles”, as well as provisions for restructuring charges for 166 million euros. euros “mainly linked to the early departure plan in France”.
Finally, the failure of the group’s strategy in China is also noted in the accounts, with 153 million euros of capital loss on the sale in this country, a charge linked to the sale of Renault’s shares in its joint subsidiary with Dongfeng Motor Corporation. Renault had announced that it was abandoning the sale of combustion-powered cars in China to focus on utility and electric vehicles.