EARNINGS SEASON IS HERE. GROUPE RENAULT UNVEILS Q1 2020 REVENUES

Earnings season is here and there is a huge expectation from buyers to see how the coronavirus has impacted the global economy and businesses. At this time, the French car-maker Groupe Renault – led by interim CEO Clotilde Delbos – unveils Q1 2020 revenues yesterday, April 23, 2020. By looking at the results, it is absolutely clear that coronavirus or COVID-19 has started to take its toll on the performance of the global Automotive Industry and RENAULT would not be an exception. Let us not forget the delicate situation of the company, since it incurred losses after 10 years.

If you are a (potential) investor in RENAULT, a lover of the Automotive Industry or simply a curious person, I would definitely recommend you to have a deeper look into the official Q1 figures reported by Groupe Renault. Do not miss it out!

GROUPE RENAUT´S SALES RESULTS

First things first: the Global Automotive market has experienced a decrease of 24.6% compared to Q1 2019. As a consequence of the coronavirus, the production and commercial activities have been shut down in most countries during the month of March at RENAULT. In summary, RENAULT experienced a global sales drop of 25.9% to 672,962 units, vs. 908,402 in Q1 2019. We can easily see how Groupe Renault has been more negatively impacted than the average of the Global Automotive market.

Renault first quarter 2020Source: GROUPE RENAULT Q1 2020 revenues

When looking at the most important market of the Group – Europe with approx. 50% of total volume – the demand has been reduced by 26.2%. While Groupe RENAULT´s sales has been reduced to a greater extent than the Automotive Industry, by 36% to 321,756 units, vs. the first quarter of 2019. A good example of that is DACIA, brand of the Group which has seen a very strong impact in its registrations, accounting a decline of 44.5%.

Renault first quarter 2020

                                                        Source: GROUPE RENAULT Q1 2020 revenues          TIV: Total Industry Volume

Outside Europe, group sales were down by 13.4% in Q1 2020 vs. Q1 2019. Some important markets have also been impacted very negatively like Algeria (-88%), China (-46%), Argentina (-36%), and India (-23%), among others.

There are also good news given the successful new models launched end of last year, letting some countries have shown a positive performance compared to Q1 2019, These countries are Russia (+2%) and Turkey (+41%).

FIRST QUARTER 2020 REVENUES BY OPERATING SECTOR

Groupe RENAULT reported a total revenue of 10,125 million € (-19.2% vs. Q1 2019). At this point, let us see how the situation looks like by operating sectors

Renault revenue 2020 first quarter

Source: GROUPE RENAULT Q1 2020 revenues

  • Automotive (excl. AVTOVAZ) revenues -21.3%, to 8,591 million €, mainly due to an accused decrease in volumes (-14.1 pts). Forex effects from Argentinian Peso and the Brazil Real currencies have been partially compensated by price increases.
  • AVTOVAZ (RENAULT holds 68% of the largest car manufacturer in Russia), has a positive contribution of 701 million € (-8.6% vs. 2019), including a positive currency effect of 14 million €.
  • Mobility Services is shown for the first time as a separate and specific operating sector in Q1 2020. Its contribution to Group revenues amounted to 6 million €.
  • RCI Banque (sales financing), whose revenues amounted to 827 million € in Q1 2020 (-2% vs. Q1 2019). Negative FX effect coming from the Argentinian Peso and the Brazilian Real currencies.

 

Renault revenue 2020 first quarter

Source: GROUPE RENAULT Q1 2020 revenues

TOTAL GROUP´S SALES PASSENGER CARS + LIGHT COMMERCIAL VEHICLE BY BRAND

As mentioned before, the total Groupe RENAULT´s sales in 2020 is 672,962 units against  908,402 in 2019. It turns out important to highlight that the decline in the Group´s sales has impacted more negatively on the LCV side (-32.9%) than on PC (-24.5%).

DACIA (-40.1%) and JINBEI&HUASONG (-55% for PC) show the worst results against Q1 2019. In fact, the complete lockdown of China has been the main driver of such sales decrease on JINBEI&HUASONG, a joint venture in the Asian giant in which RENAULT holds a 49% stake.

Still, it wasn´t all bad news. South Korea seems to have been able to manage the COVID-19 better than other countries from the beginning, showing a positive impact on RENAULT SAMSUNG MOTORS sales figures (+24.5%) vs. Q1 2019. Such good news has been possible thanks to the new launch of the RENAULT XM3 in South Korea end of last 2019.

Renault revenue 2020 first quarter

Source: GROUPE RENAULT Q1 2020 revenues

RENAULT´S BOARD OF DIRECTORS

Before the COVID-19 outbreak, the situation was already critical for RENAULT. In addition to that, factories have been shut down in most countries and there is still a lot of uncertainty for what is coming next. For those reasons, RENAULT´s Board of Directors has decided to suspend the distribution of the previously agreed dividend of 1.1.-€/share. In terms of dividend yield, this might not be the best year for the investors, but is it now the right moment to buy? As of April 23rd, RENAULT´s stock quotes at around 16.-€/share.

Being asked about the outlook 2020, the Board of Directors unveils that it is still impossible to assess the final impact of this pandemic on the Group´s results. As soon as there more details, RENAULT has committed to communicate the new guideline.

Similarly, Clotilde Delbos has confirmed that the promised 2-billion € cost-reduction plan is on-going and will be accomplished within 2020, despite the COVID-19 threat. Being asked about further details of how exactly the restructuration plan will be conducted (closing of factory plants, dismissal of employees, etc.) the interim CEO has not provided deeper details yet.

CONCLUSIONS

We are currently facing an unprecedented crisis like no other before. In the same ways, there are several guessworks about the real source of the virus – from biological mutations to political conspiracies.

What is exactly this both unknown and lethal virus, which has impacted on our lives? What or who has created and globally spread the virus? To be honest with you, most likely we will never know the absolute truth and trust me… Maybe that is better!

The COVID-19 has obligated many companies to stop their production and send employees home. Some of them are either doing home office or being fired until the situation becomes stable. At RENAULT, in addition to the well-known economic problems, the effect of COVID-19, has intensified the bearish trend of the stock, burning more than 73% of the value so far. Is it a good time to buy-in?

Some institutions like macroaxis.com state that RENAULT has a probability of bankruptcy of 50%… The French Government has also started conversations about nationalizing companies like RENAULT or PSA Group. Let us not forget that the French Government is currently the major shareholder of RENAULT (15,01%), holding 28,67% of the rights to vote.

It is now your time to assess whether RENAULT will be bankrupted, nationalized, or will simply revive as the great French car-maker! I wish you great investment decisions!

See you soon my dear car lover! 🙂

Juan Carlos Hoyos Saez Administrator
Passionate about Cars, Driving and Business. My objective is to inspire more and more car lovers. Racing, Kickboxing, traveling, and healthy life. Sub-project leader as a Material Cost/Project Controller, Daimler Trucks Asia (Tokyo, Japan).
follow me
Total Page Visits: 78 - Today Page Visits: 1

0 Comments

Leave a Reply

Your email address will not be published. Required fields are marked *

 

error

Did you enjoy this post at Auto Charlie? Please spread the word :)

LinkedIn
Share
Instagram
Facebook
Facebook