Renault Plans to Raise Dividend Following Strong Financial Performance
Shares of Renault climbed on Thursday as the French carmaker announced its proposal to increase the dividend per share for the financial year. The proposed dividend of 1.85 euros ($1.99) per share represents a substantial increase from the previous 0.25 euros.
Financial Performance and Outlook
The company recently reported a full-year group operating margin of 7.9%, which is at the high end of its previous guidance. Renault aims to achieve double-digit margins by 2030. Group revenue witnessed a 13% increase to 52.4 billion euros, though net profit slightly missed forecasts.
Renault’s target for 2024 includes a group operating margin equal to or above 7.5% and a minimum free cash flow of 2.5 billion euros, with a focus on 10 upcoming vehicle launches, optimizing cost structure, and accelerating their electric vehicle (EV) and software strategy.
Renault’s Market Share and CEO’s Perspective
Renault’s shares have seen a gain of 2% in the current year. The company’s decision to not publicly list its new electric vehicle and software business, Ampere, contributed to an uptick in January. The CEO, Luca de Meo, referred to the automotive market as “challenging” and expressed cautious optimism, stating that Renault’s guidance was prudent. He also mentioned the expectation of market pressure on electric vehicles and reduction of pricing, but highlighted the positive outlook due to their upcoming 10 vehicle launches.
Investor Reaction and Expert Analysis
Susannah Streeter, the Head of Money and Markets at Hargreaves Lansdown, emphasized that Renault shareholders reacted positively to the dividend proposal and the improvement in operating margins to 7.9%. She acknowledged the challenges in the electric vehicle space where prices have been driven down due to increasing cost-consciousness among motorists and intensified competition.
In summary, Renault’s decision to raise their dividend per share and their strong financial performance have garnered positive attention among investors. The company’s focus on upcoming vehicle launches and electric vehicles contributes to an optimistic outlook, while challenges persist in the competitive automotive market.
