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Renault Raises Profitability Targets In Business Overhaul

Renault

French car maker Renault on Tuesday announced a major overhaul that will see it separate its activities in five businesses, deepen ties with China’s Geely and spin off its electric vehicles unit through a stock market listing next year.

Renault, ahead of a long-waited investor presentation on Tuesday, said it targeted operating margins of 8% for 2025 and rising to more than 10% in 2030, from 5% expected this year.

It also said it plans to reinstate dividends from next year after a three-year hiatus, and aims to generate more than 2 billion euros of cash a year between 2023-25, growing to more than 3 billion euros in the following five years.

The main plank of the car maker’s strategy is separating its combustion engine business – which will be housed in a 50-50 joint venture with Geely, also announced on Tuesday – from its electric vehicle unit, to be listed in the second half of next year.

Renault’s long-standing partner, Japan’s Nissan is expected to take a stake in the EV venture, codenamed “Ampere”, alongside outside investors, though Renault will keep a majority stake.

However, talks with Nissan are dragging on, amid Japanese reservations about sharing intellectual property with others, including a Chinese rival like Geely, sources have told Reuters.

Shares in Renault fell more than 4% as it gave no details on the state of play of talks with Nissan on the future of their partnership.

The talks have one week remaining to meet a Nov. 15 target the companies had set to reach a deal, according to people with knowledge of the talks.

Aside from the Ampere EV unit and the combustion engine venture, called “Horse”, Renault will have an additional three businesses – the Alpine sports-car brand, financial services and new mobility and recycling activities.

“We are creating independent businesses, focused on structurally more profitable activities, open to external investments, each of built around an indigenous set of technologies,” said Renault CEO Luca De Meo.

Using a sports metaphor, he compared the “old” Renault to a pentathlon athlete who would struggle to win gold medals in all five sport specialties.

By partnering in each of its new 5 businesses with the best available partners, “Renault hopes to win medals in those different sports instead of remaining at an average level in all 5,” he said.

(Reporting by Gilles Guillaume; Writing by Silvia Aloisi;Editing by Sudip Kar-Gupta and David Evans)

Gilles Guillaume
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