Summary
- Renault to adjust Nissan stake value using current share price
- One-off loss of 9.5 billion euros won’t hit dividends, guidance
- Move further weakens decades-old alliance between the two firms
PARIS, (Reuters) – Renault will book a one-off loss of about 9.5 billion euros ($11 billion) on its stake in Nissan Motor, the French carmaker said on Tuesday, writing down its years-long investment in its Japanese partner that is battling slumping sales.
The move is a further loosening of ties between the companies after a two-decade-old alliance, with Renault gradually lowering its stake in Nissan and shifting largely to collaboration in specific manufacturing projects.
Renault currently owns 35.7% of Nissan, with 17.05% held directly and the rest through a trust.
Renault said it would book the one-off charge in its first-half results and that from now on, the value of the holding would be directly based on Nissan’s share price.
The charge will not affect Renault’s full-year financial guidance nor the dividends it pays out, it said, adding there would be no change to operational projects and collaboration between the companies.
Shares in the French company, which is currently seeking a new CEO, were up 0.6% at 1020 GMT, with analysts describing the move as positive.
“The change allows for a clearer reflection of the underlying improvements in Renault’s profitability,” said Morningstar analysts.
Renault, which reports first-half results on July 31, was one of the few automakers not to issue a profit warning last year.
Nissan shares fell 2.4% on Tuesday to 341.8 yen, trading well below the 400 yen mark at which Renault valued the stock when it increased its stake in the Japanese automaker in 2002.
Renault’s 2024 universal registration document showed a carrying value of the Nissan investment of 1,549 yen per share.
Nissan has been hit harder than other automakers by the shift to electric vehicles, having never fully recovered from years of crisis sparked by the 2018 removal and arrest of former chairman Carlos Ghosn.
Facing declining sales and an ageing vehicle lineup, Nissan reported a $4.5 billion net annual loss in the year to the end of March and has declined to give a forecast this year.
It has asked some suppliers to allow it to delay payments to free up short-term funds, Reuters reported on Monday.
The change in accounting for Nissan’s stake will also remove volatility in Renault’s earnings from Nissan’s operational swings, analysts at Oddo added.
($1 = 0.8483 euros)
($1 = 143.2900 yen)
Reporting by Gilles Guillaume. Additional reporting by Miyoung Kim. Writing by Dominique Patton. Editing by Edwina Gibbs, Emelia Sithole-Matarise and Mark Potter
Source: worldautoforum.com
