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MarketScreener Homepage  >  Equities  >  Euronext Paris  >  Renault    RNO   FR0000131906

RENAULT

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Renault to Cut Over 14,000 Jobs -- WSJ

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05/30/2020 | 02:48am EDT

By Nick Kostov

PARIS -- Renault SA is planning to slash production capacity by a fifth and cut more than 14,000 jobs around the world, as the French auto giant grapples with a prolonged slump in the global car market.

The company said Friday that measures would include restructuring its plants in France, reducing the number of parts it uses in its vehicles and cutting marketing expenses. It hopes to save EUR2 billion ($2.2 billion) in fixed costs a year by 2022.

The planned moves, similar to cuts announced at partner Nissan Motor Co. on Thursday, represent an effort to downsize the company after a bid to expand sales around the world never came to pass. Renault had hoped to sell more than 5 million cars a year by 2022, but last year sold less than 3.8 million.

"We thought too big in terms of sales. We have structured ourselves for a company size that we have never achieved," said Clotilde Delbos, Renault's acting chief executive.

Global auto sales peaked in 2017 and have been declining since. More recently, the coronavirus pandemic has exacerbated auto makers' struggles.

Renault has also had to grapple with management upheaval following the 2018 arrest of former CEO Carlos Ghosn on charges of financial misconduct, which he denies. Mr. Ghosn's successor lasted less than a year in the job before being pushed out. The company has struggled to regain its footing, and last year reported its first annual loss in a decade.

Reflecting current uncertainty, Renault executives have declined to make any financial predictions for 2020.

Earlier this week, Renault and its partners Nissan and Mitsubishi Motors Corp. announced they would divide up the global car business, aiming to cut duplicate spending to save billions of dollars a year. That plan allows Renault to design small cars and compact SUVs for its partners, while leaning on its partners for vehicles it is less good at, like larger SUVs.

On Friday, Renault said it plans to cut production costs by roughly EUR650 million, engineering costs by EUR800 million and find EUR700 million in savings on marketing expenses and support functions.

However, those plans are still in draft form. Renault will now start discussions with unions and local authorities. The company's incoming chief executive, Luca de Meo, is expected to come up with a new product strategy to present around the end of the year. The former Volkswagen AG executive was appointed in January but won't start in the job until July because of a noncompete provision.

The plan is already generating friction, with workers at Renault's plant in Maubeuge in Northern France going on strike on Friday, according to union officials. That plant produces small vans for the European market.

In all, Renault said it would cut around 4,600 jobs in France, with more than 10,000 jobs cut in the rest of the world. Four production sites in France, including parts factories, will be under review and the company is also planning to reverse course on planned capacity increases in Morocco and Romania and shrink gearbox manufacturing world-wide.

Overall, the plan -- set to cost around EUR1.2 billion to implement -- is expected to reduce Renault's capacity to produce vehicles by almost 20% to 3.3 million annually.

Renault shares fell 5% on Friday but are still up around 20% for the week. Investors have cheered Renault's moves, as well as the French government's plans to get consumers buying cars again by subsidizing the purchase of electric and hybrid vehicles.

The French state has also pledged to support Renault by backing a EUR5 billion credit facility to help it ride out the pandemic. Ms. Delbos, the interim CEO, said that agreement is expected to be finalized in the coming days. However, French President Emmanuel Macron has said the state won't sign off on the credit facility until the company and unions reach an agreement over some of its plan to reshape its workforce in France.

Write to Nick Kostov at Nick.Kostov@wsj.com

 

Stocks mentioned in the article
ChangeLast1st jan.
DRAFT INC. 1.52% 1071 End-of-day quote.0.00%
LINE CORPORATION -0.54% 5500 End-of-day quote.2.80%
NISSAN MOTOR CO., LTD. -2.27% 374.8 End-of-day quote.-41.08%
RENAULT 3.77% 22.415 Real-time Quote.-46.86%
THE GLOBAL LTD. -3.30% 205 End-of-day quote.-56.48%
THE NEW HOME COMPANY INC. 2.16% 3.31 Delayed Quote.-28.97%
WORLD CO., LTD. -5.40% 1420 End-of-day quote.-47.23%
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Financials
Sales 2020 43 697 M 49 360 M 49 360 M
Net income 2020 -5 008 M -5 657 M -5 657 M
Net Debt 2020 798 M 902 M 902 M
P/E ratio 2020 -1,27x
Yield 2020 0,42%
Capitalization 6 034 M 6 827 M 6 816 M
EV / Sales 2019
EV / Sales 2020 0,16x
Nbr of Employees 179 565
Free-Float 62,0%
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Mean consensus HOLD
Number of Analysts 21
Average target price 27,61 €
Last Close Price 22,42 €
Spread / Highest target 306%
Spread / Average Target 23,2%
Spread / Lowest Target -55,5%
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Managers
NameTitle
Luca de Meo Chief Executive Officer
Jean-Dominique Senard Chairman
Clotilde Delbos Chief Financial Officer & Executive Vice President
Pascale Sourisse Independent Director
Benoît Ostertag Director
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