PARIS – Renault SA’s new chief executive plans to stick to the strategy set by his predecessor, after last year’s profit dropped due to lower contributions from Nissan Motor Co., highlighting the importance of the car makers’ alliance.
Thierry Bollore, who took the top job at Renault in January amid a scandal that has landed former CEO Carlos Ghosn in prison, said the goal of making the alliance “irreversible” remains. Bollore also plans to stick to a mid-term strategy developed under Ghosn, he said.
“All of us in the alliance want more alliance, better alliance, more efficient alliance,” he said Thursday.
Renault should sell some of its shares in Nissan to rebalance the cross-shareholding arrangement, “reduce uncertainty and firm up relations,” said London-based brokerage Evercore ISI. Currently, Renault holds 43 percent in Nissan, while Nissan holds 15 percent in Renault with no voting rights.
Net profit last year fell more than a third to 3.30 billion euros ($3.73 billion) from 5.21 billion euros a year ago, mainly because of a lower contribution from Nissan. The Japanese partner contributed 1.51 billion euros to the results, compared with 2.79 billion euros a year earlier, when it booked a benefit from United States tax reform.
Ghosn, who was Renault’s CEO from 2005 until this year, was arrested by Japanese prosecutors in November, after Nissan shared details of an internal investigation into alleged financial misconduct. Ghosn, who remains in a Tokyo prison, has denied the charges.
Responding to a question about mistrust between the companies, Bollore said the companies will make sure “the disturbances won’t reach the operational level.”
The widening crisis around Ghosn and Renault’s alliance with Nissan comes at an already challenging time for global auto makers who have seen their results hammered by trade tensions, slowing demand in China, the world’s largest market for cars, as well as tightening emissions rules in Europe and high investments into electric cars and other future technologies.
Renault performed strongly, despite the deteriorating market environment, Bollore said.
“The commercial and financial results demonstrate the group’s resilience and its rapid adaptation to a more challenging environment,” he said.
Revenue decreased 2.3 percent to 57.42 billion euros and Renault said it would propose an unchanged dividend of 3.55 euros a share.
Looking ahead, Renault expects European and global markets to remain stable, excluding the scenario of a disorderly Brexit. The company targets an increase in revenue excluding currency effects and aims for an operating margin of about 6 percent. Its goal is to generate a positive operational free cash flow in the year, Renault said.