- Renault to split into five businesses in overhaul
- Formed a joint venture with Geely to spin off the EV division
- Lack of progress in talks with Nissan, shares fall
PARIS, Nov 8 (Reuters) – French carmaker Renault (RENA.PA) announced a major overhaul, splitting its activities in five businesses, deepening ties with China’s Geely and divesting it through a stock listing its electric vehicle division.
Renault said ahead of its long-awaited investor presentation on Tuesday that it was targeting an operating profit margin of 8 percent in 2025, rising from 5 percent this year to more than 10 percent in 2030.
It also plans to resume dividends from 2023 after a three-year hiatus and generate more than 2 billion euros of cash per year between 2023-25, growing to more than 3 billion euros over the next five years.
As a forerunner in the electric car race, Renault has fallen behind newer rivals such as Tesla. The group hopes to expand its turnaround after losses in 2019 and 2020 and raise the valuation of its different parts after it needed emergency cash during the COVID-19 pandemic.
But as Renault seeks other outside investors for each of its divisions, its strained relationship with longtime Japanese partner Nissan remains a big question mark.
A major part of the automaker’s strategy is to separate its combustion engine business from its electric vehicle business, which will go public in the second half of next year. .
Nissan (7201.T) is expected to join other investors in the electric vehicle joint venture, codenamed “Ampere,” but Renault will retain a majority stake.
Sources told Reuters that talks with Nissan have been dragging on as Japan has reservations about sharing technology with Chinese rivals including Geely.
Renault shares fell more than 4 percent on Tuesday as it did not elaborate on discussions with Nissan over a future partnership.
Renault chief executive Luca De Meo said the group wanted to provide the alliance with a strong future and “new opportunities”. But he also said — as in marriage — “it’s important for us to have our own hobbies and our own lives.”
Talks have a week left to meet in November. The companies set 15 targets for the deal, according to people familiar with the matter.
In addition to the Ampere EV division and the internal combustion engine business called “Horse”, Renault will have three other businesses – the Alpine sports car brand, financial services and new mobility and recycling activities.
“We’re creating separate businesses focused on structurally more profitable activities, open to outside investment, each built around a set of homegrown technologies,” De Meo told investors.
Using a sports metaphor, he likened “old” Reynolds to a pentathlete who struggled to win gold in all five sports majors.
By working with the best partners in each of the new 5 businesses, “Renault wants to win medals in these different sports, not average across all 5,” he said.
Reporting by Gilles Guillaume; Writing by Silvia Aloisi; Editing by David Evans
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