Shares in Renault (RENA.PA) surged to their highest point in two months on Thursday following the announcement of the French carmaker’s financial results for full-year 2023.
Despite a net profit slightly below expectations, Renault reported gains in both margin and revenue, alongside a substantial increase in dividends.
On Wednesday, Renault revealed its proposal for a dividend of 1.85 euros ($1.98) for 2023, a significant rise from the previous year’s 0.25 euros.
This move aligns Renault with U.S. automakers Ford (F.N) and General Motors (GM.N), who have also increased returns to shareholders.
Closing at 38.18 euros, Renault shares saw a 4.2% increase, reaching their highest level since mid-December.
This surge outpaced the 0.9% rise in Paris’ CAC 40 (.FCHI) index.
In contrast, rival Stellantis (STLAM.MI) announced a share buyback programme worth up to 3 billion euros on Thursday, propelling its shares to a record high in Milan despite cautionary remarks about the challenges expected in 2024.
During an analyst call, Renault’s Chief Financial Officer Thierry Pieton acknowledged the potential positive impact of car prices on the company’s 2024 results, albeit less than in 2023.
The company’s operating margin rose to 7.9% from 5.5% in 2022, with expectations of maintaining around 7.5% for the year and aiming for double-digit margins by 2030.
Analysts at Bernstein expressed interest in Renault’s plans to sell more Nissan shares in 2024 and how the proceeds would be utilised.
They also sought insight into Renault’s demand projections for the year.
Pieton highlighted the continued support from favourable raw material prices expected in the second half of 2024.
JP Morgan analysts interpreted Renault’s 7.5% group margin projection as a floor for 2024, anticipating further improvements driven by product strength, pricing strategies, and cost reductions.
Morgan Stanley echoed this optimism but warned of potential risks associated with European pricing trends weakening.
They noted that investors could react favourably to Renault’s operational margin guidance, especially with improved balance sheet conditions and continued management effectiveness.