|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's Range||11.11 - 11.28|
|52 Week Range||10.52 - 18.45|
|Beta (3Y Monthly)||1.09|
|PE Ratio (TTM)||2.80|
|Forward Dividend & Yield||0.80 (7.38%)|
|1y Target Est||N/A|
European stock markets ended at a two-week high on Wednesday, led by a rebound in Italian shares and as investors bet more concrete signals of stimulus from central bankers may help allay global slowdown fears. The pan-European STOXX 600 index ended 1.2% higher with Milan's blue-chip index rising 1.8%, bouncing back from a political crisis-driven sell-off. The resignation of Italian prime minister Giuseppe Conte on Tuesday, had made investors nervous about Rome's continuing lack of political stability, but also signaled that a new coalition arrangement may be in works.
(Bloomberg Opinion) -- France SA’s romance with the Chinese car industry could be nearing its end.Dongfeng Motor Corp., a state-owned giant that runs joint ventures with PSA Group, Nissan Motor Co. and Honda Motor Co., is looking at options for its 12.2% stake in PSA including a sale or bond issuance backed by the stock, people familiar with the matter told Bloomberg News on Thursday.On purely financial terms, such a move makes a great deal of sense. Dongfeng bought the shares as part of a 2014 bailout of the maker of Peugeot and Citroen cars, brokered by the French government. That investment has done rather well: PSA has seen the third-best share performance in Bloomberg’s Global Automobile Valuation peer group over the past five years, after Geely Automobile Holdings Ltd. and Fiat Chrysler Automobiles NV. The 800 million euros ($897 million) Dongfeng spent at the time is now worth around 2.2 billion euros. On top of that, the operational ventures that underpinned the shareholding have seen better days. Listed subsidiary Dongfeng Motor Group Co.’s sales of Peugeot- and Citroen-branded cars fell by about half in the first six months from a year earlier and are running at less than a quarter of their level in 2015. In the key crossover SUV market, models like Citroen’s C5 Aircross and Peugeot’s 4008 have simply failed to catch fire against competition from Asian and domestic rivals.Unless there’s a serious pick-up in the second half, Dongfeng’s PSA production lines, dedicated to turning out as many as 600,000 vehicles a year, will be running at little better than 25% utilization – levels at which it should be hard for the business to make money. Losses at Dongfeng’s PSA venture were already running at the equivalent of $251 million in 2018; it would hardly be surprising if they were worse this year.Management in China clearly see little sign that sales are about to pick up. Dongfeng’s dealer network for PSA-branded cars shrank by almost 80% between 2015 and 2018, and now stands at just 666 outlets compared with 1,186 for Renault-Nissan marques. The showrooms that remain suffer low productivity, shifting an average of 400 PSA vehicles each in 2018 compared with 1,431 at Nissan outlets and 761 at Honda-branded locations. (For what it’s worth, Renault does even worse, on just 204 vehicles).There’s a more proximate issue, too. Cash has been looking a little tight for Dongfeng’s listed subsidiary of late, owing largely to a huge increase in working capital, two years of negative Ebit, and net debt of 2.15 billion euros that was running at 8.1 times Ebitda at the end of December. In the 2018 fiscal year, operating cash flows actually turned negative to the tune of about 1.25 billion euros, a relatively rare event for carmakers that aren’t in the grip of a financial crisis or corporate scandal.Dongfeng still has ample liquidity. Its ratio of short-term assets to short-term liabilities was 1.36 at the end of December, above the industry average. But China’s auto market is grim, with sales declining from a year earlier for 12 straight months even as the government ratchets up pressure to spend money on the switch to electric vehicles. Faced with such headwinds, 2.2 billion euros could come in handy.At present there’s no word that Dongfeng is planning to unwind the JV to manufacture PSA cars in China – but it would probably welcome such an outcome, especially if it could persuade its European affiliate to pay to take more control of the partnership in the manner of the deal last year between BMW AG and Brilliance China Automotive Holdings Ltd.Dongfeng’s partnerships with Nissan and Honda are clearly the better performers, and PSA may feel it needs more of a free hand to turn around its Chinese operation. If a sale of a strategic stake can help ease the path toward that happier outcome, both sides stand to benefit.To contact the author of this story: David Fickling at firstname.lastname@example.orgTo contact the editor responsible for this story: Matthew Brooker at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Automobile production in Brazil jumped 14.2% and sales grew 9.1% in July from June, the best performance for the month since 2014, the national automakers' association Anfavea said on Tuesday. Brazil's auto industry is recovering from a crushing depression that cost the country its place as one of the world's five biggest auto markets, even as automakers are still struggling with low margins. Auto exports to depressed Argentina, Brazil's largest foreign destination for its cars, are down 38.4% so far in 2019 compared to a year ago, Anfavea said.
(Bloomberg Opinion) -- Even after a relationship is dead, couples often go through the motions of remaining in a marriage. That’s the best way to characterize what’s left of the alliance between Renault SA and Nissan Motor Co. Renault must sell down its 43.4% stake in its Japanese partner to 5%-10% and both sides should “invest in new ventures,” Nissan’s Senior Vice President Hari Nada wrote in an e-mail to colleagues, saying this was the view of independent director Masakazu Toyoda, the Wall Street Journal reported at the weekend. In Toyoda’s view, the two sides should come up with some sort of joint venture in order to show that the alliance isn’t dead, giving Renault Chairman Jean-Dominique Senard the room to unwind the cross-shareholdings that underpin the relationship, the Journal reported.To judge by the picture this paints of internal discussions within Nissan, the Japanese company is only interested in maintaining the appearance of an alliance with Renault and its 15% shareholder, the French government. Making a joint commitment to reaffirm a bond isn’t uncommon for people in a failing relationship, but it’s no way to run a business.If Nissan is sincerely committed to a joint venture, the first thing it should do is identify a strategic opportunity, work out what synergies it would bring, and find a way to operate it. Forming a JV just to get your partner to agree to the terms of a divorce puts your employees’ careers at the mercy of these corporate maneuverings.For those at Renault most committed to the logic of the merger with Fiat Chrysler Automobiles NV that was declared dead in June, this might count as good news. Senard has publicly talked down the prospect of the tie-up being renewed, but this suggests that Renault has been looking for ways to revive the alliance behind the scenes.A tie-up between European giants, in the manner of the mergers that created Airbus SE, Air France-KLM, and IAG SA, seems a far more congenial outcome than the bitter remains of the Renault-Nissan marriage. Fiat Chrysler’s strong business in SUVs and North America would also complement one of the most obvious shortcomings that Renault would suffer if it lost its alliance with Nissan.At the same time, the writing is on the wall for any further integration between France and Japan. Nissan seems committed to preventing any further convergence. Whether or not a Potemkin village JV is agreed to, the sort of ambitious activities pushed in the Carlos Ghosn era – development of modular designs shared between Renault and Nissan vehicles, or moving the manufacturing of the Nissan Micra from the Japanese company’s Chennai plant to a Renault factory north of Paris – are unlikely to see the light of day again. The more likely outcome would be something eventually resembling the far more limited cooperation between Daimler AG and the alliance.Does it matter whether Renault and Nissan are married, or merely cohabiting? In many ways, the alliance has been dead since Ghosn and his deputy Greg Kelly were arrested by Japanese authorities last November. As my colleague Anjani Trivedi has written, Nissan in particular may be better off resolving its substantial problems on its own rather than getting involved in the complexity of another multi-billion dollar cross-border merger.Still, the risk for Nissan is that by turning away from its European partnership it will leave itself too small to manage the vast capital expenditures and research and development costs necessary as the global car industry seeks to reverse slumping sales and manage the transition to electric vehicles and greater automation. Ghosn’s pursuit of volume growth at any cost is one reason why Nissan is now plagued with overcapacity and facing drastic job cuts. But the vision he was pursuing before his arrest – of a company as transnational as he is, headquartered in the Netherlands and with operations all over the world, and not especially beholden to either the Japanese or French governments – is now unlikely ever to materialize.That’s a tragedy. A Renault-Nissan alliance free to pursue profitable growth in the interests of the business as a whole, rather than being turned into the plaything of nationalist interests, is the likeliest way for the two companies and their workforces to prosper. If management in Paris and Yokohama are quietly giving up on that future, both companies may live to regret it.A marriage where neither partner is committed is the worst of all worlds. If separation is out of the question, Nissan and Renault need to find a way to make this relationship work.To contact the author of this story: David Fickling at firstname.lastname@example.orgTo contact the editor responsible for this story: Matthew Brooker at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Fiat Chrysler Automobiles Chief Executive has a message for Renault SA and other would-be partners: We are happy to talk, but we can go it alone. "Strategically, we have a solid future and clear plans that are being invested in and are underway now," Mike Manley said during a session with reporters the day after the company released better than expected second-quarter results. Fiat Chrysler is open to re-starting merger negotiations with French automaker Renault, Manley said, but added the French car maker is not the only potential partner to gain scale or plug gaps in Fiat Chrysler's technology or vehicle lineup.
(Bloomberg Markets) -- It’s just a marketing gimmick. But it casts a spell.A pale orange-and-gold sunset bathes the macadamia plantations and avocado orchards that sweep down to Australia’s Byron Bay. The coming dusk is a cue for two sleek Tesla battery packs in the garage at Amileka, a secluded holiday villa nearby. They stir silently into action—powering the appliances in the five-bedroom home’s twin kitchens, recharging a $100,000-plus Model X SUV, driving a filter pump for an 18-meter swimming pool sparkling in the shade of a century-old native black bean tree.From first light on this Southern Hemisphere autumn day, a bank of 33 rooftop solar panels has been capturing the sun’s energy. At times, the electricity is directed back to the local grid. But mostly it’s funneled into the garage and stored in Powerwall units, in the same type of rechargeable cells that fuel the automaker’s vehicles. The batteries—as tall as refrigerators, as thin as flat-screen TVs—will power this unusually energy-hungry villa deep into the evening.But not all night. The solar array and batteries meet just half of Amileka’s average energy needs. So after a few hours, the 25-acre, $1,160-a-night miniresort that Tesla Inc. uses to promote its products must tap into the local electricity grid. The photogenic demonstration on Australia’s eastern coast presents a vision of what some see as the most significant shift in the energy sector since the late 19th century: rechargeable batteries—in electric vehicles, homes, industrial plants, and power grids—that will make the transition to renewable energy possible.The actual future of energy may be less postcard-worthy. It may look more like a fleet of electric school buses. And the end of utility companies as we know them.“If you are wanting to run your home just on solar and batteries … it’s going to be tough. … At this point it’s pretty overstated”By 2050 solar and wind will supply almost half the world’s electricity, bringing to an end an energy era dominated by coal and gas, according to forecasts by BloombergNEF, Bloomberg LP’s primary research service on energy transition.It can’t happen without storage. The switch from an electricity system supplied by large fossil fuel plants that run virtually uninterrupted to a more haphazard mix of smaller, intermittent renewable sources needs energy storage to overcome two key hurdles: using power harvested during the day to supply peak energy demand in the evening and ensuring there’s power available even when the wind drops or the sun goes down.“We think storage can be the leapfrog technology that’s really needed in a world that’s focused on dramatic climate change,” says Mary Powell, chief executive officer of Green Mountain Power Corp., a utility based in Colchester, Vt., that’s worked with Tesla to deploy more than 2,000 residential storage batteries. “It’s the killer app in a vision to move away from bulk delivery systems to a community-, home-, and business-based energy system.”Utilities aren’t panicking yet. The prospect of large numbers of residential consumers moving fully off the grid is probably overstated, says Zak Kuznar, managing director of microgrid and energy storage development at Duke Energy Corp., a Charlotte-based utility that supplies electricity to more than 7.5 million customers in six American states. “If you are wanting to run your home just on solar and batteries,” he says, “from where the technology is today, it’s going to be tough. It’s something we are keeping an eye on, but at this point it’s pretty overstated.”Lithium-ion batteries continue to have limits in terms of the amount of energy they can store, and they’re typically able to supply energy to grids for just hours at a time, not days or weeks. What’s more, concerns are rising over the environmental costs of mining lithium in Chile’s parched Atacama Desert and over a cobalt industry that’s tarnished by the use of child labor in the Democratic Republic of the Congo to supply battery manufacturers. And the sector is just beginning to prepare for the future need to recycle or dispose of a torrent of expired battery packs.QuickTake: Better Batteries Still, optimism abounds. Battery storage technology is nearing a tipping point like the one that accompanied the “massive” adoption of solar power some years ago, says David Frankel, a partner at McKinsey & Co. in Los Angeles whose clients include energy and industrial companies.Mainstream adoption of electric cars is the third great stage in the transformation of the global energy sector—a natural outgrowth of the first two: the spread of cheaper renewable energy and the evolution of batteries, says Marcus Fendt, a managing director at Mobility House GmbH, a tech company in Munich.And it’s coming, however slowly. By 2040, according to a BNEF forecast in May, almost 60% of new car sales and about a third of passenger vehicles on the road will be electric.On the Portuguese island of Porto Santo, a 16-square-mile outpost in the Atlantic where Christopher Columbus lived for a time, the convergence of automaker and utility company is plain to see. Renault SA and Empresa de Electricidade da Madeira are testing a suite of storage technologies as the isolated community strives to curb imports of fossil fuels. Twenty electric cars—rising to 100 or so next year—cruise the streets. Some are taxis, some are shared by residents, and one is even used by the police as a patrol car.Islanders are also testing a network of about 40 charging stations. Banks of second-life batteries—cells that are no longer powerful enough to be used in a car but remain adequate for less-intensive storage applications—have been connected to a local grid to soak up excess energy from wind and solar farms.The French automaker has a second project on Belle-Ile-en-Mer, off the northwest coast of Brittany. At a school on the island, rooftop solar panels and batteries power classrooms during the week and a fleet of rental cars over the weekend. Renault has struck an agreement with Electricité de France SA to expand these experiments elsewhere.The next step in storage technology is to turn electric cars into money makers for their owners. The latest global experiments along these lines entail hooking the cars’ batteries directly to power grids. These vehicle-to-grid connections enable reversible charging, the two-way transfer of electricity from cars to houses or back to power grids. A vehicle’s battery can power home appliances, sure. But more significantly, whenever it’s parked and plugged in, the car can make money by storing energy or helping stabilize supply and demand on the grid.Drivers will be able to carry renewable energy wherever they go. “You can be a virtual grid,” says Fendt, of Mobility House, which works with Nissan Motor, Renault, the Dutch grid operator Tennet Holding, and other clients. “I take the sun around with me.” Fendt calls the pilot projects “playgrounds for the future.” Renault has begun tests in Utrecht, in the Netherlands, where electric cars have been fitted with reversible chargers. In Utrecht and elsewhere in Europe, says Yasmine Assef, program director of Renault’s new-energy business, “we’re not so much testing the technical part. What we really want to test here is the business case.”Customers can already earn some money by charging their cars on a schedule determined by the availability of energy on the grid, Assef says. Under a program Renault operates in the Netherlands, a typical consumer makes €60 ($67) a year from the utility for charging during low-demand periods only, she says. “As a customer,” she says, “the journey is quite easy—you plug in, you forget, and you make money.”In Hagen, Germany, a Nissan Leaf has been connected to the country’s power grid since January. By storing energy when there’s a surplus and returning it to the grid as demand rises, the car could eventually earn about €1,000 a year, Fendt says.America’s iconic yellow school bus is getting into the act. To go electric, a vehicle that size—one that sits idle for much of the time—requires a huge battery. Macon, Ga.-based Blue Bird Corp., which sells battery-powered models that carry 84 passengers, says it will begin selling vehicles with two-way connections to the grid before the end of the year.Ride-hailing companies such as Uber Technologies Inc. and other operators of large fleets will likely find ways to generate additional revenue from cars that are parked and not taking fares by plugging them into the grid, Fendt says: “They will connect the car and squeeze every last cent, every last euro out of it.”“If you are wanting to run your home just on solar and batteries … it’s going to be tough. … At this point it’s pretty overstated”Automakers are becoming “a part of the electricity ecosystem,” as Renault’s Assef puts it. They’re not just making EVs that can return power to the grid. Like Tesla, Nissan produces and sells energy-storage products, while Volkswagen AG—the carmaker with the most aggressive timetable for adding electric models—plans to supply homes and small businesses with renewable energy through a retail power subsidiary, Elli Group GmbH.Oil giants are also investing in storage. Through its New Energies division, Royal Dutch Shell Plc is spending about $2 billion a year on these technologies. The company says it wants to become the largest electrical power company in the world by the early 2030s. In addition to acquiring a U.K. electricity provider and a car-charging operator, Shell this year bought Germany’s Sonnen GmbH, a leading supplier of residential storage systems. In May, Shell announced plans to install industrial-scale batteries at two facilities in Ontario, a crude refinery and a motor oil plant. Chevron, Total, and BP have also made investments in electric car charging or storage companies.In parts of the U.S., storage batteries are already a cheaper option than so-called peaking plants. These typically are environmentally unfriendly fossil-fuel-fired power stations that are needed only for a couple of weeks each summer, when electricity demand spikes, and are idle the rest of the time. As some coal-fired power stations are retired, “there could be a situation where, instead of building that new peaking plant, I am putting more storage on the grid,” says Duke Energy’s Kuznar.Duke has outlined plans to invest more than $500 million in battery storage projects over the next 15 years. Other utilities from California to China are also considering how battery systems can be added to existing networks, potentially deferring or eliminating the need for some investments in power plants.Investors probably underestimate the impact falling battery prices will have on the energy sector, as well as the speed at which change will come, says Tom King, chief investment officer at Nanuk Asset Management Pty., a Sydney-based fund that focuses on renewables and energy efficiency. The consequences, he says, “will be profoundly negative for conventional utilities. That’s an almost unstoppable outcome.”At a remote site about 150 miles north of Adelaide in the state of South Australia sits the Hornsdale Power Reserve. This is the world’s largest operating lithium-ion battery facility, a city block-size cluster of 2-meter-high Tesla battery units tethered to a field of 99 towering wind turbines.The French renewable energy company Neoen SA spent €56 million on Hornsdale, which can deliver enough electricity to power 30,000 homes. But the plant’s key task is to help stabilize fluctuations in supply and demand, preventing outages in a state the size of Egypt where a rising share of renewables now accounts for almost half of power generation.Australia is a natural testing ground for renewable energy research. Vying with Africa as the world’s sunniest continent, the nation of 25 million people grapples with some of the highest power prices in the world. This year, as many as 60,000 homes—admittedly, a minuscule fraction of the total—will add battery storage systems, making Australia the world’s largest residential storage market.Glorious beaches, fine weather, a counterculture vibe—these things have drawn surfers and eco-conscious hippies to Byron Bay since the 1960s. More recently, stylish resorts and swank holiday homes have moved in. Most, like Amileka, have installed rooftop solar panels. And more and more, storage batteries are joining the list of eco-accoutrements.At the Arts & Industry Estate—a collection of boutiques, galleries, artist studios, and the like—a microgrid and storage battery setup will enable about 30 tenants to pool and share solar energy, lowering their bills. Nearby, a refurbished 1949 passenger train runs on solar power, shuttling tourists between the town’s main shopping strip and a beachside resort and sending surplus electricity back to the local grid. This isn’t exactly an eco-warrior’s utopia, but maybe it’s enough to give conventional electricity producers pause.“I wouldn’t want to be a utility provider, particularly in the suburbs, in another 30 years,” says James Kennedy, chief technology officer at Brisbane-based Tritium Pty. The company, which manufactures some of the world’s fastest electric car charging stations two hours north of Byron Bay, is also studying the integration of vehicles into power grids. “What might sound like science fiction is in reality only two or three years away.”Stringer covers energy and commodities in Melbourne. To contact the author of this story: David Stringer in Melbourne at firstname.lastname@example.orgTo contact the editor responsible for this story: Stryker McGuire at email@example.comFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Nissan wants Renault to reduce its 43.4% stake in the Japanese auto company, according to emails reviewed by WSJ. The discussions, which are at an early stage, started soon after the potential deal between Renault and FCA collapsed, the report added.
Nissan wants Renault to reduce its 43.4% stake in the Japanese auto company, according to emails reviewed by WSJ. The discussions, which are at an early stage, started soon after the potential deal between Renault and FCA collapsed, the report added.
(Bloomberg) -- About 5,000 euros ($5,600) are set to buy your 10-year-old combustion clunker an electric makeover—and offer a cut-price way to avoid driving bans across European cities.French startup Transition-One has developed retrofitting technology that adds an electric engine, batteries and a connected dashboard into older models of Fiat Chrysler Automobiles NV, Volkswagen AG, Renault SA and PSA Group for about 8,500 euros, or 5,000 euros after government subsidies in France.“I’m selling to people who can’t afford a brand new 20,000-euro electric car,” founder Aymeric Libeau said in an interview aboard his first prototype, a Renault Twingo from 2009 with an electric driving range of 180 kilometer (112 miles). “We’re turning the best-selling models across Europe into electric cars.”Libeau expects French and European regulator approval by the end of the year and will start pre-orders in September to test demand.Automakers are rushing to churn out electric cars to comply with stricter regulations on emissions in Europe. While sales are rising, hybrid and battery cars made up less than 3% of total sales last year as vehicle prices remain comparatively high with shorter driving ranges than conventional models.Read more: A Dead End for Fossil Fuel in Europe’s City CentersEven as the tepid uptake is set to reverse in coming years, initiatives like Transition-One’s show the car industry is still trying to navigate a path towards an electric future, with the risk of outright driving bans giving birth to moonshot ideas. “You could technically turn a handcart into an electric car—the question is, does it make sense and how big is the effort?”An increasing number of cities has already started to ban older diesel cars, after the 2015 Volkswagen diesel emission-cheating scandal prompted scrutiny of cars flouting limits. Over the next decade, many more European cities will cut access to fossil-fuel cars altogether.In the prototype Twingo, three battery packs are fitted in front and two in what used to be the gas tank. The whole pack, bought from a Tesla Inc. parts reseller, weighs 120 kilograms (265 pounds). To compare, Renault’s electric Zoe has a 290 kilogram battery for a 210 kilometer driving range. Prices start at around 23,000 euros excluding battery rental battery.The transition takes less than a day, leaving the original stick shift and gear box and installing the plug behind the hatch that drivers usually pop open to refill the tank.There are doubters on Libeau’s approach, and questions over how attractive a shortened driving range will be to motorists. Markus Lienkamp, a professor of automobile technology at the Technical University of Munich, also warns against the risk of errors and the difficulty of obtaining regulatory approvals for the retrofitted cars.“You could technically turn a handcart into an electric car—the question is, does it make sense and how big is the effort?” Lienkamp said. “My advice would be to drive the combustion car as long as it can take, and just buy a new electric car after, because it makes much more sense financially.”Libeau, whose previous experiences include co-founding software company Pentalog Group, has worked on retrofitting for two years, and tested the method with a French business school. He is looking to raise 6 million euros to build a factory he says would be capable of churning out as many as 4,000 vehicles next year.Retrofitting services have so far focused on one-offs for classic cars with a number of small companies offering a variety of conversion kits. What’s specific with the French startup is a plan to help create a regulatory framework rather than case-by-case permits to broadly offer the technology.Read more: The New Hot Rods Are Souped-Up Vintage Cars With Electric MotorsPSA Chief Executive Officer Carlos Tavares has called the idea of retrofitting “great” while cautioning that large companies needed worldwide regulations on emissions and safety before going down this road. “For that to happen, first thing is: align regulations,” he said on his online show ACoffeeWithCarlosTavares earlier this month.Transition-One’s solution is compatible with models including PSA’s Citroen C1 and Peugeot 107, Fiat 500, Toyota Aygo, Twingo II and Volkswagen Polo.“If the end goal is to cut pollution, all solutions should be on the table,” Libeau said, driving in the dense traffic of central Paris. “New cars aren’t enough.”\--With assistance from Oliver Sachgau.To contact the authors of this story: Ania Nussbaum in Paris at firstname.lastname@example.orgMarie Mawad in Paris at email@example.comTo contact the editor responsible for this story: Elisabeth Behrmann at firstname.lastname@example.orgFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Moody's Japan K.K. has affirmed Nissan Motor Co., Ltd.'s A3 issuer rating. "Nissan's weak first quarter results indicate the challenges the company faces in achieving its guidance for this fiscal year. Moody's downgraded Nissan's rating in May 2019 to reflect the continuing slide in profitability.
(Bloomberg) -- For months, Renault SA’s partnership with Nissan Motor Co. has been a strain on management and a public relations nightmare. Now the Japanese carmaker’s woes are hitting where it really hurts: the bottom line.The largest French automaker, which owns 43% of Nissan, reported Friday that its partner’s poor performance in the first half cut net income by 21 million euros ($23.4 million). A year earlier Nissan added 805 million euros, or about 40% of profit.The Japanese carmaker is smarting from slumping U.S. sales and aging vehicle models. The worsening results come at a time of heightened tension within the alliance with Renault in the aftermath of the arrest of their former chairman, Carlos Ghosn, who held the partnership together for almost two decades.“Our top priority is to help Nissan get out of that situation,” Renault Chief Executive Officer Thierry Bollore said in an interview with Bloomberg Television. While Renault cut a sales target for this year, the carmaker is sticking to its profit outlook despite the industry slump.In contrast, Nissan on Thursday announced a doubling in the number of jobs it plans to eliminate and unveiled new production cuts, while reporting a 99% drop in first-quarter profit. It blamed sales incentives and over-expansion under Ghosn. Nissan’s deteriorating results could help Renault take the upper hand in the teetering partnership.Read More: Nissan’s Pain Worsens on 99% Profit Plunge, 12,500 Job Cuts (1)While Renault owns a stake in Nissan, the Japanese automaker is the bigger partner in their alliance and in turn owns 15% of the French carmaker, with no voting rights. The lopsided shareholding arrangement has long been a source of tension.The alliance partners, who include Mitsubishi Motors Corp., together produce some 10.8 million cars a year, almost double Ford Motor Co.’s global deliveries. The alliance would be second in vehicle sales only to Germany’s Volkswagen AG, with Toyota Motor Corp. a close third. Yet despite the cost benefits of cooperation on purchasing, design and manufacturing, doubts have grown about the future of the alliance.Since Ghosn’s November arrest in Tokyo on allegations of financial crimes, which he has denied, Renault’s new chairman, Jean-Dominique Senard, has pushed for a merger Nissan didn’t want, and then pursued talks to combine with Fiat Chrysler Automobiles NV without telling its partner. Those talks collapsed after the French government made it clear it wanted Nissan to support the Renault-Fiat deal before entering an agreement.Shared DreamsWhile talks with Fiat have ended, Bollore said he shares the “same dreams” as Senard of reviving the deal. “The fundamentals for such a deal are there,” although the priority is for helping Nissan turn itself around.Renault lowered its outlook for full-year sales on Friday -- saying revenue will be close to last year’s level rather than grow -- but kept its forecast for a group operating margin of 6%.The shares were little changed at 52.32 euros by 11:14 a.m. in Paris trading, leaving them down 4.1% this year.The results cap a mostly gloomy week for the automotive industry. Ford missed earnings estimates and gave a projection for 2019 profit that disappointed investors, while Tesla Inc. posted a worse-than-expected loss. Suppliers also suffered, with Continental AG shaving its targets. Among the brighter spots, France’s PSA Group booked a record profit margin at its automotive division and Volkswagen AG’s earnings beat estimates.Renault is counting on new models, higher prices and cost-cutting measures to reach its profit targets in the second half, as well as its “fighting spirit,” Bollore said in a statement. Sales fell 6.7% in the first half and operating income dropped 12%.Read More: Europe Car Sales Extend Downward Spiral With Worst Drop of 2019It’s unclear how Nissan’s woes will affect Renault factories, said Franck Daout, a representative of the carmaker’s CFDT union. Renault’s plants in Cleons and Le Mans make parts for Nissan cars, and the manufacturer makes the Nissan Micra in its Flins plant outside of Paris.Nissan already shifted production of the X-Trail model from Sunderland in the U.K., citing Brexit concerns, and has announced a plan to cut 600 jobs at a plant in Barcelona.\--With assistance from Caroline Connan.To contact the reporter on this story: Ania Nussbaum in Paris at email@example.comTo contact the editors responsible for this story: Anthony Palazzo at firstname.lastname@example.org, Frank Connelly, Tara PatelFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Renault warned revenue may decline this year, scrapping a previous goal, after first-half profit was hit by weakening car demand and an earnings collapse at alliance partner Nissan in the wake of the Carlos Ghosn scandal. "Given the degradation in demand, the group now expects 2019 revenues to be close to last year's," Renault said - abandoning an earlier pledge to increase revenue before currency effects. A broad-based auto sales downturn has rattled the sector, prompting profit warnings and compounding challenges for Renault and Nissan as they struggle to turn the page on the Ghosn era.
(Bloomberg Opinion) -- If you’re looking for a metaphor for how politics has swamped decision-making at Nissan Motor Co., look no further than reported plans to restructure its cratering global business.Nissan doubled its planned job losses to 12,500 and unveiled new production cuts after reporting a 99% plunge in fiscal first-quarter operating profit Thursday. The Japanese carmaker is considering reducing production in Southeast Asia and Latin America, people familiar with the matter earlier told Ma Jie and Masatsugu Horie of Bloomberg News.The logic of pulling out of sub-scale markets is a mainstay of car manufacturing, and certainly applies to some of its smaller Asian units. Plants in Indonesia, the Philippines and Taiwan produce just a few thousand cars apiece. Still, it’s bizarre for Nissan to be so fixated on these motes when the biggest problem with its business lies at home, in its outsize Japanese export business.Japan isn’t known as a low-cost manufacturing center, yet more than half the cars produced in Nissan’s local factories are shipped overseas, with almost a third of the total going to the U.S. alone. Those volumes have remained remarkably consistent since 2015, in spite of falling U.S. sales, Trumpian rhetoric around the risks of imported automobiles, and a roughly 10% strengthening of the yen against the greenback.It’s worth considering the resilience of that trade in the context of the dismissal and arrest of Nissan’s former Chairman Carlos Ghosn. A merger like the one Ghosn was pursuing between Nissan and its alliance partner Renault SA would inevitably have resulted in cuts to the least productive parts of the business, but it can be fiendishly difficult to work out what these are in a global carmaker of Nissan’s size.On paper, the company’s labor productivity in Japan is about as strong as at any of its divisions. That’s complicated, though, by the fact that almost half of Nissan Japan’s revenue comes from selling vehicles and parts to overseas units at opaque prices. As a result, it’s hard for outsiders to tell whether foreign segments are unprofitable because of local weaknesses, or because they’re paying too much to support the home team.There's telling evidence out there, all the same. The steepest discounts on Nissan cars in the U.S. are all for the Infiniti – and only one model in the luxury line is manufactured in America. Labor productivity in aggregate is also suggestive: Less than a fifth of Nissan’s workforce is in the Asian and Latin American regions where the reported job cuts will be concentrated. So this metric is driven mostly by Japan, which has about 42% of employees, followed by North America (including Mexico) and Europe, with 26% and 12% respectively.At one time, productivity was a point of pride for Nissan. When the Renault alliance was founded in 1999, it stood at $5,460 of operating income per employee, close to the worst among the major volume carmakers. Three years later, Nissan had the best productivity among its peers, at more than $50,000 per employee.Things have changed dramatically. Just over two years ago, productivity was still running around the $50,000 mark. Since then, plummeting sales and overspending on incentives in the U.S. mean that Nissan for the first time in two decades is now one of the worst performers. The $20,667 income per employee in the year through March was only narrowly ahead of Renault’s $19,279.Fixing that has to involve sorting out the North American business, Nissan’s biggest division. One way to do this would be to upgrade its U.S. plants to produce more high-margin SUVs and luxury marques, and let Mexico supply the declining sedan market. The trouble is that such an outcome would involve savage cuts to export volumes from Japan.The path of least resistance in these nationalistic times is to protect the home front, and sacrifice the periphery. Nissan’s road may be predestined, but investors shouldn’t be surprised if it takes them to an unprofitable destination. (Updates the second paragraph with Thursday’s earnings announcement.)To contact the author of this story: David Fickling at email@example.comTo contact the editor responsible for this story: Matthew Brooker at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Renault is confident that alliance partner Nissan's new board will work to reinforce their partnership as it struggles to turn the page on the Carlos Ghosn scandal, Renault Chairman Jean-Dominique Senard said on Thursday. Nissan shareholders last month approved the appointment of a new board at the Japanese carmaker with a more international profile as well as Senard and his Renault Chief Executive Thierry Bollore. "There is a change," Senard told reporters in a briefing at Renault headquarters.
(Bloomberg) -- Renault SA will invest 128.5 million euros ($144 million) for a 50% stake in a venture with Jiangling Motors Corp. to develop electric vehicles in China, part of a push by the French company to make further inroads into the world’s biggest car market.The Chinese entity was created in 2015 and already holds certification to manufacture battery-electric passenger cars, according to a statement from Renault Wednesday. It aims to grow quickly and become a “prominent player” in the market.“This partnership in electric vehicle business with JMCG will support our growth plan in China and our EV capabilities,” Francois Provost, head of the China region at Renault, said in the statement. The venture will help Renault expand its electric capabilities beyond a production agreement with longstanding partner Nissan Motor Co. and Dongfeng Motor Corp., a spokeswoman said.Renault, which has so far had a limited presence in China, is moving forward with an electrification strategy that includes a new battery-powered car slated to go on sale in the Asian country this year. The company also plans to make hybrid versions of three existing models. Global automakers have been expanding cooperation with new-energy vehicle producers in China to meet government regulations on fuel consumption that were put in place this year.Renault’s move to expand further in China outside the Nissan-Dongfeng venture comes amid a crisis in its two-decade partnership with the Japanese company. Nissan has resisted merger overtures from Renault and withheld support for the French company’s failed plan to combine with Fiat Chrysler Automobiles NV.Renault also has plans to invest more than 1 billion euros to boost its production of electric cars in France -- a move that was aimed at smoothing relations with the French government, its biggest shareholder. Carmakers are spending billions of dollars to shift to battery-powered vehicles from diesel engines as the industry responds to a tightening of European emissions rules.(Updates with comments from Renault in third and fifth paragraphs.)\--With assistance from Tian Ying.To contact the reporters on this story: Tara Patel in Paris at email@example.com;Ania Nussbaum in Paris at firstname.lastname@example.orgTo contact the editors responsible for this story: Anthony Palazzo at email@example.com, Tara Patel, Christopher JasperFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Renault has formed a joint venture partnership with Jiangling Motors Corporation Group (JMCG) to target the Chinese electric vehicles (EV) market, in a deal which will also see Renault take a 50% stake in the new venture. Renault said it would increase its share capital by around 1 billion Chinese RMB, or roughly 128.5 million euros ($144 million), to acquire its 50% stake in the new venture. "China is a key market for Groupe Renault.
France's Renault SA said on Wednesday it will invest $145 million in a unit of China's Jiangling Motors Corporation Group (JMCG) that will allow it to expand its electric vehicle manufacturing footprint in the world's largest auto market. The French car maker will take a 50% stake in JMEV, an electric car maker launched by JMCG in 2015, and establish it as a joint venture between the two companies, Renault said in a statement. “This partnership in electric vehicle business with JMCG will support our growth plan in China and our EV capabilities,” said Francois Provost，China region chairman for Renault.
Moody's Latin America ACR S.A. has today affirmed ratings and assessments of 22 Argentine banks, finance companies and securities firms. At the same time, Moody's lowered the standalone assessments and downgraded the ratings assigned to Rombo Compañía Financiera S.A., GPAT Compañia Financiera S.A.U. and Balanz Capital Valores S.A.U. Moody's also changed to negative, from stable, the outlook on the ratings of 21 banks, finance companies and securities firms following the change in outlook to negative, from stable, on Argentina's B2 government bond rating announced on 12 July 2019.
French carmaker Renault posted a 6.7% decline in first-half vehicle sales amid a global auto slowdown, but said a forthcoming product offensive would begin to help soften the blow in key markets. The slump was outpaced by a 7.1 percent global market contraction, it added. The sales announcement comes amid gathering gloom for the global auto industry, with major markets in decline and trade barriers looming.