New Renault models drive carmaker's shares in tough European market for sales

However, the carmaker pushed out the likely timing for a listing of its electric vehicle arm following investor feedback

The Renault Austral has helped the carmaker's shares rise.

Renault shares jumped more than 7% after it raised its 2023 financial outlook thanks to the success of new models, in particular the Austral SUV and a Dacia Jogger hybrid.

After several years of restructuring and strategic repositioning to restore margins, the French carmaker said it is now aiming for an operating margin of 7% to 8% by full-year 2023, from a previous target of more than 6%.

Renault chief executive Luca de Meo said that the upgrades were due to cost cuts and an "unprecedented product offensive". The carmaker now also expects an automotive operational free cash flow superior or equal to €2.5bn, compared with €2bn previously.

Renault was committed to catching up with its best-performing rivals, Thierry Pieton, its chief financial officer, said during a conference call. Stellantis, which owns rival PSA, confirmed last month it was forecasting a double-digit margin for this year.

However, Renault pushed out the likely timing for a listing of its electric vehicle arm following investor feedback while sweetening the wait by upgrading its earnings outlook for the year.

The carmaker will hold the initial public offering of the Ampere unit in the “most favorable window,” which will most likely be the first half of next year, Mr Pieton said.  Previously the company said the share sale in the Ampere unit could happen as early as the end of 2023.

The move helps buy some time for Renault, which upgraded earnings expectations despite softening markets in Europe, while heavy price cuts by Tesla put pressure on its flagship electric vehicle, the Megane E-Tech. Renault said strong sales momentum from some new models, like the Astral crossover, and lower costs helped boost its expectations.

The European market remains “relatively challenging,” Mr Pieton said. The new guidance is “materially better” than the company’s previous targets, Bernstein analyst Daniel Roeska wrote in a note. Renault now has “the option to wait for ideal timing” with regards to the Ampere initial public offering, he said. 

Reuters and Bloomberg