RENAULT

Dividend abolished at Renault, which reduces the salary of its managers 

The car group has announced that it has given up paying dividends because of the crisis sanitary and economic. While Renault's rating has just been lowered by Standard and Poor's, the manufacturer could request state aid "to guarantee its credits".
The manufacturer with the diamond has, like many French companies , removed its dividends for 2019. An announcement came on Thursday, April 9, while the rating of the group, weakened by the crisis caused by the coronavirus, was the same day lowered to the rank of speculative investment by the agency Standard and Poor's. The dividend was abolished at a board meeting in the afternoon, Renault announced in a statement. Initially, the group planned to pay shareholders 1.10 euros per share, compared to 3.55 euros in 2018, after having recorded its first losses in ten years last year.
 Renault has also decided to cut the compensation of President Jean-Dominique Senard and interim managing director Clotilde Delbos by 25% for the second quarter of 2020 "at a minimum" and possibly longer if the crisis were to last. Directors will experience a 25% drop in their attendance fees for the current year. "The savings made will be transferred" to the crisis fund dedicated to group employees. "The exceptional situation required exceptional solidarity measures," reacted Renault's CFDT in a press release, welcoming "a responsible approach".
Many Renault employees are currently on short work due to the closure of most of the group's factories worldwide. For the CGT, this decision by the administrators "does not settle the imbalance" between the efforts "requested from the employees" and those of the "shareholders and managers" of the group. This decision was "eagerly awaited," said FO, a tense account of "the exceptional situation".
A few hours before this announcement, Renault's rating had been lowered to "BB +", the first rank in the speculative investment category, by the Standard rating agency and Poor's, due to the consequences of the pandemic on the expected financial results. S&P estimates that the pandemic will cause a drop of around 15% in the car market this year before a rebound of around 6% to 8% in 2021 and that, despite the support it should receive from the French State , Renault's profit, liquidity and financial position should "materially weaken" in 2020 after an already difficult year in 2019.
S&P also maintained PSA's rating at "BBB-" on Thursday, ie a notch above that of its hexagonal competitor. Both notes have a "negative" outlook, indicating that they may be downgraded again soon. "The negative outlook reflects the high degree of uncertainty regarding the economic impact of the pandemic, its implications for global auto sales and the extent to which this could affect Renault's performance, its ability to handle declining revenues. , the situation of its cash flow and its capacity to reach the objectives as regards CO2 emissions ", indicates the agency.
"The onset of the Covid-19 pandemic adds to the many challenges that Renault is currently facing, including the efforts imposed by the European Union to reduce CO2 emissions" , underlines S&P. Regarding PSA, it considers, however, that this manufacturer is "well prepared to meet its environmental obligations with its products already on the market".
The French Minister of Economy Bruno Le Maire said on Wednesday that the State was ready to support Renault in which it holds 15% of the capital . But he also asked companies receiving public aid to waive dividends. Jean-Dominique Senard had assured ten days ago that renationalization was "not on the agenda", but that Renault could "request guarantees from the State" on credits. The manufacturer, which comes out of several good years, however still benefits from a "large mattress of liquidity" underlined S&P. Renault has also announced that the next general meeting of shareholders, postponed because of the coronavirus, will be held on June 19 in a format yet to be defined.

Source: © SP/Renault