PARIS -- Renault posted its first loss in 10 years and set a lower operating margin goal for 2020, a crunch year for its planned reboot alongside partner Nissan after a scandal surrounding former boss Carlos Ghosn.
Renault made an annual loss of 141 million euros ($153 million), compared with a profit of 3.3 billion euros in 2018, the automaker said in a news release on Friday. Operating income dropped 30 percent to 2.11 billion euros.
Renault was penalized by charges linked to some of its Chinese joint ventures. Nissan's contribution to Renault's income plunged to 242 million euros last year from 1.51 billion euros the year before.
Renault also booked a 753 million-euro charge related to the discontinuation of the recognition of deferred tax assets on tax losses in France.
Sales to partners were down 3.4 percentage points due to lower vehicle production for Nissan and Daimler, as well as the decline in demand for diesel engines in Europe. A sharp drop in CKD business in China and the end of this CKD production in Iran also hit earnings.
Renault's group sales fell 3.3 percent to 55.53 billion euros in 2019.
For 2020, the carmaker sees annual revenues in line with last year, leaving aside currency swings, and a group operating margin of between 3 percent and 4 percent, down from 4.8 percent in 2019.
It forecasts positive automotive operating free cash flow before restructuring expenses. Expected volatility in Europe in light of new emissions rules and the potential impacts of the coronavirus cloud the outlook, the company said.
Renault’s 2019 dividend will fall by more than two-thirds to 1.10 euros a share, it said.
"Visibility for 2020 remains limited due to expected volatility in demand," interim CEO Clotilde Delbos said in the statement, adding that the new guidance did not take into account possible impacts from China's coronavirus crisis.
Renault has a factory in China's Wuhan, the epicenter of the epidemic, which has been in lockdown to contain the spread of the virus. It has also suspended operations for at least four days at its South Korean subsidiary in Busan due to supply chain hiccups.
Nissan, Renault's alliance partner, and in which Renault has a 43 percent stake, earlier this week posted its first quarterly loss in nearly a decade and cut its operating profit forecast, hit by a slump in vehicle sales.
Renault is trying to move past internal turmoil with a management shake-up, but it is also grappling like some peers, including Nissan, with tumbling auto demand in some key markets such as China.
Last month, Renault named former Volkswagen Group executive Luca de Meo as CEO, starting in July. He and Chairman Jean-Dominique Senard will be charged with turning the page on a troubled era and shoring up Renault’s alliance with Nissan. Sorting out their differences is crucial as automakers face the costly and uncertain transition to electric vehicles.
Bloomberg contributed to this report
