Renault Says Revenue Climbed, Supply-Chain Woes Remain

Albertina Torsoli, Bloomberg News

A Renault SA Megane E-tech electric vehicle (EV) in a window at the L'Atelier Renault flagship store on the Champs Elysees in Paris, France, on Wednesday, Feb. 16, 2022. Renault is scheduled to report results for 2021 on Feb. 18. Photographer: Benjamin Girette/Bloomberg , Bloomberg

(Bloomberg) -- Renault SA shares slipped after third-quarter revenue gains failed to offset wider investor worries about the impact of higher inflation and continued supply-chain disruptions on the carmaker.

Renault reaffirmed its full-year guidance on Friday, as it reported group revenue of €9.8 billion ($9.6 billion) for the third quarter -- a 21% gain from last year and in line with analyst estimates.

Shares declined as much 2.8% and were trading 1.5% lower as of 9:44am in Paris.

Stifel analyst Pierre-Yves Quemener said investors were selling after gains in recent weeks and that the decline “should not last.”

Renault saw revenues helped by the French automakers’ biggest ever pricing boost and strong demand for new electric models such as the Megane E-Tech. But a persistent shortage of semiconductors contributed to a 2.4% decline in commercial sales, Chief Financial Officer Thierry Pieton told analysts on a call on Friday.

“Pricing and productivity more than offset inflation” so far this year and the positive sales trends seen in the third quarter are continuing, Pieton said.

The CFO said he’s confident Renault will be able to navigate the tough inflationary environment in the months ahead, also helped by Renault’s less expensive Dacia models.

Renault raised its full-year outlook in July as it sought to move past a costly withdrawal from Russia that led to a first-half loss. Chief Executive Officer Luca de Meo and his team are now working to carve out the company’s electric-vehicle and combustion engine businesses, a plan they will give more details on next month.

Renault also is in ongoing talks with with Japanese partner Nissan Motor Co. to reshape their two-decade old alliance, with the two companies closing in on an agreement, Bloomberg reported earlier this week.

Under the possible deal with Nissan, Renault would reduce its stake over time to 15% from the current 43%, people familiar with the situation have said. In return, Nissan is planning to invest $500 million to $750 million for about 15% of Renault’s EV business Ampere, which is being split from the combustion-engine and powertrain operations as part of de Meo’s strategy.

The company is due to hold a capital markets day Nov. 8 to give an update on its mid-term financial targets and more details on the carve-out plans.

(Updates with analyst comment in fourth paragraph.)