ANALYSIS: Credit Suisse analyst urges caution on Renault results
By Simon Warburton | 14 February 2013
A leading analyst says Renault is "betting the house" on recovery this year despite conceding the automaker has posted better than expected cash generation.
The comments from Credit Suisse slightly take the gloss from Renault's 2012 results announced today (14 February) in Paris, despite net income falling 15% to EUR1.77bn on revenues of EUR41.3bn.
"We are now seeing the highest-ever inventory of independent dealer carry going into 2013," said Credit Suisse specialist sales industrial equities, David Arnold. "This is [an] unsustainable position and it is predicated on a recovery in the European market.
"We have Renault making a very bold bet, which completely negates the experience of others. I genuinely think they are massaging the working capital position and are effectively betting the house on a recovery this year. It is illusory."
Despite Arnold's caution, the analyst nonetheless hailed the way in which Renault stock outperformed last year and its rally today, as well as the automaker's results, which were "better than expected" with its net financial position boosted by the EUR924m disposal of AB Volvo shares.
"It is a very, very strong working capital model and we can't argue with the move in the market," said Arnold. "What we do know is the inventory build requires a second-half recovery and we don't believe we know it may happen."
Today's results revealed Renault had paid off its net debt. For the first time since the beginning of the Alliance with Nissan in 1999, Renault is reporting a positive Automotive net cash position of EUR1.49bn at 31 December, 2012, compared with net debt of EUR299m at end-December 2011.
The automaker also saw strong sales growth outside Europe (+9.1%) helping to offset its European sales drop (-18%).
Sectors: Financial, Retailing, marketing & distribution, Vehicle manufacturers, Vehicle manufacturing
Companies: Renault, Volvo, Nissan
View next/previous articles
14 Feb 2013 -
Currently reading -
ANALYSIS: Credit Suisse analyst urges caution on Renault results
14 Feb 2013 -
Related company research
Renault SA - SWOT, Strategy and Corporate Finance Report
Renault SA - SWOT, Strategy and Corporate Finance Report, is a source of comprehensive company data and information. The report covers the company’s structure, operation, SWOT analysis, product and service offerings, detailed financials, and corporat...
Renault S.A. (RNO) - Financial and Strategic SWOT Analysis Review
Renault S.A. (Renault) is a France-based automobile manufacturing company. Renault designs, develops, manufactures, and sells automobiles including passenger cars, powertrains, light commercial vehicles, and electric vehicles. It designs, manufacture...
Renault S.A. - Mergers & Acquisitions (M&A), Partnerships & Alliances and Investment Report
Datamonitor's Company Mergers & Acquisitions (M&A), Partnerships & Alliances and Investments reports offer a comprehensive breakdown of the organic and inorganic growth activity undertaken by an organization to sustain its competitive advantage....
Related articles
Read more on this hot issue
Last quarter/full year financial results
Results season continues - fourth quarter, full year, third fiscal, first fiscal - we're still compiling them here - along with our own analysts' comments - as the data rolls in.
Read further items in this columns
just-auto business editor Simon Warburton offers up a wide range of views in his distinctive style, informed by daily contact with the global auto industry
There are currently no comments on this article
Be the first to comment on this article