ANALYSIS: Credit Suisse analyst urges caution on Renault results
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%).
The media days for the 2013 Frankfurt Internationale Automobil-Ausstellung (IAA) are 10 & 11 September. Each of the following vehicles is a world premiere at the show....
Hyundai Motor India, currently second, wants to overtake market leader Maruti Suzuki one way or another by the end of the decade....
Vehicle importers enjoyed record sales in South Korea in July, with total volumes rising by almost 39% to 14,953 units, according to the Korea Automobile Importers and Distributors Association....
Iran Khodro (IKCO) says it is hopeful Iran's recent election of a new President will allow more partners - as well as its old Renault and Peugeot business allies - to have full operations in the count...
- THE WEEK THAT WAS - Scion and Ford workers' chop
- Analysis - Bull market for Lamborghini
- F23 2 Series Convertible & future BMWs
- Interview with Harman Connected Car division
- Q&A – Delphi Chief Technology Officer, Jeff Owens
- New Ford plant for Mexico & Prius rival - report
- Auto vacancies due to UK skills shortage - report
- Volvo nixes range extenders
- VW Group quality chief leaves
- Geneva premieres list - Honda Civic world debut