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.

Go deeper with GlobalData

Data Insights

The gold standard of business intelligence.

Find out more

Related Company Profiles

View all

“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.”

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

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%).

See also: FRANCE: Renault posts profit down 15% for 2012