Renault sees rating cut by Moody’s as problems mount
Renault shares fell this morning after credit agency Moody’s cut its rating for the embattled carmaker’s debt to junk after last week’s poor full-year results.
Moody’s said that the rating cut, which saw the French firm downgraded from Baa3 to Ba1, was triggered by Renault’s substantially weakened operating performance reported for last year.
The financial services group said that it did “not expect that Renault will be able to restore healthy operating margin levels in the medium term”.
Shares in the embattled car maker originally dropped about 2.3 per cent, before recovering slightly to around one per cent down.
Last week Renault fell to its first loss in a decade as the firm took a hit from its alliance with Nissan, which remains mired in a scandal concerning former boss Carlos Ghosn.
Both firms have been hit by year of turmoil caused by Ghosn’s arrest in Tokyo in November 2018 on financial misconduct charges, all of which he denies. Ghosn fled the country late last month.
The company lowered its guidance on the back of the results, setting a margin between three and four per cent, down from 4.8 per cent in 2019.
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Nissan, of which Renault owns 43 per cent, contributed €242m, down from €1.5bn the year before, as the Japanese firm reported its worst year for a decade.
The company is currently undergoing a leadership reshuffle, with chief executive Luca de Meo due to join from Volkswagen in the summer after Thierry Bollore was ousted last year.
Fellow rating agency Standard & Poor’s also it was placing the firm on credit watch negative, meaning it could also revise its investment grade BBB- rating downwards.
Renault suffered a further blow yesterday when French finance minister Bruno Le Maire warned the carmaker against shutting factories and cutting jobs in France.
He told reporters in Brussels: “The state will play its role as shareholder in Renault to make sure that the choices which will be made will not go against jobs and factories in France”.
The French government holds a 15 per cent stake in Renault and controls two board seats.