Shares of automakers led European stocks higher Thursday, after Renault sharply raised its dividend following a boost to sales and Stellantis proposed a €3 billion share buyback.
Paris-listed Renault
RNO,
said late Wednesday that it made a net profit in 2023 of €2.315 billion ($2.48 billion), compared to a loss of €716 million in 2022.
The net profit was below analysts estimates of about €2.62 billion — after deducting losses from the disposal of a stake in Nissan — but other improvements cheered investors.
Global sales volumes rose 9% after four consecutive years of declines; operating margins increased from 5.5% in 2022 to 7.9% last year, and management suggested a dividend of €1.85 per share, up from €0.25 the year before.
“The proposed dividend payout illustrates our confidence in our ability to continue to grow,” Thierry Pieton, Renault’s chief financial offer, told reporters.
The increase in sales and margins comes after chief executive Luca de Meo looked to improve efficiency by trimming the number of models Renaults makes.
Renaults shares rose more than 6% to €40.08, but are down 8% over the last 12 months.
Pierre-Yves Quemener, analyst at Stifel, said he saw Renault increasing margins further and rated the shares a buy with a price target of €53.
“With €3.7 billion in net cash and €4 billion in Nissan shares remaining
to be monetized, current market value of €11bn seems much too low; re-rating is required,” he said.
Meanwhile shares of Stellantis
STLAM,
STLA,
which produces marques including Alfa Romeo, Chrysler, Citroën, Fiat, Jeep, and Peugeot, rose 4% to a record high, after the Netherland-headquartered group said it would buy back up to €3 billion of its shares in 2024.
The scheme, along with a proposal to boost the dividend by 16% to €1.55 per share, offset news that strikes at its North American plants had pushed operating profits in the second half of 2023 down 10% to €10.2 billion.
Stellantis CEO Carlos Tavares said he expected a “turbulent 2024”, but in a statement the company said there were a number of factors that could support revenues this year, “including reduced supply and logistical constraints, stabilizing and potentially reduced interest rates, and the benefits of the Company’s expected expansion of its product offering.”
The news from the two automakers lifted others in the sector, pushing the STOXX Europe 600 Automobiles & Parts Index
XX:SXAP
up 1.7%.
More broadly in Europe the mood was positive following Wall Street’s rebound overnight and firmer U.S. futures on Thursday. The CAC 40
FR:PX1
in Paris rose 0.7%, Frankfurt’s DAX
DX:DAX
added 0.6%, though London’s FTSE 100
UK:UKX
was flat amid weakness for energy majors BP
BP,
BP,
and Shell
SHEL,
SHEL,
as oil prices slipped.
