Renault shares pop as carmaker plans dividend hike
- Shares of French carmaker Renault popped on news of a significantly higher dividend.
- The company slightly underperformed in full-year net profit, but investors appeared cheered by its forward guidance.
- Renault Group CEO Luca de Meo told CNBC the market was challenging, particularly in electric vehicle pricing, but the company was optimistic about its 10 upcoming vehicle launches.
Shares of Renault climbed on Thursday after the French carmaker said it would propose raising its dividend per share to 1.85 euros ($1.99) for the financial year, up from 0.25 euros previously.
Paris-listed shares provisionally closed 6.5% higher.
The company on Wednesday reported a full-year group operating margin of 7.9%, which comes in towards the top end of its prior guidance. The automaker reiterated its target of double-digit margins by 2030.
Group revenue rose 13% to 52.4 billion euros, while net profit was slightly below forecasts, Reuters reported.
The automaker is targeting a group operating margin at or above 7.5% and free cash flow of at least 2.5 billion euros in 2024, down from 3 billion euros in 2023. The company said its focus will be on its "unprecedented" 10 upcoming vehicle launches, on optimizing cost structure and on accelerating its electric vehicle (EV) and software strategy.
Renault shares logged an uptick in January after ditching plans to publicly list its new electric vehicle and software business Ampere.
Group CEO Luca de Meo told CNBC's "Squawk Box Europe" Thursday that Renault's guidance was "relatively prudent" and described the market as "challenging."
"I think there will be a lot of pressure on EV, reduction of pricing that we already see since a few months... But we are also on the other side optimistic because we'll be launching 10 models, basically one model every month, so we enter into a very favorable product lifecycle, including EV cars," he said.
"Renault shareholders have cheered the proposal to raise the dividend and are also clearly encouraged by progress on the improvement of operating margins to 7.9%," Susannah Streeter, head of money and markets at Hargreaves Lansdown, said by email.
"It's no secret that it's still pretty tough in the EV space at the moment, and CEO Luca de Meo did not shy away from the difficulties. Motorists are increasingly cost-concious amid the economic headwinds and competitors have been driving down prices."