A view of the display of Renault at the Automobile Trade Fair 2019 in Barcelona, May 11, 2019.
Ramon Costa | SOPA Images | LightRocket | Getty Images
Renault reported its first loss in a decade and cut its 2020 margin target on Friday, as it attempts to draw a line under the Carlos Ghosn affair and reboot its Nissan alliance.
The French carmaker is trying to move on from the internal turmoil sparked by the scandal involving its former boss Ghosn with a management shake-up.
Meanwhile, it is also grappling like other automakers, including Japan’s Nissan, with tumbling auto demand in some key markets like China.
“It has been a tough year for Groupe Renault and the alliance,” acting Chief Executive Clotilde Delbos told a conference call, adding that the broader autos downturn had hit the company “right when we were facing internal difficulties.”
Renault posted a loss of 141 million euros ($153 million) for the group share of net income, in part as a result of charges linked to some of its Chinese joint ventures.
The contribution from Nissan, in which Renault has a 43% stake, also fell and it was hit by a French deferred tax charge.
Nissan this week had its first quarterly loss in nearly ten years and cut its operating profit forecast.
Renault set a 2020 operating margin target of between 3% and 4%, down from 4.8% in 2019, and sliced its proposed dividend against 2019 by almost 70% from a year earlier.
Renault shares were down 4.3% at 0831 GMT.
Luca de Meo, who used to run Volkswagen’s Seat brand, is set to join as CEO in July, taking over from Delbos, who is also Renault’s financial chief.
She stepped into the CEO role on an interim basis after Thierry Bollore, a long-standing Ghosn ally, was ousted in October.
Ghosn, who ran Renault and oversaw its alliance with Nissan, was arrested in Japan in late 2018 on financial misconduct charges, but fled to Lebanon in December.
He has denied wrongdoing and hit out at his past employers, saying the Renault-Nissan alliance was all but dead without him.
Renault executives repeated assurances that the Nissan alliance was on track. Delbos acknowledged that investors were still skeptical, but said that the firms would provide meatier joint goals by May.
Carmakers have posted contrasting performances in an industry hobbled by falling global demand, squeezed by high investment costs for cleaner models, and now facing supply chain problems due to China’s coronavirus outbreak.
However, Italy’s Fiat Chrysler posted higher fourth-quarter profit due to a strong North American business.
Renault forecast that the global auto market would fall in 2020, with sales in Europe and Russia down around 3%.
It stumbled in several countries, including Argentina, and said it needed to fix its operations in China, where it has a partnership with Dongfeng on electric vehicles and with Brilliance China Automotive Holdings on commercial cars.
Renault said its goals did not take into account possible impacts from the coronavirus crisis in China, where it has a factory in Wuhan, the epicenter of the epidemic, which has been in lockdown to contain the spread of the virus.
It has also suspended operations for at least four days at its South Korean subsidiary due to supply chain hiccups.
Renault’s group sales fell 3.3% to 55.53 billion euros in 2019, beating an average 55.24 billion-euro forecast expected by 20 analysts polled by Refinitiv.
Sales were down 2.7% at constant exchange rates.
Tesla is under pressure to revitalize its solar and storage business
Elon Musk reveals prototypes of the Tesla Solar Roof on October 28, 2016
Even with a record fourth quarter for its solar energy and storage systems business, Tesla’s energy revenue declined by over $24 million in 2019, after several rounds of layoffs that started the prior year.
The company is now under pressure to get the business going again. Tesla said, in its annual financial report on Thursday, that it’s ramping up solar photovoltaic production at its plant in Buffalo, New York.
“We have recently started manufacturing solar panels at this facility in collaboration with Panasonic,” the filing states.
CEO Elon Musk needs to increase headcount at the Buffalo plant, dubbed Gigafactory 2. If Tesla fails to employ 1,460 people there in April, it will have to pay a $41.2 million penalty to the state of New York or get an exemption. The mayor of Buffalo said, citing company officials, that there are currently around 1,100 workers at the plant.
Empire state taxpayers doled out $959 million to build Tesla’s factory, including equipment purchases, which is $209 million more than originally expected.
In addition to his race against the clock in upstate New York, Musk is also in a battle with Tesla shareholders, who sued the automaker in 2017 over its $2.6 billion acquisition of SolarCity. They say the deal never should have happened and called it a bailout of Musk and his cousins, Lyndon and Peter Rive, who started SolarCity.
Musk was co-founding chairman of SolarCity and its biggest shareholder at the time of the acquisition. He’s expected to stand trial in Delaware’s Chancery Court in March.
Tesla told Reuters in September that the allegations were “based on the claims of plaintiff’s lawyers looking for a payday, and are not representative of our shareholders.”
Since the acquisition, solar energy has been a relatively small and dwindling business for Tesla, in part because of delays in manufacturing and a longer development cycle than expected.
Musk said last March that 2019 would be the “year of the solar roof.” But even with the company rolling out new ways for customers to lease solar systems and with a new version of its Solarglass roof tiles promoted last year, solar energy and storage made up just 6.2% of the company’s $24.6 billion in 2019 revenue.
Newlyweds stuck aboard quarantined ship on Valentine’s Day: ‘This is our honeymoon’
A newly married couple from Texas is stuck aboard the quarantined Diamond Princess cruise ship in Japan, but they are not letting it get in the way of their Valentine’s Day celebration.
Tyler and Rachel Torres, who tied the knot in September, say they are trying to stay optimistic after their honeymoon turned into an extended stay on the ship.
“We have a bottle of wine. We saved it the whole trip,” Tyler Torres, sitting alongside his wife Rachel of five months, said in a video aired on the network’s special “Outbreak” report that day. “Now we’re like: ‘It’s Valentine’s Day. We’re drinking it.'”
The luxury days on the ship are no more as passengers were instructed to stay in their cabins after a voyage through East Asia. While being holed up in their room for nine days after the cruise has ended, Rachel Torres joked that it feels as if they’d been married for 15 years.
“We’re also going to dress up for dinner tonight,” she said, while Tyler Torres showed off a Kit Kat bar they would share. “This is our honeymoon.”
Rachel Torres said the trip was fun, until the quarantine came. She is counting the days to be able to disembark the cruise ship on Wednesday, but her experience has since declined into a “roller coaster” as the optimism waned.
“Yesterday, hearing the news from the chief medical officer that [February] 19th may or may not be the date we get out and [it] kind of scared me a little bit,” she said.
The Diamond Princess, a cruise ship under Carnival Corp’s Princess Cruise Line, is on day nine of a mandatory 14-day quarantine after a number of passengers were diagnosed with the novel coronavirus, now known as COVID-19. The couple were two of 3,700 passengers and crew members that were held on the trip after a number of passengers were diagnosed with the virus.
Guest diagnosed with the disease have been removed from the ship and isolated in a Tokyo hospital. Passengers were told on Wednesday that they would be able to unboard the ship voluntarily and complete the quarantine period at a facility on land. Older guests and the most medically vulnerable people will be given priority.
China’s National Health Commission said that as of Friday that there have been almost 66,500 cases and more than 1,500 deaths in the country from the coronavirus. The virus originated in the Hubei province city of Wuhan in December. There are almost 67,000 cases worldwide.
Still, Tyler and Rachel Torres plan on cashing in on a free trip that the company is offering affected guests. The couple plan to make it a honeymoon part two.
“They gave us a free cruise after this and we’re going to take it,” Tyler Torres said.
US raises tariffs on European-built aircraft in ongoing dispute over subsidies
Eric Cabanis | AFP | Getty Images
The U.S. government on Friday said it would increase tariffs on aircraft imported from the European Union to 15% from 10%, ratcheting up pressure on Brussels in a nearly 16-year transatlantic dispute over aircraft subsidies.
The U.S. Trade Representative’s Office said it remained open to reaching a negotiated settlement with the EU on the issue, but could revise its actions if the EU imposed tariffs of its own in connection with a pair of disputes over the subsidies.
In a statement released late on Friday, USTR said it would make minor modifications to 25% tariffs imposed on cheese, wine and other non-aircraft products from the EU, including dropping prune juice from the list. It did not raise the tariff rates on those product, as it had suggested it might do in October.
The higher aircraft tariff will take effect March 18.
The U.S. action comes as U.S. President Donald Trump, emboldened by agreement on a Phase 1 trade deal with China, has trained his sights on restructuring the more than $1 trillion U.S.-EU trade relationship, raising the specter of another major trade war as the global economy slows.
EU officials have said they want to negotiate with Washington but will not be bullied into submission.
European planemaker Airbus said the U.S. move would hit U.S. airlines already facing a shortage of aircraft and complicate efforts to reach a negotiated settlement with the European Union in the longstanding dispute.
Airbus said it would continue discussions with U.S. customers to “mitigate effects of tariffs insofar as possible” and hoped USTR would change its position, particularly given the threat of EU tariffs on U.S. products in its own case before the World Trade Organization.
“USTR’s decision ignores the many submissions made by U.S. airlines, highlighting the fact that they — and the U.S. flying public — ultimately have to pay these tariffs,” the company said in a statement.
EU officials had no immediate comment on Friday’s news.
The USTR had announced in December that it could increase tariff rates up to 100% and subject additional EU products to tariffs, following a decision by the WTO that EU launch aid to Airbus continued to harm the U.S. aerospace industry.
The WTO in October had awarded Washington the right to impose tariffs on $7.5 billion of annual EU imports in its case against Airbus. Washington then slapped 10% tariffs on most European-made Airbus jets and 25% duties on products ranging from cheese to olives and single-malt whisky, from Oct. 18.
Boeing, in a statement, said it was working with U.S. federal and state officials to “promptly bring the United States into full compliance” with WTO rulings.
“The EU and Airbus could end these tariffs by finally complying with their legal obligations, ending these illegal subsidies, and addressing their ongoing harm. We hope they will,” the company said in a statement.
The Wine & Spirits Wholesalers of America (WSWA) said it remains strongly opposed to tariffs on European-origin wine and spirits, and urged U.S. and EU trade officials to negotiate an end to a trade dispute that was lowering revenues.
A study commissioned by the group estimated that the 25% tariffs implemented in October could result in the loss of nearly 36,000 jobs in the beverage alcohol industry.
The Distilled Spirits Council of the United States said tit-for-tat tariffs on alcoholic beverages were hurting companies and consumers on both sides of the Atlantic.
It said new U.S. government data showed the U.S. spirit industry’s exports to the EU, its largest export market, fell 27% in 2019 from a year earlier, and global exports of American whiskey declined 16% in the same period.
“We urge both sides to resolve these disputes so that consumers can enjoy #ToastsNotTariffs,” the group said.
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