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.
U.S. likely impose sanctions against China over Hong Kong law
Hong Kong Chief Executive Carrie Lam attends the opening session of the National People’s Congress (NPC) at the Great Hall of the People in Beijing on May 22, 2020.
Leo Ramirez | AFP | Getty Images
The U.S. government will likely impose sanctions on China if Beijing implements national security laws that would give it greater control over autonomous Hong Kong, White House National Security Advisor Robert O’Brien said Sunday.
The draft legislation represents a takeover of Hong Kong, O’Brien said, and as a consequence U.S. Secretary of State Mike Pompeo would likely be unable to certify that the city maintains a “high degree” of autonomy. This would result in the imposition of sanctions against China under the Hong Kong Human Rights and Democracy Act of 2019, O’Brien said.
Pompeo has already called the proposal a “death knell” for Hong Kong’s autonomy. O’Brien warned that Hong Kong could lose its status as a major hub for global finance.
“It’s hard to see how Hong Kong could remain the Asian financial center that it’s become if China takes over,” O’Brien told NBC’s Chuck Todd on “Meet the Press.” He said financial services initially came to Hong Kong because of the rule of law that protected free enterprise and a capitalist system.
“If all those things go away, I’m not sure how the financial community can stay there. …They’re not going to stay in Hong Kong to be dominated by the People’s Republic of China, the communist party.”
The legislation was announced during the annual session of China’s parliament, the National People’s Congress. The session had been delayed for months during the coronavirus pandemic. Hong Kong faced months of at times violent anti-government protests before the pandemic effectively shut China down.
Hong Kong has been governed under the “one country, two systems” principle since the former British colony was returned to Chinese rule in 1997. The system gives Hong Kong a high degree of autonomy and a greater degree of freedom for the special administrative region than the rest of China.
A draft decision on “establishing and improving the legal system and enforcement mechanisms” for Hong Kong was submitted to China’s parliament Friday, according to state news agency Xinhua. A document explaining the decision said the one-country two systems principle “has achieved unprecedented success in Hong Kong,” but the “increasingly notable national security risks” in the city “have become a prominent problem,” according to Xinhua.
The document says activities “have seriously challenged the bottom line of the ‘one country, two systems’ principle, harmed the rule of law, and threatened national sovereignty, security and development interests,” according to Xinhua.
The move from China has incited strong opposition from pro-democracy activists and politicians. Thousands of protesters demonstrated for the first time since the introduction of the national security laws on Sunday. Hong Kong police fired tear gas and pepper spray to disperse the crowd.
Nearly 200 political figures from the U.K., Europe, Australia, North America and Asia condemned the laws in a joint statement.
Airlines change summer air travel procedures
Ahead of the Memorial Day holiday weekend, all states in the U.S. began to lift some restrictions implemented to halt the spread of the coronavirus. Government officials are still urging people to practice social distancing and to wear masks in public.
Changing opinions from scientists and health officials have contributed to some people refusing to wear masks because public health authorities initially advised against wearing masks, saying there was little evidence that it would help prevent people from getting sick.
China’s top diplomat criticized U.S. efforts to hold China accountable for its alleged role in the spread of the coronavirus, calling any aims to force Beijing to pay compensation for the coronavirus a “daydream.”
The number of coronavirus fatalities in New York state fell below 100, Gov. Andrew Cuomo said on Saturday, marking the lowest daily death toll since March 24.
This is CNBC’s live blog covering all the latest news on the coronavirus outbreak. This blog will be updated throughout the day as the news breaks.
- Global cases: More than 5.33 million
- Global deaths: At least 341,513
- U.S. cases: More than 1.62 million
- U.S. deaths: At least 96,046
The data above was compiled by Johns Hopkins University.
Air travel is going to look different this summer because of the coronavirus
9:03 a.m. ET — Memorial Day weekend is the traditional kickoff to the peak travel season and while demand is showing some signs of life, it is still down about 90% from a year ago. The virus and concerns about it spreading have prompted new procedures at airlines and federal agencies.
The Department of Homeland Security, which includes TSA and customs, is exploring temperature checks at airports. The Transportation Security Administration is also changing some polices to limit physical contact, such as asking travelers to scan their own boarding passes and that they remove food and other items from their bags so officers don’t have to touch bins.
Starting this month, U.S. airlines require that travelers wear masks on board. They are tweaking boarding to fill seats from back to front to limit contact with other travelers. Some airlines are limiting the number of travelers on board, or letting travelers know when their flights are full. Experts warn its nearly impossible to socially distance on an aircraft, however. —Leslie Josephs
AngloGold Ashanti closes mine in South Africa after 53 employees tested positive
China tells U.S. to stop wasting time in coronavirus battle
Pedestrians wearing protective masks walk along the street as a screen displaying a live broadcast of Chinese President Xi Jinping at the National People’s Congress in Beijing, China, on Friday, May 22, 2020.
The United States should stop wasting time in its fight against the coronavirus and work with China to combat it, rather than spreading lies and attacking the country, the Chinese government’s top diplomat Wang Yi said on Sunday.
Sino-U.S. ties have nosedived since the outbreak of the new coronavirus, with the administrations of President Donald Trump and President Xi Jinping repeatedly trading barbs over issues related to the pandemic, especially U.S. accusations of cover-ups and lack of transparency.
The two top economies have also clashed over Hong Kong, human rights, trade and U.S. support for Chinese-claimed Taiwan.
State Councillor Wang, speaking at his annual news conference on the sidelines of China’s parliament, expressed his deep sympathies to the United States for the pandemic, where the death toll is expected to surpass 100,000 in the coming days, the highest number of any country.
“Regretfully, in addition to the raging coronavirus, a political virus is also spreading in the United States. This political virus is using every opportunity to attack and smear China,” said Wang, who is also China’s foreign minister.
“Some politicians have ignored the most basic facts and concocted too many lies about China and plotted too many conspiracies,” he added.
“I want to say here: Don’t waste precious time any longer, and don’t ignore lives,” Wang said.
“What China and the United States need to do the most is to first learn from each other and share their experience in fighting against the epidemic, and help each country fight it.”
China and the United States also need to start coordinating macro policies for their respective economies as well as the world economy, he added.
China remains prepared to work with the United States in the spirit of cooperation and mutual respect, Wang said, when asked if Sino-U.S. relations would further worsen.
“China has always advocated that, as the world’s largest developing country and the largest developed country, both of us bear a major responsibility for world peace and development,” he said. “China and the United States stand to gain from cooperation, and lose from confrontation.”
Last month, Missouri became the first U.S. state to sue the Chinese government over its handling of the coronavirus, saying China’s response to the outbreak that originated in the city of Wuhan brought devastating economic losses to the state.
Wang said such lawsuits lacked any legal basis. “The China of today is not the China of a century ago, and nor is the world,” he added.
“If you want to infringe upon China’s sovereignty and dignity with indiscriminate litigation, and extort the fruits of the hard work of the Chinese people, I am afraid this is a daydream and you’ll only humiliate yourself.”
Wang also offered his strong support for the World Health Organization (WHO) and its chief, Tedros Adhanom Ghebreyesus, frequent targets of U.S criticism.
“To support the WHO is to support saving lives. This is the choice any country with a conscience should make,” he said.
Trump, who has accused the agency of being “China centric”, has threatened to permanently halt funding to the WHO and to reconsider his country’s membership of the agency.
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