S&P shifts Renault outlook to stable

S&P said it revised its outlook Renault SA to stable from negative and affirmed its BB+ long-term rating.

“Renault has beat its 2022 guidance and outperformed our base case. Following the publication of Renault's 2022 results, we have reviewed our base case for the group. We now expect Renault to post adjusted EBITDA margins in the 7.0%-8.0% range compared with 6.3% in 2021 and our previous projection of about 7% for 2022. We also estimate adjusted FOCF at about €1 billion, versus negative FOCF in 2021 and our previous expectation this year of €300 million-€500 million,” the agency said in a press release.

“We think this, supported by Renault's measures to reduce the cash breakeven per unit produced, other cost savings, and proactive management of its model mix and pricing, will enable Renault to maintain improved profitability and cash flow amid more difficult industry conditions in 2023,” S&P added.

The agency said it sees Renault toughing out a mild recession while keeping its adjusted EBITDA margin above 6% and positive FOCF to sales.

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