Renault and Nissan have been business partners for over 20 years. But now, their partnership is getting weaker. Renault is slowly reducing how much of Nissan it owns. Instead of owning a big part of the company, it will focus on working together on specific car projects.
Right now, Renault owns about 35.7% of Nissan. It directly holds 17.05%, and the rest is kept in a trust.
Renault said it will take a one-time financial loss in its results for the first half of the year. From now on, it will calculate the value of its Nissan shares based on Nissan’s actual stock price.
Renault also said this change will not affect its full-year profit goals or the dividends it gives to shareholders. Their ongoing work and projects with Nissan will also continue as planned.
Renault Changes How It Values Its Nissan Stake
Renault’s stock rose by 0.6% after the announcement. Experts said the move is a good step and will help show how Renault is becoming more profitable.
Renault is one of the few car companies that did not warn of lower profits last year. It will share its first-half financial results on July 31.
Meanwhile, Nissan’s stock dropped by 2.4% on Tuesday. Its price is now 341.8 yen, which is much lower than the 400 yen per share Renault paid when it bought more shares in 2002. According to Renault’s 2024 report, it still values its Nissan shares at 1,549 yen each, which is much higher than the current market value.
Nissan is having a tough time. The company never fully recovered after its former boss, Carlos Ghosn, was removed and arrested in 2018. Nissan is also struggling with falling sales, old car models, and the shift to electric vehicles.
In the year ending in March, Nissan lost $4.5 billion and did not give any future financial forecast. It has even asked some parts suppliers to wait for payments so it can save money for now.
By changing how it values its Nissan shares, Renault hopes to avoid big ups and downs in its earnings caused by Nissan’s problems, analysts said.
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