Renault Shares Stumble After Q3 Vehicle Sales Drop

Shares of Renault SA fell on Friday as the French carmaker said supply curbs hit several of the vehicles it sold in the third quarter, keeping investors concerned over the impact of higher inflation and continued supply-chain disruptions on its business.

Renault’s shares edged lower by 2.4%, as the company reported a year-on-year decline of 2.4% to 481,000 in its quarterly sales volume.

Renault Still Faces Chip Shortage and Supply-Chain Curbs

While the semiconductor shortage and supply bottlenecks have eased recently due to the continued implementation of strict COVID-19 rules in key chip maker China, automotive chip disruptions remain a challenge for France-based Renault.

Carmakers worldwide are trying to cope with a semiconductor shortage, higher energy costs due to the Russia-Ukraine war, supply chain curbs, and a potential recession in Europe.

Still, the firm’s price increases of its cars somewhat helped offset the weaker sales. Renault stated that the hikes were necessary to counter cost and currency inflation. The move pushed the company’s overall group revenue up €9.8 billion ($9.6 billion) in the third quarter.

The top line also rose 20.5% when adjusted for the closure of its Russian unit, AvtoVAZ, following the country’s invasion of Ukraine. The disposal of the units had Renault posting a total financial impact of €867 million.

As regards financial outlook, the company reaffirmed that it expects to see its full-year operating margin higher than 5%, compared with 3.6% in 2021, while its automotive operational free cash flow above €1.5 billion.

The activity growth in the third quarter reflects Renault’s focus on improving pricing policy, optimizing commercial discounts, and prioritizing the most profitable channels, Chief Financial Officer (CFO) Thierry Pieton stated.

Pieton added that Renault’s push into the compact vehicle business from small vehicles led to higher revenues, saying margins on compact cars were twice that of small cars.