Business

Cash haul drives Renault, Stellantis shares higher

Published

3 months ago

February 15, 2024

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Cash haul drives Renault, Stellantis shares higher

Shares in Renault hit seven-month highs and rival Stellantis shot to record peaks on Thursday after the carmakers pledged to reward investors with a big jump in annual dividend and a share buyback worth billions of euros.

The bumper payouts helped soothe investors’ concerns over the outlook for European carmakers as they struggle with competition from cheaper Chinese rivals, higher costs and tepid demand while consumers tighten their budgets due to rising costs of borrowing.

For Stellantis, the return of cash was a relief after agreeing big pay increases to end a prolonged strike by workers in North America last year, which knocked profits in the second half.

At Renault, the stronger cash position and margin growth delivered in 2023 results on Wednesday night were the latest sign that a turnaround under Chief Executive Luca de Meo is bearing fruit.

Renault shares were last up more than 7% at 1041 GMT, set for their best day in more than a year and having touched their highest since July. That compares with a 0.7% rise in Paris’ benchmark CAC 40 (.FCHI), opens new tab.

Renault also said it would propose a dividend of 1.85 euros for 2023, up from a payout of 0.25 euro for 2022, and much better than the 1.4 euros expected by analysts.

Meanwhile, rival Stellantis rose 4.1% to a record high despite its warning of a turbulent 2024. The world’s third largest automaker by revenues, whose brands include Fiat, Jeep and Citroen, said it will launch a share buyback programme worth 3 billion euros this year.

The stock has risen 77% since January 2023, the best performing carmaker in Europe under CEO Carlos Tavares.

“Dividends and buybacks announcements are supporting shares versus a cautious outlook. A cautious outlook is understandable for both companies, as the current macro environment is not easy to navigate,” said Massimo Baggiani, founder of investment boutique Niche Asset Management which owns Renault shares.

“Renault posted an excellent cash flow for 2023 and has a solid outlook for 2024,” he added.

“Stellantis remains a “growth” stock, thanks to earnings improvement, a management of exceptional standing and synergies, although margins are already very good.”

STRIKE IMPACT
Stellantis must manage the fallout from strikes in North America last year which ended with record salary increases for workers at the ‘Detroit Three automakers’.

Stellantis has said the strikes had cost the group almost 750 million euros in terms of profitability last year and around three billion euros in terms of revenue.

CFO Natalie Knight said the longer term impact for Stellantis, in terms of higher costs per car produced, would be similar to those booked by competitors, but the group could rely on strong pricing power in North America than peers Ford and General Motors.

“So the impact for us is certainly going to be on an overall level lower than what you’ve seen from our peers,” she said.

Stellantis said its margin on adjusted operating profit fell to 11.2% in the second half, from 12.3% in the same period of 2022.

Renault posted an annual operating margin of 7.9%, up from 5.5% in 2022, and forecast margin of around 7.5% in 2024. It stood by its 2030 target of double-digit margins by 2030.

Chief Financial Officer Thierry Pieton told analysts on Thursday he expects low single-digit sales volume growth this year. Sales returned to growth in 2023 after four years of consecutive declines as it undergoes a major revamp.

He also sees some benefit from higher car prices and easing raw material costs as the French carmaker prepares to launch 10 models in 2024, including two fully electric cars, the Scenic and the R5, and two hybrids.

Morgan Stanley was positive in its response, but injected a note of caution.

“We think investors will view this OP (operating profit) margin guidance as very attractive and could look to re-rate the shares more permanently as the balance sheet improves and management execution continues,” they said.

“The key risk is if European pricing weakens from here,” they added.

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Business

Chinese firm aims to expand investments in Pakistan, shows interest in mining sector

Published

1 day ago

May 17, 2024

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Chinese firm aims to expand investments in Pakistan, shows interest in mining sector

A notable Chinese company has expressed keen interest in expanding its investment in Pakistan, in yet another sign of investor confidence boost in the leadership of Prime Minister Shehbaz Sharif.

A delegation from Chinese firm MCC Tongsin Resources led by its Chairman Wang Jaichen called on PM Shehbaz here on Friday.

The premier invited the Chinese company to invest in Pakistan’s mining sector and manufacturing of export goods.

Shehbaz assured the delegation that his government would extend all-out facilitation to the company from minerals exploration and processing to the export of goods.

The PM instructed the relevant federal ministers and officers to continue consultation with the Chinese firm, taking the Balochistan chief minister, provincial departments and stakeholders on board.

The delegates reposed trust in PM Shehbaz’s leadership, and expressed keen interest in enhancing their investment in Pakistan’s mining and minerals sectors.

The delegation briefed Prime Minister Shehbaz about the construction of a mineral park in Pakistan and their future investment plans.

The premier welcomed the Chinese firm and highlighted the priority steps by his government to promote foreign investment in Pakistan.

He said that being a time-tested friend, China supported Pakistan in every difficult hour for which the Pakistani nation was grateful to the leadership and people of China.

Federal ministers Ahad Khan Cheema, Dr Musaddik Malik, Rana Tanveer Hussain, Jam Kamal Khan and relevant senior officers attended the meeting.

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Business

Govt jacks up power price by Rs1.47 per unit

Published

1 day ago

May 17, 2024

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Govt jacks up power price by Rs1.47 per unit

The government on Friday increased the electricity tariff by Rs1.47 per unit.

According to Nepra sources, the collection from consumers will take place in August, September, and October.

The electricity companies had requested the funds as part of the third quarter adjustment for 2023-2024, seeking Rs 31.34 billion under capacity charges.

Sources said that Rs5.57 billion were requested for operation and maintenance costs, and Rs12.38 billion were requested for the transmission and distribution impact under monthly fuel cost adjustment.

Previously, Nepra had completed the hearing on the electricity companies’ request under the quarterly adjustment.

Nepra approved the Power Division’s request, allowing an increase of Rs 1.45 per unit in electricity prices.

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Business

Hong Kong allows China’s digital yuan to be used in local shops

Published

1 day ago

May 17, 2024

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Hong Kong allows China's digital yuan to be used in local shops

Hong Kong will allow mainland China’s pilot digital currency to be used in shops in the city, the head of its de facto central bank said on Friday, marking a step forward for Beijing’s efforts to internationalise the yuan amid rising geopolitical tensions.

The programme, backed by Beijing, will allow mainland Chinese and Hong Kong residents to open digital yuan wallets via a mobile app developed by China’s central bank and will permit them to make payments in retail shops and some online stores in Hong Kong and in mainland China.

Transactions using e-CNY, predominantly for domestic retail payments in China, hit 1.8 trillion yuan ($249.27 billion) as of end of June 2023, with 120 million digital wallets opened, according to the latest disclosure from China’s central bank.

Using the wallet, users can make payments at over 10 million merchants in 17 provinces and cities in the mainland.

Each wallet used in the city will be subject to a balance limit of 10,000 yuan, with single transactions and daily payments capped at 2,000 yuan and 5,000 yuan, respectively, officials from the Hong Kong Monetary Authority said.

Peer-to-peer transfers will not be allowed at the moment, according to the HKMA.

“By expanding the e-CNY pilot in Hong Kong .. users may now top up their wallets anytime, anywhere without having to open a mainland bank account, thereby facilitating merchant payments in the mainland by Hong Kong residents,” HKMA Chief Eddie Yue said.

Currently, users of other digital yuan wallets such as those operated by Ant Group and Tencent can make payments in the city.

Industrial and Commercial Bank of China, Bank of China Ltd, China Construction Bank Corp and Bank of Communications Co have been selected as e-CNY wallet operators.

The yuan’s use in global finance remains low, though it has shown steady increases.

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