Renault expects electric cars and emerging markets to boost sales

PARIS — French car maker Renault expects a first-mover advantage in electric cars and a wider range of vehicles for emerging markets to help it deliver a 44% sales increase by 2022.

Electric cars are “turning into a significant contributor to our performance while other automakers are just starting the journey,” Chief Executive Carlos Ghosn said on Friday.

Renault’s mid-term plan shows it growing faster than alliance partner Nissan, which it trails in China, due to recent investments in Iran and India and a Russian rebound.

While taking a lead in electric vehicles had come at the expense of profitability, Mr. Ghosn expects to turn this around with the launch of eight new battery-powered models and 12 hybrids.

“Our vision now is a profitable core business,” he said. Renault and Daimler’s Smart are likely to extend their small-car cooperation into electric models, he added.

Renault plans to increase annual sales to five million vehicles by 2022 from 3.47 million last year while also aiming for a 7% operating profit margin and €70 billion ($82 billion) in revenue, goals that were announced in February.

Renault said on Friday that its margin would remain above 5% in the intervening years, as it pursues €4.2 billion in cumulative productivity gains and invests €18 billion in research and development.

The company also outlined a new dividend policy, promising to increase shareholder payouts to 15% of earnings by 2022, from 7% last year.

In addition, it will continue to pass through its own Nissan and Daimler dividends to Renault shareholders. Renault owns 43.4% of its Japanese alliance partner and 3.1% of the MercedesBenz maker.

Renault’s share price was up 1.5% at €86.86 at 1100 GMT and the price might be supported in the coming weeks by “management’s increased confidence” over its mid-term goals, Evercore ISI analyst Arndt Ellinghorst said.

“This is good news in a world where most people fear earnings, cash flow and profitability will fall due to disruption,” Ellinghorst said.

The market in China, where Renault only began manufacturing last year, is expected to account for half a million sales by 2022. —