Renault’s shares fell on Wednesday after Moody’s cut its rating on the French carmaker’s debt to “junk” status, citing weaker profitability as the company restructures and grapples with falling demand.
Renault is under pressure as demand dwindles in markets like China. It is also bedding down a new management team after a scandal surrounding former boss Carlos Ghosn.
Moody’s late on Tuesday cut its credit rating on Renault to Ba1 after the company last week posted its first loss in a decade, in a move that will likely add to financing costs.
Renault last week set an operating margin goal for this year at between 3% and 4%, down from 4.8% in 2019, and forecast further declines in the global auto market.
Moody’s said it did not expect Renault to return to “healthy” operating margin levels in the medium term, and highlighted other challenges the carmaker has in common with peers, including high investments to produce less polluting vehicles.
“The cost to comply with CO2 regulation in the European Union and the ongoing electrification of Renault’s fleet will have further dilutive effects on profitability,” Moody’s said.
Via Reuters
