Renault shares climb after a full-year upgrade

[MongiIG]

Despite a rise in the cost of living and the costs of exiting Russia, Renault has seen its shares rise after upgrading its outlook. The French carmaker has raised its operating margins as it focusses on higher margin products.

 

 Jeremy Naylor | Writer, London | Publication date: Friday 29 July 2022 

Renault H1 earnings

French carmaker Renault SA has posted a €1.36 billion net loss for the first half (H1) of this year from the cost of living crisis, and also the cost of exiting the Russian market.

Let's take a look at the figures as they came through before the bell this morning. That hefty first half loss was mainly as a cost of exiting Russia. The company recorded that net loss in the first half of this year, but it upgraded its full-year (FY) outlook because of improving profitability elsewhere.

Renault is the most exposed of the Western automakers to the Russian market. It sold that stake back in May for a small symbolic amount. But away from Russia, the company said operating margins in the first half, 4.7% against a 2.1% reading in the first half of last year, and it's raised that forecast of full-year margins to more than 5% from a forecast of just 3%. So you can see this is all looking very favourable as a result of that.

Renault share price chart

If we look at the share price chart, you can see quite clearly here that it's risen for a third day in a row. And most significantly, today, we are past this area of resistance at around about the 2748 level and indeed well past the 200-period moving average as well. So a very, very strong result.

We are currently up 3.68%, we have been up higher than this to levels not seen since the end of February this year. But the company has also warned that the global shortage of semiconductors, used in everything from brake sensors to entertainment systems in a car, has cut into car production at many major carmakers, and indeed Renault has not escaped from that either.

So, that continues to be a headwind for the business, but nonetheless looking favourably on the back end of this year. If you're trading this, your stop-loss goes under the underside of some of the recent actions around about the 2500 level with a view to taking this higher.

The next line to watch out for is the gains that we've seen which would take us up to around about the 3226 level which is the highs we saw back on the 2nd of March.