The Renault Group announced this Tuesday a change in the accounting treatment of the shares it still holds in Nissan, which led to a one-time accounting loss of €9.5 billion.
It should be noted that the French car manufacturer holds a 15% stake in its partner Nissan, and the change now made at the accounting level no longer considers the stake as a financial asset, as Renault revealed in a statement.
“Any variation in the fair value of the stake in Nissan (estimated based on the market price of the Japanese brand) will be accounted for directly in equity, with no impact on the net income of the Renault Group”, states the note from the French company.
The Renault Group recorded a loss of €8 billion in 2020, due to a decline in sales related, in particular, to the COVID-19 pandemic, but also to poor results from Nissan. Since then, the group has strengthened its vehicle offerings and recovered profits, which were only pressured by the decline in the value of its Nissan shares.
This accounting change “marks a structural break from decades of consolidation using the equity method” and simplifies Renault’s results, analysts at Oddo BHF noted.
The Renault Group confirmed its financial targets for the year 2025, which foresee, among other things, an operational margin that is expected to improve between the first and second halves, particularly with the launch of new models, including the Dacia Bigster SUV and the electric Renault 4.
Remember that Nissan and Renault announced in March that they would reduce their stake in each of the companies to 10%, down from the current 15%.
