Renault cut to junk by Moody’s on weaker operating margins

Frank Connelly

Renault SA had its credit rating cut to junk by Moody’s Investors Service after the French carmaker posted its first annual loss in a decade and indicated profit margins are set to shrink.

“Based on the company’s 2020 guidance anticipating a further decline in the group’s operating margin and the continuing weakness of the market environment, we do not expect that Renault will be able to restore healthy operating margin levels in the medium term,” Moody’s said in a statement Tuesday.

Moody’s lowered Renault’s long-term debt rating one step to Ba1, a level below investment grade. The automaker is still rated above junk by Standard & Poor’s.

The carmaker, suffering from slumping sales in key markets and a dismal performance at partner Nissan Motor Co., will conduct a review of its Chinese assets and explore plant closures to rein in costs, acting Chief Executive Officer Clotilde Delbos told reporters at a press conference Friday.