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Renault is taking a €9.5bn loss on its stake in Nissan following a change in the way the French carmaker accounts for the holding in its struggling Japanese partner.
Renault has been restructuring its 26-year alliance with Nissan and is gradually reducing its holding in the Japanese group, which was once as high as 43 per cent, to 10 per cent.
That process has been complicated by Nissan’s sinking share price, which has fallen by almost 40 per cent in the past year. Renault currently holds 36 per cent in Nissan, including an 18.7 per cent stake held in a French trust it wants to offload.
On Tuesday, Renault said a new accounting method would align the value of its stake with Nissan’s stock price, leading to the non-cash loss in its results for the six months to June 30, which it will publish later this month.
“Although this accounting change implies a significant adjustment to Renault Group’s financial statements, it does not change the strategic and operational commitments between Renault Group and Nissan,” Renault said.
The French group said the changes — which were triggered by the application of IFRS rules — would not impact its cash or the calculation of its dividend.
The extraordinary loss comes after its chief executive Luca de Meo’s sudden departure to run luxury group Kering, which sent shares in Renault down sharply following the announcement last month.
Before Tuesday’s update, Renault had outperformed its rivals owing to its limited exposure to the US trade war and increasing competition in the Chinese market.
De Meo left the company as he was about to outline the second phase of a growth strategy for Renault, having revived it from a struggling lossmaking group into one with a record profit margin.
Meanwhile, Nissan is pushing forward with sweeping restructuring measures that involve shutting seven out of 17 plants and cutting 20,000 jobs globally under its new chief executive Ivan Espinosa.
As part of the restructuring, Nissan plans to cut 250 jobs at its UK plant in Sunderland through a voluntary redundancy scheme. It has also sought to support its near-term cash flow position by delaying payments to suppliers.
The Japanese group had earlier held merger talks with Honda, but Renault had urged Nissan to negotiate a higher premium from its bigger rival.
Renault had been open to a merger between the two Japanese groups but the collapse in talks has complicated its path to winding down its stake in Nissan.
