PARIS (Reuters) - Renault’s (RENA.PA) shares fell on Wednesday after credit rating agency Moody’s cut its rating on the French carmaker’s debts to “junk” status.
Renault shares were down 2.3% to 30.2 euros ($32.71) in early trading, its lowest level since mid-2012, making it among the worst performing stocks on Paris' benchmark CAC-40 .FCHI index.
Moody’s late on Tuesday cut its credit rating on Renault to Ba1 status after the company posted weak annual results.
On Feb 14, Renault reported its first loss in a decade and the company also cut its dividend.
“The downgrade to ‘Ba1’ was triggered by Renault’s substantially weakened operating performance reported for the year 2019 to a level no longer commensurate with the Baa3 rating category,” wrote Moody’s.
“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,” the rating agency added.
Brokerage Jefferies also cut its share price target for Renault to 28 euros from 38 euros.
“Renault is set to remain income poor for a while,” wrote Jefferies, which kept an ‘underperform’ rating on the stock.
Reporting by Gilles Guillaume; writing by Sudip Kar-Gupta; Editing by Richard Lough