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Nissan's Ghosn crisis

5 things to know ahead of Renault's annual results

Earnings report comes as new chairman Senard arrives in Japan for Nissan talks

A worker checks cars on an assembly line at a Renault factory in France. The automaker is seen as a symbol of French industrial success.   © Reuters

PARIS -- French automaker Renault will announce its 2018 results on Thursday, reporting earnings for the first time under new leadership installed following the resignation of former chief Carlos Ghosn.

The update comes as new Renault Chairman Jean-Dominique Senard arrives in Japan on a trust-building mission to alliance partner Nissan Motor.

Here are five things to know:

What are Renault's results expected to show?

A key factor to watch is the impact of a slowing Chinese auto market.

China is increasingly important to the French automaker's business. Counting two previously excluded Chinese auto brands in the company's 2018 sales took global volume to a 3.2% increase, compared with a 1.2% decline if those cars are left out.

Weakness in China factored into Nissan's downgrade of its full-year profit forecast to 410 billion yen ($3.71 billion), an 18% reduction from its earlier projection.

Renault last saw a profit decline in 2013.

Will the new executive team continue Carlos Ghosn's strategy?

Renault named a new executive team last month after Ghosn, still in jail awaiting trial on financial charges in Japan, resigned as chairman and CEO. Former Renault No. 2 Thierry Bollore took his place as CEO, and Senard, from tire manufacturer Michelin, became chairman.

This raises the question of whether they will stick to Ghosn's hard-driving strategy of expanding to as many international markets as possible.

"Management will seek to distance itself from the Ghosn legacy -- but it needs to ensure it doesn't change tactics too much, seeing as his strategy was successful," said David Madden, analyst at CMC Markets.

The new Renault team may want to rein in Ghosn's goal of selling 5 million cars a year by 2022. This would mean an average of over 6% growth annually until then, which seems a tall order given this year's results.

Is change coming to the alliance soon?

Renault and Nissan have both said they wish to continue the alliance -- which, together with Mitsubishi Motors, forms one of the world's largest automaking groups. A breakup would risk damage to both sides at a time automakers worldwide face the challenge of adapting to technological change.

But relations between Renault, which counts the French government as its top shareholder, and Nissan had become strained even before Ghosn's arrest.

Nikkei has reported that a French delegation of Renault and government representatives suggested integrating Renault and Nissan under a holding company during a meeting with Japanese counterparts last month. Ghosn also says he put this scenario to Nissan CEO Hiroto Saikawa in September.

With all the rumors surrounding the automakers since Ghosn's arrest, Renault and Nissan both may want to keep the alliance in its current form for now, waiting until a less turbulent time to start negotiating any changes.

Will the French government's position change?

France holds a 15.01% stake in Renault, but a French law giving double representation to long-term shareholders means the government holds 28% of the voting rights.

This strong government position has long been a source of wariness for Nissan. It was recently revealed that the French government had suggested reducing its stake in Renault. But this gesture of goodwill does not necessarily mean that the French state will reduce its influence over Renault, which has significance as an employer as well as a symbol of France's industrial success.

What about Ghosn's pay?

In a board meeting on Wednesday, Renault decided to cancel Ghosn's severance package, which would have totaled over 30 million euros ($34 million).

According to Reuters, French Finance Minister Bruno Le Maire asked the government's representative on Renault's board to reduce Ghosn's compensation as much as possible, calling it a matter of decency. Speaking to a French radio station, Le Maire said: "Nobody would understand it if Ghosn were to receive an excessive leave package."

Renault said it will announce on March 15 whether to pay Ghosn the salary he is due for 2018. Ghosn's salary, one of the highest among French CEOs, has always been controversial -- so much so that in 2018 the French government demanded it be lowered as a condition for renewing his mandate to lead Renault.

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