Fitch Ratings upgrades Renault’s credit rating from BB+ to BBB-

Article by Christian Andrei, on November 15, 2014

Fitch Ratings has upgraded Renault’s credit rating by one level from BB+ to BBB-, which is equivalent to investment grade. According to the rating’s group, Renault’s profitability is improving as it expands deliveries outside Europe through low-cost vehicles from its Dacia brand.

Thomas Corcoran, an analyst at Fitch, said in a report that the outlook for Renault is stable, which means there should be no change in the carmaker’s ratings anytime soon. He remarked that ongoing and successful diversification has resulted to an increasing share of sales outside Europe.

He noted that the success of the Datsun brand’s entry range is key to offsetting drops in sales of the core Renault models. He added that Renault’s vehicles profitability "is higher than the automotive average."

Morgan Stanley estimates Dacia having a 9-percent operating margin -- a level or profitability usually found in luxury carmakers.

For the third quarter of 2014, Renault posted a 7-percent jump in revenue to EUR8.53 billion ($10.6 billion), thanks to strong performances by Dacia Duster SUV and Sandero hatchback and the Renault Captur small crossover.

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