Renault (LSE:RNO) has reaffirmed its full-year financial guidance, indicating that its operating margin is expected to reach the lower end of its target range, at approximately 5%, while maintaining its forecast of €1 billion in free cash flow.
The French automotive manufacturer provided the update during a pre-close investor call on Friday, led by Head of Investor Relations Florent Chaix.
Renault reiterated its operating margin guidance of approximately 5.5%, while indicating that the final result is more likely to be close to 5%.
The company’s shares rose 0.7% at the market open following the update.
During the call, Renault reported that wholesale vehicle volumes were broadly aligned with retail sales, with both measures declining by approximately 6% to 7%.
The Dacia brand continued to affect the group’s overall sales performance, partly reflecting its limited range of electrified vehicles.
Renault also reported a modest negative impact from inventory reductions at independent dealerships, which contributed to the decline in wholesale volumes.
Despite lower vehicle sales, the company indicated that changes in product mix, pricing and sales to business partners provided some positive offsets.
As a result, Renault suggested that third-quarter automotive revenue could decline by approximately 2%, a smaller reduction than the reported fall in vehicle volumes.
The group’s financing division continued to expand, although its growth rate has moderated following double-digit increases during the first half of the year.
Renault also maintained its assumptions concerning raw material costs, reiterating an expected impact of approximately €400 million during the second half.
The company indicated that some effects would be delayed until 2027, contrasting with reports from certain competitors of increasing raw material cost pressures beginning in the third quarter.
Regarding regulatory expenses, Renault said it does not expect to reverse provisions previously recognised in connection with carbon dioxide emissions requirements.
The company also confirmed that its order book remained equivalent to approximately two months of sales, providing an indication of existing customer demand.
Cost reduction initiatives are progressing in line with the group’s existing plans, with no changes announced to the current programme.
Renault’s full-year outlook therefore remains unchanged, although management expects operating profitability to be towards the lower end of its previously communicated range.
The company’s performance will continue to depend on vehicle demand, product mix, pricing conditions, manufacturing costs and the implementation of its operational efficiency measures.
About Renault
Renault (LSE:RNO) is a French automotive manufacturer engaged in the design, production and sale of passenger cars and commercial vehicles.
The group operates through automotive brands including Renault and Dacia, with activities spanning conventional, hybrid and electric vehicles.
Its operations also include automotive financing services, while its financial performance is influenced by vehicle sales volumes, pricing, production costs and regulatory requirements.
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