Renault confirms guidance at low end of margin target

Renault recently announced its full-year guidance during a pre-close call, maintaining its confidence in delivering an operating margin at the lower end of its target range, around 5%, and generating €1 billion in free cash flow. During the call, Renault's IR Head, Florent Chaix, reiterated the company's operating margin guidance of approximately 5.5%, acknowledging that results would likely hover near this figure. Shares experienced a modest 0.7% increase at the market opening bell.

The company reported a decline in both wholesale and retail sales, with volumes down by 6% to 7%. Dacia's ongoing struggles, particularly due to the lack of electrified vehicle options, contributed to the overall volume decrease. Additionally, Renault faced a minor challenge from destocking at independent dealers, which was somewhat offset by positive factors such as mix, pricing, and sales to partners, suggesting a potential 2% decline in third-quarter automotive revenue.

However, Renault's finance division is experiencing slower growth compared to the double-digit gains seen in the first half of the year. The company's raw material guidance remains unchanged at approximately €400 million for the second half of the year, with the impact expected to be realized in 2027. This differs from some of its competitors, who have reported acceleration in raw material costs beginning in the third quarter.

Renault does not anticipate any reversal of previously announced CO2 provisions. As of now, the company's order book is projected to sustain around two months' worth of sales at any given time. The company's cost-cutting efforts are progressing as planned, without any modifications to existing strategies.