Renault cuts 2025 operating margin and free cash flow forecasts

Renault cuts 2025 operating margin and free cash flow forecasts

Title: Renault Cuts 2025 Operating Margin and Free Cash Flow Forecasts

Renault Group has revised its financial outlook for the fiscal year 2025, reducing its operating margin and free cash flow projections. The company announced its H1 2025 preliminary financial figures on July 15, 2025, indicating a significant impact on its financial health due to lower-than-expected performance in June and increasing commercial pressure.

The Group reported revenue of €27.6 billion for the first half of 2025, representing a 2.5% increase over the same period last year. The operating margin stood at 6.0% of Group revenue, down from the previously targeted 7.0%. The free cash flow was €47 million, significantly lower than the expected €1.0 to €1.5 billion for the full year. This decrease is attributed to a negative change in the working capital requirement estimated at approximately -€900 million, excluding tax effects.

The company cited several factors contributing to the lower-than-expected performance, including lower-than-anticipated volumes in June, increasing commercial pressure due to the decline in the retail market, and underperformance of the light commercial vehicle (LCV) business in Europe. Additionally, the higher level of production at the end of 2024 compared to June 2025 and the increased OEM inventories level further exacerbated the situation.

Renault Group has responded by strengthening its cost reduction plan and accelerating structural levers to mitigate the financial impact. The company is focusing on reducing SG&A costs, manufacturing, and R&D expenses to achieve an operating margin around 6.5% and a free cash flow between €1.0 and €1.5 billion for FY 2025. This shift in strategy reflects Renault's commitment to prioritizing value creation over volume and protecting its launches.

The revised financial outlook underscores Renault's agility and flexibility in adapting to market demands. The company's strong fundamentals, including a flexible business model, an attractive product line-up, and a focus on profitable sales channels, position it well to navigate the competitive automotive market. Renault Group's ambition to achieve carbon neutrality in Europe by 2040 remains unchanged, with a continued focus on developing new technologies and services.

The preliminary figures released in the press release are not audited, and Renault Group will publish its H1 2025 results on July 31, 2025. A press conference is scheduled for today at 18:15 CEST, where Duncan Minto, Renault Group Interim CEO and CFO, will provide further insights.

References

[1] https://www.gurufocus.com/term/price-to-free-cash-flow/FRA:RNL
[2] https://www.globenewswire.com/news-release/2025/07/15/3115900/0/en/H1-2025-financial-figures-and-FY-2025-financial-outlook.html