Renault blames 'sharp decline' in LCV market
Renault announces interim CEO Duncan Minto, issues profit warning
Duncan Minto, CFO and interim CEO, Renault Group
Renault Group
The group's CFO will be tasked with tackling difficult first half financial results in his new role as interim CEO of Renault Group.
Renault has appointed its chief financial officer (CFO) Duncan
Minto to temporarily take over as interim CEO while the selection process for
the new head of the company continues.
Renault had been expected to appoint its new CEO to take
over from Luca de Meo this week, as De Meo’s departure was set to be effective
from today (15 July).
The OEM, which also issued a profit warning today, said the
CFO will take over the day-to-day management of the company alongside
Jean-Dominique Senard, who will hold the position of chairman of Renault’s
operating company. Selection of the CEO is well underway, according to the carmaker.
In a release, Renault said that Minto has “a solid
experience in finance and a deep understanding of the issues at stake”, having
been part of the company since 1997. He has held vice-president, managing
director and CFO roles across regional Renault divisions in Europe and Asia Pacific,
and brands including CFO of Dacia and more recently CFO of Alpine, before being
appointed CFO of Renault Group in March this year.
In his interim role, Minto will face a harsh outlook and
pressure to reduce costs considerably.
The OEM’s unaudited financial results for the first half of
the year reported a significant reduction in free-cash flow, which stands at €47m
($54.5m). The company said this includes a significantly negative change in the
working capital requirement estimated at €900m, excluding tax.
Just a few months ago, in April, Renault had said in its Q1
results that it expected its free cash flow for the year to be at least €2bn. Now,
the OEM has halved that expectation, and said it expects to end the year with
free cash-flow of between €1bn and €1.5bn.
The OEM’s operating margin for the first half of the year
stands at 6%, while group revenue is up 2.5% to €27.6bn.
The financial results were impacted by a “lower than anticipated
performance in June”, according to the release, with volumes “slightly lower
than expected”, billing timing differences over the last days of the month, and
“an increasing commercial pressure due to the continuing decline in the retail
market and an underperformance of the (light commercial vehicle) LCV business
in a sharply declining market in Europe”.
The fact that the group mentioned a sharply declining LCV
market in the continent is particularly worrying for Renault, as it unveiled
a new range of electric LCVs earlier in the year under Flexis, a joint venture
(JV) between the OEM, Volvo Group and logistics provider CMA CGM. Renault Group
holds a 45% stake in the JV, and initially agreed to invest €300m ($313m) into
the business. Prototype production of the three new LCV models is set to begin at the end of this year, and series production and first deliveries are set for 2026.
A Flexis spokesperson told Automotive Logistics: "Flexis is on track with its roadmap, preparing for its first deliveries in 2026, and is not affected by the Renault announcement."
Renault further explained the negative change in working
capital requirement in the first half of the year as being due to having a drop
in the level of production and higher OEM inventories compared to the end of 2024.
The carmaker said it will “prioritise value creation over volume”
to protect its launches, and will strengthen its short-term cost reduction
plan. The group believes its “flexible and agile business model” will enable it
to “meet the challenges of an increasingly competitive market”.
Since issuing the profit warning, Renault shares have fallen
17.9%. Renault Group will release its full half year 2025 results on 31 July.
