Release Date: July 15, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Renault SA (RNLSY, Financial) reported a group revenue of EUR27.6 billion, slightly above market consensus.
- The company maintains a strong order book in Europe, with two months of forward sales.
- Renault SA (RNLSY) has a high factory utilization rate, averaging around 90%.
- The company plans to launch seven new models and two facelifts in 2025, targeting both European and international markets.
- Renault SA (RNLSY) is implementing immediate short-term cost reduction measures and accelerating its cost reduction plan.
Negative Points
- Operating margin for the first half was 6%, below the market consensus of 6.9%.
- Free cash flow stood at EUR47 million, significantly below the consensus of EUR645 million.
- The company experienced a negative change in working capital requirement estimated at around minus EUR900 million.
- Renault SA (RNLSY) faced lower-than-anticipated performance in June due to declining retail market and underperformance in the LCV business.
- The company has downgraded its full-year 2025 operating margin target to around 6.5%, down from the previous expectation of higher than 7%.
Q & A Highlights
Q: Can you explain the weaker free cash generation in the first half and any structural market changes in the last two months? What actions are you taking to meet the free cash flow guidance for the year?
A: The weaker free cash generation was due to lower-than-expected volumes in June, increased commercial pressure, and a significant decline in the LCV market. Additionally, invoicing timing issues left more receivables on the balance sheet. Structurally, the retail market across Europe has been slow, with increased competitive pressure. For the second half, we expect to recover most of the EUR900 million negative working capital, maintain controlled inventories, and leverage a strong order book to secure free cash flow targets.
Q: Can you elaborate on the increased commercial pressure towards the end of June? Was it specific to certain countries or segments?
A: The increased commercial pressure was generally across Europe, particularly in France, where the retail market was down. Renault has a stronger market share in retail segments, which affected us more. The LCV market remained weak, but we expect improvement in the second half with new launches and cost reductions. Despite missing targets, we maintain a positive outlook with an operating margin around 6.5% for the full year.
Q: Was the weaker retail performance specific to any country, and do you expect a recovery in France in the second half?
A: We do not anticipate an improvement in the retail market in France. The expected improvement will primarily come from the LCV segment and new launches in the second half of the year.
Q: What are the key elements for delivering in the second half, given the current challenges?
A: Key elements include managing inventories close to target levels, leveraging a strong order book, launching new products, and implementing cost reductions. These factors should help us achieve a positive dynamic in the second half and meet our cash generation targets.
Q: How do you view the profitability of EVs in the current market environment?
A: While the profitability of EVs is not yet at the desired level, we are focusing on improving this through new launches and cost efficiencies. The overall strategy remains centered on maintaining a strong operating margin and generating cash flow.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
