Renault records a substantial first-half loss of €11.2 billion
Renault, the French automaker, has revealed its new strategic plan named "Futurama" to modernize its vehicle range and strengthen its position in the electric vehicle (EV) market. The weaker-than-expected June volumes led the company to cut its full-year margin forecast earlier this month.
The Futurama plan, aimed at modernizing Renault's vehicle range, emphasizes increasing partnerships and alliances with other companies. This approach is crucial for sharing the significant R&D costs required for electric and software technologies, which Renault cannot afford alone given its smaller scale compared to competitors like Volkswagen or Stellantis.
Key elements of the Futurama plan include modernizing Renault's vehicle lineup, expanding and deepening partnerships with firms such as Geely, Google, Volvo Group, and Nissan, balancing independence with alliances, and continuing the asset-light approach initiated by the previous CEO. The plan aims to manage growth challenges, including slow demand in Europe and increasing global competition, by adopting a strategic cooperation-focused model.
In a significant move, Renault has promoted an insider, Francois Provost, who had spearheaded the automaker's previous transformation plan, to steer the company through growing competition and weak demand. Francois Provost, a graduate of France's Polytechnique and Mines engineering schools, began his career at the Ministry of Economy and Finance before being appointed industrial advisor to the defense ministry.
Renault's revenues for the first half of the year were €27.6 billion, up 2.5% compared to the previous year. Despite the challenges, Renault has fared better than many of its peers over the last year due to a focus on Europe. However, the company's reliance on Europe makes it more vulnerable to the region's sluggish growth.
The new expected free cash flow for 2025 is between €1 billion and €1.5 billion, down from at least €2 billion previously anticipated. The net loss includes a one-off €9.3 billion from writing down its investment in partner Nissan. Excluding the impact related to Nissan, Renault's net income attributable to the group reached €461m.
Analysts Rella Suskin at Morningstar and Michael Foundoukidis at Oddo-BHF believe that Provost's experience overseas and understanding of company strategy likely won over the board. His understanding of the public sector could help in his relations with the French government, one of Renault's largest shareholders, with a 15% stake.
The operating margin fell 2.1 percentage points to 6%, and the new expected operating margin for 2025 is around 6.5%, down from at least 7% previously targeted. Renault reported a net loss of €11.19 billion for the first half of the year.
Francois Provost was appointed as the new CEO of Renault last night. With the implementation of the Futurama plan, Renault aims to keep up with the rapid evolution of the automotive market and remain competitive in the electric vehicle sector.
- To achieve its goals in the electric vehicle sector and keep up with the industry's rapid evolution, Renault, under the leadership of its new CEO Francois Provost, plans to emphasize partnerships and alliances, leveraging the significant R&D costs associated with electric and software technologies, as emphasized in the Futurama plan.
- As Renault strives to modernize its vehicle range and strengthen its position in the electric vehicle market, it will focus on balancing independence with alliances, as outlined in the Futurama plan, including partnerships with firms such as Geely, Google, the Volvo Group, and Nissan, to share technological advancements in finance, business, and technology.
