CNBC's Charlotte Reed discusses Renault's revised full-year forecast, and the company's appointment of CFO Duncan Minto as interim CEO.

Renault has experienced a significant drop in its share price following an unexpected revision of its full-year financial forecast. The company cited weaker demand in Europe, particularly in the van market, and lower sales volumes for June as key reasons for the downgrade. Renault now expects an operating margin of 6.5%, down from 7%, and free cash flow between 1 and 1.5 billion euros, compared to the previous estimate of 2 billion euros. 

This development comes amid broader industry challenges, including pricing pressures and competition from Chinese electric vehicle manufacturers. The company is also facing leadership changes, with CFO Duncan Minto stepping in as interim CEO after the departure of Lucane Béaud. The search for a permanent CEO is ongoing, adding to the uncertainty surrounding the carmaker.

Renault shares drop as company plagued by lower demand

Yeah, it was a shock announcement really. It's a surprise there because again, you know, in their full-year numbers in February, they posted record operating profit and free cash flow. When I spoke to the CEO at the time, he said, you know, they had the mission accomplished with a renovation turnaround plan that they had achieved their targets two to three years in advance. And then they were focusing now on their growth plan called Futurama. They have a strong model lineup. Basically, the success story when it comes to European carmakers last year, the only one that didn't issue a profit warning last year was Ferrari. So certainly that's why that was one of the favorites in the sector because one of the outlier there. But now this unexpected announcement cutting their guidance, they mentioned weak demand in Europe and June volumes lower than expected. They said the van market as well being particularly weak. So they revised their guidance, a fully operating margin at 6.5% instead of 7% previously and free cash flow between one and 1.5 billion euros versus two previously. According to Barenberg this morning, Renault's downgraded guidance implies an 8% to 10% cut to the group operating profit for 2025. And so, of course, this comes at a time of uncertainty for Renault as well because apart from the normal headwinds for this industry, we know the question of tariffs, the pricing pressure, the competition from the Chinese EV makers. They had their CFO that was highly respected, Thierry Piéton, that left in February. The CEO, Lucane Béaud, now leaving. He stepped down actually just yesterday, moving to Kering. So another turnaround story. And so while they said that the search for the new CEO is already well underway, that adds to the uncertainty for the carmaker as well. So CFO Duncan Minto is interim CEO at the moment. But suddenly, all this context, the uncertainty for the carmakers in Europe and the uncertainty for Renault themselves, despite the success story they have been so far, kind of created that shock element and was showing why we have this share reaction this morning.

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