Renault shares plunge as profit warning deepens its problems

A hefty profit warning sent Renault shares tumbling as much as 15% on Friday, capping a miserable year for the French carmaker following the arrest of long-time boss Carlos Ghosn and adding to signs of a sharp slowdown in the global auto industry.

Renault and partner Nissan both announced changes in leadership last week, seeking to reboot their alliance after it was thrown into crisis last year by the arrest of Ghosn in Tokyo on financial misconduct charges, which he denies.

But the companies are struggling amid a global industry slowdown, with pressures also coming from tougher emissions regulations in Europe and the need to invest in electric and self-driving technologies.

Late on Thursday, Renault said sales were likely to drop between 3% and 4% this year, compared with its previous forecast for a similar outcome to 2018. It blamed difficulties in markets outside Europe, like Argentina and Turkey in particular.

The company also said its operating margin was set to come in at 5%, versus a previous 6% goal, as it struggles to keep a lid on research and development costs.

Renault shares dropped to a six year low of 46.7 euros and at 0805 GMT were down 13.1% at 47.69 euros.

Many carmakers including Renault had already trimmed their goals a quarter earlier, though some like its French rival PSA Group bucked the trend.

Peugeot-maker PSA is due to release its sales update next week, as will luxury carmaker Daimler , while Renault will provide a fuller readout for the third quarter.

Renault`s sales warning came less than a week after it revamped its management team in a bid to turn a page on the Ghosn era, appointing financial chief Clotilde Delbos as its interim CEO. Nissan also has new faces at the helm.

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Delbos said on Thursday evening the shake-up would pave the way for a renewed focus on joint projects that would allow the two to cut costs and usher in cleaner car models.

The worsening backdrop for carmakers adds urgency for the alliance to deliver, however.

"Needless to say that this profit warning comes at a time of major instability at Renault and its partner Nissan," analysts at Evercore said in a note. "Investor worries will more likely intensify."