(Bloomberg) -- Renault SA dropped the most in more than two years after partner Nissan Motor Co. and European peer Stellantis NV reported disappointing results, eclipsing record returns for the French carmaker in the first half of 2024.
Renault shares tumbled as much as 9.9% and traded 8.4% lower as of 10:30 a.m. in Paris, slumping to a four-month low. Nissan, where Renault holds a stake, dropped 7.0% while Stellantis dropped 7.9%.
Carmakers are contending with weakening demand, especially for electric cars. Investor sentiment also has dampened for Renault amid lingering political uncertainty following recent elections in France. The French state owns a 15% stake in the company.
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“Stellantis had a bad publication and it’s weighing on the whole sector,” said Pierre-Olivier Essig, an analyst at AIR Capital. “There also are investor concerns on the French political situation, which isn’t helping Renault, the electric-vehicle outlook is difficult and the stock had climbed a lot. There is some profit taking too.”
Renault’s results were slightly better than expected, with shares under pressure after its partner Nissan cut its operating income guidance for the full year, according to Harry Heneage, a sales trader at Kepler Cheuvreux’s KCx in London.
“The market is nervous,” Chief Executive Officer Luca de Meo said on a conference call with analysts. “There’s the Nissan results, there are other competitors who unlike us are pulling back on their EV plans. It’s a very competitive industry, and we’ve gone from crisis to crisis. We are unfazed.”
The results come on a tough day for global equity markets, with investors pulling back from artificial-intelligence stocks.
Renault was the top-performing stock in France’s benchmark CAC 40 Index this year until Thursday’s slump. It comes even as the carmaker reported its highest-ever profitability, benefiting from lower raw-material costs and healthy demand for more expensive sport utility vehicles like the Austral and Espace.
The operating margin came in at 8.1%, beating the 7.9% projected by analysts. The French manufacturer confirmed its full-year guidance for operating profitability and free cash flow.
“Order intake was really good in the first half and we have a very healthy level of inventories,” Chief Financial Officer Thierry Pieton said on a media call. “We keep on having demand for higher-trim versions of our vehicles.”
Renault, like its peers Stellantis and Volkswagen AG, is navigating a challenging market in Europe, where demand for electric vehicles is slowing. Its CEO is betting on 10 new products this year, including the battery-powered Renault 5, to re-energize sales.
Renault reported first-half group revenue of €27 billion ($29.3 billion), broadly in line with analyst estimates. Net income was €1.4 billion, but included a €440 million capital loss from selling Nissan shares.
(Updates with analyst and Renault CEO comments, adds latest share prices.)
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