Renault Shares Tumble 11% with Profit Warnings

Renault share price fell more than 11 percent on Friday's trading, hitting its lowest level in six years, as car makers warned of a decline in financial performance for the year.

The French car maker said earlier that it expected operating margins at 5% this year, lower than the previous forecast of 6 percent.

Also, Renault expects its revenue to decline this year by 3-4%.

Renault said that Free cash flows (FCF) are expected to be posted at a positive range in the second half of the year, yet, not guaranteed for the whole year.  FCF represents the amount of cash flow generated by a business after deducting Capital Expenditures.

[caption id="attachment_85786" align="alignnone" width="1648"] Renault car factory in Algeria[/caption]

At the close, Renault shares fell 11.5 percent to € 48.56, the lowest level since 2013.

The company attributed the downgrade to a less favorable economic environment than expected.

Alliance Renault and Nissan were pushed into turmoil following the arrest of chief executive Carlos Ghosn last November. The arrest prompted investigations of governance including the failure of the management structure.

Ghosn is alleged to have failed reporting millions of dollars, using the company's funds as personal expenses.

It is worth mentioning that french company owns a 43 percent stake in the Japanese group, which announced 12,500 job cuts and a drop in quarterly profits following the arrest.