Renault warned that sales would fall three to four percent this year, instead of remaining flat as previously forecast

Paris (AFP) - French carmaker Renault saw its shares tumble 12 percent Friday after issuing a dismal financial update, extending its woes following the arrest of its former CEO Carlos Ghosn almost a year ago.

The company’s shares were down 12.3 percent at 48.13 euros ($53.45) in afternoon trading, in a market down just 0.4 percent.

The fall came a day after Renault, which is struggling to recover from Ghosn’s arrest in Japan on financial misconduct charges last November, lowered its sales forecast for the year.

Citing a “less favourable than expected” economic environment, the company said it expected revenues to fall three to four percent from 2018 – previously it had expected sales to be on a par with last year’s level.

In the third quarter, revenues fell 1.6 percent to 11.3 billion euros.

Renault also trimmed its operating margin forecast, saying it should be “around 5 percent” instead of the previous estimate of 6 percent.

Renault and its Japanese partner Nissan were plunged into turmoil last November after Ghosn, who built up the world’s biggest car-selling alliance, was arrested in Tokyo on suspicion of under-reporting millions of dollars in salary and using company funds for personal expenses.

Ghosn has denied any wrongdoing, but both companies ousted him while he remains in Japan awaiting trial.

His downfall exposed tensions in the partnership and led both Nissan and Renault to carry out sweeping revamps of their management structures.

In a bid to turn the page on the Ghosn era, Renault last week ousted chief executive Thierry Bollore, whom Ghosn had groomed as his successor and who took over after his boss was sacked.

Bollore’s sacking came just days after Nissan named a new CEO.

- ‘Disconcerting’ -

Renault chairman Jean-Dominique Senard said the change was aimed at giving the carmaker “a fresh start,” but company sources had also expressed concern over the company’s flagging performance under Bollore’s stewardship.

In the first half of the year Renault’s profits halved to 970 million euros from 1.952 billion euros in the same period last year.

Earnings were “heavily penalised by the decline of Nissan’s contribution”, the French group said at the time.

Renault owns a 43 percent stake in the embattled Japanese group, which announced 12,500 job cuts and a dramatic drop in quarterly profits as it struggles with weak sales in the wake of Ghosn’s arrest.

Analysts at the asset management group ODDO BHF said Thursday’s announcement was “disconcerting for its timing and its magnitude,” while Societe Generale analysts said: “Renault runs aground on the rocks.”