By Nick Kostov
PARIS -- Renault SA cut its revenue and operating-margin guidance for the year, citing slumping sales outside Europe and higher costs associated with developing cleaner car models.
The French auto maker said group revenue is expected to decline between 3% and 4%, compared with previous expectations of revenue close to last year's EUR57.42 billion ($63.44 billion). Renault previously cut its revenue forecast for the year in July.
Renault also cut its outlook for its operating margin to around 5%, compared with a previous forecast of around 6%.
On the revenue side, Renault's acting CEO, Clotilde Delbos, said some markets had been weaker than expected and that September hadn't compensated for disappointing performance in July and August. The company's business in Turkey and Argentina has caused concern in recent months.
At the same time, spending on research and development hasn't come down as quickly as the company had expected, pressuring its operating margin, Ms. Delbos said.
Renault and its partner Nissan Motor Co. have been in a state of upheaval since the arrest of Carlos Ghosn, the executive who forged the alliance and served as chairman of both companies before his detention in Japan last year.
Renault ousted its chief executive officer last week, replacing him with current Chief Financial Officer Ms. Delbos on an interim basis. The Japanese car maker also replaced its CEO, Hiroto Saikawa, with a triumvirate of executives earlier this month.
Like other auto makers, Renault is also grappling with a slowdown in sales and rising investment to develop electric and self-driving vehicles. European regulators are establishing some of the strictest emissions regimes in the world, which, combined with high labor costs, are squeezing regional auto makers' bottom lines.
Renault was in merger discussions earlier this year with Fiat Chrysler Automobiles NV, but a deal fell apart after the two car makers failed to secure the explicit support of Nissan.
The company's automotive operating free cash-flow is forecast to be positive in the second half of the year, while that isn't guaranteed for the full year, the company said Thursday. Renault's free cash flow was negative EUR716 million in the first half of the year.
In addition to the outlook cuts, the company's new management team will also review the company's midterm targets from its "Drive the Future" plan introduced in 2017. The plan aims to boost sales and profits by launching new electric vehicles and increasing shared parts between Renault and Nissan.
Renault posted third-quarter revenues of EUR11.3 billion for the third quarter, down from EUR11.5 billion in the same period the year before.
Arndt Ellinghorst, an auto analyst with brokerage Evercore ISI, said Renault's cut to guidance "paints a rough outlook on what might come in 2020 when markets will more likely be tougher and CO2 rules will add significant incremental costs to the system."
contributed to this article.
Write to Nick Kostov at Nick.Kostov@wsj.com