In order to get out of the red zone, Renault may have to cut more costs than initially planned, said the French carmaker’s new chief executive in an internal memo, adding the company’s cash-flow projections are “alarming”.
Luca de Meo, who took over as CEO in July, wrote in the memo that generating cash and restoring profitability was an immediate priority.
“The aim is to get back on the right track and to resolve our most pressing problems as quickly as possible: treasury and costs. This means we will perhaps need to go further than planned with our cost-cutting efforts,” he said.
De Meo said Renault was in a “red zone” as the COVID-19 pandemic had exacerbated existing problems, including its ability to generate cash, a downward trajectory in earnings since 2018, and new models that were not profitable enough.
Earlier this year, the French multinational automobile manufacturer acknowledged that its global ambitions had been unrealistic and announced plans to cut about 15,000 jobs.
