*

Income attributable to group of 461 million euros,

excluding

Nissan ( NSANF ) hit

*

Revenues up 2.5%, operating margin down 2 percentage

points

*

New CEO Francois Provost to address commercial pressures

(Adds shares in paragraph 3, CFO comments from paragraph 8,

analyst comment in final paragraph)

By Gilles Guillaume

PARIS, July 31 (Reuters) - Renault expects its

operating margin to rebound in the second half, its finance

chief said on Thursday, as a first half net loss due to a Nissan ( NSANF )

writedown and tough market conditions highlighted the challenge

facing its new CEO Francois Provost.

The French carmaker reported a first-half net loss

attributable to the group of 11.19 billion euros ($13 billion),

including a one-off 9.3 billion euros from writing down its

investment in partner Nissan ( NSANF ) flagged earlier this

month.

Its shares were down 1.8% at 32.6 euros by 0815 GMT.

Renault lowered its annual forecast earlier this month after

market conditions deteriorated, particularly in the commercial

vehicle market.

The group, whose sales volume growth slowed to 1.3% in the

first half, now expects an operating margin of around 6.5% in

2025, compared with at least 7% previously targeted, and free

cash flow of between 1.0 billion and 1.5 billion euros, compared

with at least 2 billion euros previously anticipated.

First-half revenue was 27.6 billion euros, up 2.5% compared

with a year earlier, helped by several new product launches,

though its operating margin fell 2.1 percentage points to 6%, in

large part due to weakness in vans.

CFO Duncan Minto told reporters that he expects the

operating margin to rebound in the second half, nearing the

level of the same period last year, or 7.1%, thanks to a

reversal of the negative effect of the separation from the group

of the internal combustion and hybrid engine business Horse.

Renault has brought in new investors to the unit, China's

Geely and Aramco, to share costs and gain agility.

"We will benefit in the second half from lower costs than

when we manufactured the engines ourselves," said Minto.

RESULTS 'NOT ALIGNED' WITH INITIAL AMBITIONS

Excluding the hit related to Nissan ( NSANF ), its net income

attributable to the group reached 461 million euros, less than a

third of a year ago's level, due to the weaker van market, costs

associated with electric vehicles and commercial pressures in a

more competitive environment.

"Our first-half results, in a challenging market, were not

aligned with our initial ambitions," said Provost, appointed new

CEO of the group late on Wednesday.

"Nevertheless, Renault Group's profitability remains a

reference in our industry, and we are determined to maintain

this standard," he added in a statement.

Financial details already released earlier this month

confirmed that "pricing benefits have now peaked and growth

outside Europe diluted (the) mix", said analysts at Jefferies in

a note.

While international expansion will help reduce Renault's

dependence on a sluggish European market, models sold outside

Europe are often sold at lower prices, and the company said its

geographic mix had a negative 1.1 percentage point impact on

revenue growth.

"New CEO Francois Provost's insider experience should help

address both operations and strategy," added Jefferies.

($1 = 0.8754 euros)

(Reporting by Gilles Guillaume and Dominique Patton; Editing by

Jacqueline Wong and Emelia Sithole-Matarise)