The maker of the Clio and Megane hatchbacks said on Friday that it took a 512-million-euro (USD 680-million) charge to write off the entire value of its Iran operations, which are threatened by international sanctions on the Islamic republic.
Other charges, including restructuring of factories in France, left Renault's first-half earnings at only 39 million Euros, down from 734 million Euros a year earlier, the carmaker said in a statement on Friday.
New car sales continued to fall as international growth couldn't offset poor markets in Europe, especially in France. Renault said that a worsening market conditions would put in doubt its full-year targets, including higher worldwide registrations.
Renault's business in Iran consists of assembling vehicle kits it sends there. Tougher US sanctions on the Islamic regime that came into effect last month mean Renault cannot get its money out of Iran, leading to the charge against its second quarter earnings.
Earlier this month, the European automakers' association ACEA said that car sales slumped 6.6 percent in the first half of the year amid signs of continued deep recession and high unemployment in Europe.
To cope with the dwindling market in Europe, automakers have announced factory closures and put off new car launches.