Renault Sa Unsp/Adr

Good morning, everyone, and welcome to Renault Group H1 results. This presentation will be made by Luca De Meo, CEO, Thierry Piéton, CFO, and the management team of Renault Group. Luca, the floor is yours.

H1 results. And also, it will be an opportunity for us to update you with the in-depth transformation that we keep developing in this company. In the first semester of 2024, Renault Group achieved 8.1% operating margin. This is actually the highest operating margin this company has ever achieved. We generated 1.3 billion of free cash flow and we reached a very strong net financial position at almost 5 billion euros. I want to take the opportunity to thank all those who are supporting us and have supported us also in challenging times. Our employees of course, our clients, our distribution partners, our suppliers and of course our shareholders and investors. These results confirm the, I would say, constantly improving operational performance of Renault. This is the consequence of the passionate job done by women and men of this company for almost four years now in depth at every level of the organization to put it back at the highest standards in the automotive industry. 2.7 billion of cash, fixed cost reduction since the first half of 2019. over 90% utilization rate of our industrial footprint, and a strict commercial policy focused on value. All this allowed us to reduce our break-even point by 50% since 2020, and is reflected in our H1 results. And these ingredients are going to support the financial profitability of our all new lineup that is just beginning its ramp up in Europe and also globally. In H1, less than 5% of our invoices came from vehicle launched in 2024. It gives you an idea of what we have in the store. For us, putting Renault back at the top of the classical game that OEMs have been playing for 150 years was only the appetizer. We know that when it comes to the main course, the good old receipts are not going to be enough. Everything is moving incredibly fast and crisis turned out to be the new normal. So car makers need something more and they need something new. This is why we're working to transform Renault Group into one of the most progressive European companies, setting up a new breed of organization designed for an environment that has turned radically volatile and unpredictable tech landscape. It means something very simple, putting flexibility, strategic agility, and speed at the core of our model, injecting this mindset at every level of the organization. No other OEM, and we approve that, can pretend today to be so flexible as Renault Group when it comes to absorbing the shocks on the bumpy roads towards, for example, the all-electric mobility. On the EV side, we have Ampère, our EV and software champion. It's on track to cut its cost by 40% and to reduce prices while improving its margins. Every day, we measure the benefits of having a dedicated entity. On the ICE side, we have power with highly cash-generating businesses, Renault and Dacia ICE and hybrid cars, as well as our LCV business. On top of making money, this team works as a safety net for the group in front of the unevenness of the EV shift. It is supported by HORS, the global ICE and hybrid powertrain leader that we have set up with Giulia and Aramco. Horse is not only a supplier for Renault Group and Geely, it's a platform for the entire auto industry. It has the mission to reinvent the ICE technology and our core business to give it a future. Concretely, this means developing smart hybridization, but also alternatives of why not renewable fuels, developing innovative low-emission ICE and hybrid vehicles. Aramco's joining has given new evidence that setting up had been, I would say, the right move, establishing the value of the thing at 7.4 billion euros. I know that many supplier competitors are looking at this figure. Maybe this is also the reason why we receive so much interest from partners. On top, HORS also allows us to gain in productivity, reduce fixed costs, gain scale. We improve our balance sheet significantly and keep a substantial stake in a growing and cash-generating business. The open, ecosystemic approach that we have put at the core of our game plays a key role to boost the strategic agility of Renault Group. Since the start of the Renault-lution, we have struck over 20 strategic partnerships with the best players on all the new automotive value chains from Google and Qualcomm to AESC, Vercor, LG, CATL for the batteries to ST Microelectronics for power electronics. We go open because pretending to keep cultivating alone your small piece of land when all the boundaries are falling around you just makes no sense. Especially when you have to deal with the challenges that cut across the sectors like the energy transition or the digital revolution. On the contrary, this ecosystemic approach allows us to smartly address the new automotive value chains, including businesses with margin that are higher than in our traditional activity while nurturing innovation by exposing our people to the best in every sector, boosting our ability to switch quickly to a new technology, for example, when it comes to batteries, accelerating our time to market, sharing the risk and the investments. All of this ensures efficient capital allocation. We achieved 28.5 Roche in 2023, while we started from zero in 2021. Now, I will leave it to a person very important in the organization that you rarely see. This is Francois Pravot, our procurement and partnership and public affairs VP. And Francois is going to tell you about what he has been doing for two years to strengthen our value chain. Francois.

Thank you, thank you Luca. Over the last two years, we have reshuffled our relationship with our suppliers. We are pivoting from a pretty transactional and short-term to a more strategic approach, considering our suppliers like business partners boost agility, speed, and innovation of our entire ecosystem. We have already seen the power of this approach against inflation. Assuming transparency on costs, we accepted to take into account inflation triggers, together with a roadmap to offset cost increase within a reasonable timeframe. As an example, as Renault Group, we already reduced by over 25% the energy consumption per unit, and we expect our suppliers to do the same. In fact, we are onboarding our whole ecosystem in our struggle against inflation, and we have started, in H1 2024, to bring down the cost of our cars again by several hundreds of euros, not accounting for the regulatory impacts. Besides, we are increasing our control on our value chains. As a traditional OEM, we use to buy parts and systems to Tier 1 suppliers. Now we go to Tier N and we aim to develop, when it makes sense, parts and systems by ourselves. The best example is software. In the past, we used to buy software systems within black box. Now we want to develop partially by ourselves, to co-develop with Tier 1, but also to co-develop directly with tech companies such as Google and Qualcomm. As another example, we can also point out the strategic partnership and contracts signed with our electronic components producers, as well as contracts with raw material producers to secure battery supplies. We are also looking at all options to increase the speed of execution. It means involving our suppliers much earlier in sourcing phase. For instance, we are reducing our detailed technical specification, relying more on the creativity of suppliers to propose optimized solutions in terms of value and cost, including on-the-shelf solutions. This is a key level to develop cars within two years and to reduce costs, and the new Twingo is for us a kind of proof of concept we can develop European cars within two years. Another example is to move from traditional one-size-fits-all processes to tailor-made solutions for each entity of the group, like ampere or power. We do not manage EV and software technologies for ampere the same way we supply traditional technologies such as seats or chassis. Within 1.5 years, we already reviewed our supplier panels for over 70% of our purchase amounts, and we engaged with key suppliers, joined strategic and technological roadmap, reviewed on a quarterly basis. Thank you for your listening, and I give back the floor to Luca.