Renault Sa Unsp/Adr

Good morning, everyone, and welcome to this Q3 Sales and Revenue Conference. The presentation will be made by Thierry Pieton, Renault Group CFO, and will be followed by a Q&A session. Thierry, the floor is yours.

Thanks very much, Philippine, and very good morning to all of you, and thank you for joining us this morning. I'm pleased to comment today our Q3 revenue and sales performance. You will see that despite the decrease in registrations in Q3, we posted revenue growth. The product offensive is starting to be reflected in our commercial and financial performance. We're continuing to improve our product mix while stabilizing the product effect, the price effect. After being pretty stable in H1 2024 versus H1 23, group revenue was up 1.8% in Q3 at 10.7 billion euros. At constant exchange rates, it was up 5%. Auto revenue increased by 2.6% at constant effects in Q3 compared to last year to reach 9.3 billion euros. Mobility services amounted to 14 million, up 3 million. Mobilized financial services revenue was up 21.6 million at 1.3 billion, mainly driven by the rise in interest rates and higher average performing assets. It increased 25.6% at constant effects. Now, let's focus on the automotive revenue. Automotive revenue stood at €9.3 billion in Q3, as I mentioned, up 2.6% at constant effects, with a negative forex impact of 3.1 points. As in previous quarters, this impact was driven by the Argentinian peso devaluation, and to a lesser extent, to the Turkish lira. As you know, though, the Turkish lira has a positive impact on production cost, though, so it's not all bad news. This quarter, revenue was also penalised by the Brazilian Real. Brazil represented 6% of our revenue in Q3, with a 7% increase in our sales compared to last year, thanks in part to the launch of Cardian. Volume effect was negative 3.1 points in the quarter due to lower registrations, partially offset by a less pronounced dealership destocking than last year. Volume-wise, the group registered 482,000 units in the quarter, a 5.6% decrease over Q3 2023. Both the market and our sales figures are to be put in perspective of tough comps in the third quarter of 2023. Last year, sales in Europe were up 15% at group level and 25% for the Renault brand, thanks to the return to availability of electronic components. This effect was particularly pronounced in July and August where accumulated sales were down 8.7% versus last year. Sales in September, however, were very stable. In Europe, Renault Group confirmed its position on the podium with sales at 328,000 units, a 5.3% decrease that still outperformed the market's decline of 6.1 points. Group sales in Italy, Spain, and the U.K. grew strongly, outperforming their respective markets and partially offsetting France and Germany lower registrations. Over the first nine months of the year, registrations stood at more than 1.6 million units, stable compared to last year. Renault brand ranked number three in Europe and number one in France. The brand consolidated its leadership in the European LCV market, excluding pickups, with sales up 9.9%. Renault Clio, whose sales in Europe rose by 5.6%, moved up three places to become the second best-selling model across all channels. In Europe, Dacia was number nine for passenger cars. It consolidated its position on the European passenger car retail podium, the brand's core customer base. Dacia Sandero, with sales up 16.3% in the first nine months of 24, was Europe's first best-selling model across all channels. All in all, we now have four cars among the top ten of retail sales in Europe, Sandero, Duster, Clio and Captur. Alpine delivered a high double-digit growth year-to-date before the effect of the new launches. Alpine is off to a good start in terms of orders for its new A290 model, which will arrive in dealerships in France during the fourth quarter. Looking at electrification in Europe, Renault Group enjoyed a very strong growth in hybrid sales, which were up 52% and contributed to achieve a 30% electrified PC mix. Bev Mix at group level stood at 8% year-to-date. This was down in a year of transition marked by the discontinuation of Zoé and Twingo Electric and the generation transition of Dacia Spring. As you know, Renault Group is launching a full range of competitive electric vehicles. Scenics for deployment and the launches of Renault 5, Alpine A290, the new Dacia Spring, Renault 4 and Alpine A390 will sharply increase our EV penetration in the coming quarters. For the Renault brand, electrified vehicles accounted for 47% of its PC, excuse me, of its passenger cars in Europe, up 7.8 points compared to the same period of 2023. Renault brand was number two in European hybrid cars with a 16% market share. Looking at the rest of the year, the negative volume effect in Q3 is expected to reverse in Q4 thanks to the growing impact of the launches, but I'll come back to this later on. Now let's move to inventories on the next slide. And as I said, this lower registration level was partially offset by the positive impact of the stock evolution. We continue to apply a strict discipline to the management of our global inventories, which stood at 528,000 units in September 2024, compared to 542,000 units last September. The independent dealer stock stood at 297,000 units, down 72,000 units versus June, back to normal seasonal patterns. The total level of stock is underpinned by a sound order book that stood at around two months of forward sales at the end of September. Keep in mind, the forward sales anticipate a strong Q4 sales number. Let's move to our sales to partners. 2024 is a transition year for our sales to partners with a discontinuation of several programs last year and before the production of new vehicles for our partners, starting with the new Micra for Nissan next year. As anticipated, sales to partners were down 2.1 points in Q3 versus last year. Now, let's have a look at our price and mix effects. In Q3, price effect was stable. As already mentioned, we entered a phase of price stabilization. We aimed to offset negative forex by pricing actions while also giving back a portion of cost reduction to our customers, mostly through content, as we had started doing in the first half. This is designed to boost competitiveness of our vehicles while protecting our margins. product mix, as expected, keeps improving gradually. After a stable impact in the first quarter and two points positive in the second quarter of 24, it reached 3.8 points in the third quarter thanks to the ramp-up of our recent launches, and this trend will continue in the coming quarters. In Q3, Renault Brand achieved a 42.4% mix on the sea and above segments, up 1.6 points versus last year, thanks to Austral and Espace, and before fully benefiting from the effects of Scenic, Symbiose and Rafale launches. The geographic mix at 1.2 points negative was explained by the ramp-up of Cardian in Brazil and by weaker registrations in France and Germany over the quarter. The last item, Other, impacted positively our revenue by 5 points. This was mainly driven by the solid performance in Renault Retail Group and by a strong performance of the after-sales business. The retreatment of sales with buyback commitments also had a positive impact in this bucket. Sales with buyback commitments decreased in the third quarter 24 versus last year due to lower short-term rental sales, which were quite high last year because of the catch-up in deliveries post-logistic issues of H-123. Now, let's comment the performance of mobilized financial services. New contracts production was almost stable over the third quarter of 24. Average performing assets increased by 8.5% at 56.5 billion euros, mostly thanks to the increase in average selling prices over the last years. All in all, mobilized financial services revenues were up 21.6% to 1.3 billion euros, mainly driven by higher interest rates and the increase in average ticket per vehicle described above. Now, let's move on to the rest of the year. In the third quarter, our launches accounted for 18% of our automotive shipments, compared to 5% in the first half. Even if we've already revealed all of our new vehicles for 2024 and most of the 2025 ones, our product offensive is not yet fully reflected in our performance. As you know, we continue to manage the company with conservative assumptions on volumes, but the current dynamic order intake supports our confidence in a strong Q4 volume effect. For Renault, our EV offensive is continuing with the ongoing launches of Renault 5, the new master EV, scheduled next month. On ice and hybrid, Symbioys joined New Capture and Rafale, launched in the European market. Outside of Europe, we will benefit from the first full quarter of sales of Cardian in Latam and Renault Duster in Turkey. Last, Grand Coleos is off to a very strong start in Korea. For Dacia, the order momentum has been supported since March by the opening of orders for the new Duster. The combined orders for the previous and new generation of Duster represent a 50% increase for the model versus last year. We're looking forward to Bicster's arrival next year. It's big stuff. Now, spring has started to arrive during the month, and it will ramp up across the different European countries during the upcoming quarters. For Alpine, the ultra-exclusive limited edition of the A110R called Ultime is an unmitigated success. The A290 will be launched in the coming weeks, and this is just the beginning of the brand, as you know. Today, we have a competitive offer, both for EV and for ICE and hybrid cars, and we know that products are even more key in this challenging environment. For sure, 2024 is challenging for OEMs and suppliers, but we can rely on a solid foundation. We have strong brands with exciting product launches, as shown in the previous slide. At the end of September, the order book stood at around two months of sales. Our current order intake is very healthy and supports our confidence for our Q4 24 volumes. We have a very disciplined inventory management process. We keep focusing on the most profitable channels. We are 23 points above market average on retail, reaching more than 68% of total sales on the group's five main European countries, gradually improving compared to the first two quarters of the year. In Europe, the Renault brand continued to sell more than one out of two vehicles on the retail channel, and Dacia, 85%. This commercial discipline, our new models, and the overall improvement of the quality of our cars also support a favorable evolution of our residual values. And you know that this is key as a competitive lever. And finally, for 2024, our industrial capacity utilization will be around 90% five days, two shifts. All in all, this should allow us to be countercyclical in this environment. And this is why we can confirm our guidance for the four-year 2024 with an operating margin above 7.5% for the four-year. and a free cash flow above 2.5 billion euros. This concludes my presentation. Thank you for your attention, and I'm now ready to answer your questions.

Thank you, Thierry. So we have a first question from Michael Jacks, Bank of America. Michael, please could you open your mic?