Renault Sa Unsp/Adr

Good morning everyone and welcome for 24 results. We are very pleased to be here with the team. The presentation will be made by Luca De Meo, CEO of Renault Group and Thierry Pieton, CFO of Renault Group. And this presentation will be followed by a Q&A session. Luca, the floor is yours.

Hello, everyone. Good morning. So thank you for joining this call. Things are pretty rock and roll in automotive these days, so it takes a lot of focus even at 8 o'clock in the morning. A lot of discipline, hard work. And I think also a touch of passion that is mandatory to spark innovation and to continuously adapt to a changing environment. We will be here to present you third year in a row record results for a new group. I think I can say probably we found our magic potion, like in Asterix and Obelix. I don't know who is Obelix and Asterix, Thierry. You look more like Panoramix. So, jokes apart, we will deliver in 2024, we delivered 7.6% of the operating margin. This is actually 4.3 billion, and this is our biggest operating margin in 126 years of the history of the company. And we generated almost $3 billion of free cash flow, achieving then, as a consequence, over $7 billion of automotive net cash position. This is also an all-time record. So actually, we do more than just breaking our own records. I think we are a pretty reliable bunch of people. We're the only ones... that achieved our initial guidance. We were pretty proud of it because it was a lot of work, actually with the exception of Ferrari. We are together with Ferrari, so it's a good opportunity to say hello to my friend Benedetto and congratulate him. Most importantly, I think we confirmed our ability to generate cash. That shows that we are in a very solid position to invest in our future. 2.9 billion in 2024 actually took us... one decade to generate the same amount of money between 2011 and 2020. So I think that in automotive, the most important thing, the first thing is product. So right from the beginning, as you remember, we put We put the whole product conversation at the core of everything we do, and we're starting to take full advantage from having restructured our brand portfolio with four strong brands on very, very clearly differentiated territories, and I think also with a complementary offer. Renault is a kind of pop and modern brand focused on innovation and electrification. That just serves the main consumer needs and offers the best value for money in the market. Alpine, I think, gives us for the first time in the history of Renault the opportunity to attract affluent customers and car enthusiasts. with electric power platforms of a new generation and with top-notch racing technology and then mobilise He's a specialist, of course, of financial services, but also energy and also new mobility. And we also start to do design purpose vehicle from some segments of the mobility. So all this work to reposition our brands, as I was anticipating, has already paid off. We put the Renault brand back where it belongs, up from position number five to position number three. in Europe, where it's now one of the three brands with over 1 million sales per year. It's leader on LCV segment, and it's number one in France in all rankings, passenger cars, men's, retail, fleet, EV, you name it. Dacia is number three on the retail market in Europe, and is now one of the top 10 brands for passenger cars in Europe. Alpine is celebrating this year, this 70th anniversary, but I think it's younger than ever. We have reignited it. When we measure the brand value, that is one of the KPIs that we track, the value is now at 840 million. This is six times what it used to be just three or four years ago. We multiplied the sales of Alpine by three since 2020. And we only had one car. This is the A110, which is a product that is the end of the life cycle. So I think on Alpine the best is still to come. And all of this, in my opinion, is kind of a very solid bedrock on which we've set our lineup. We have launched 22 products in three years. And I think 2024 was the fireworks. We launched 10 cars on time without any quality problem, something that this company had never experienced. ever achieved before so it's also a sign of the of the the fact that the system is organized and and healthy and capable um it was a stress test for sure for a new group launching 10 cars in a year without any delay you know in the year where also regulation was changing with the gsr2 um so when i tell you that this is uh the best lineup renault had in three decades just uh you know ask the experts what they're saying. And, you know, it's clear that we have, you know, we've won prizes everywhere. The most important one was the Car of the Year Award, which is kind of a holy grail for cars in Europe that was given to the Renault 5 and also to the Alpine 290. Last year, maybe you remember, we won with Scenic, and this is a kind of historical doublet, something with actually no precedent for us or for the French automotive industry. The last time a company won two years in a row was Fiat in the 90s. Maybe it's the Italian touch on the thing, I don't know. On top of it, you had Dacia that was ranked number five in the car of the year. So we actually had three cars out of seven finalists in the context. And by the way, I don't want to forget that Newmaster is also van of the year 2025. So this is not the kind of thing that happened by accident. It means that we focus on that as a result of the very strange work from the Renault group team that we've done the last four years. And I think it's the best evidence that this company has moved to a new standard, which is important. And I think we are now ready to take advantage of an unprecedented product lifecycle. So we now have the right cars, but I think we also have the right strategy, a strategy that is designed to give us agility and flexibility in a world that is becoming more and more volatile. So we actually knew from the start that the energy transition, for example, would be a bumpy road. We have designed Renault Group to be ready to smartly adapt to the changing pace of markets and technology absorbing all the ups and downs we are. all set for the journey thanks to clear assets. This is not PowerPoint. This is organization, people, processes. To play with the smooth transition, you have on one side Ampere, which is our EV and software champion. It's an organization that is tailored to outpace the pure players in the race towards, you know, EV, ICE, price parity. And then on the other side, you have power and horse, which is generating cash, is de-risking the group and racing to reinvent the ICE and hybrid technology. So that way, if you want, it looks like, if we can use an image, we are sure we can, you know, run into solid legs. With the future, Twingo, just to get a little bit more in detail, Ampere, I think, is already demonstrating its effectiveness to boost EV democratization in Europe. We'll use development time. We leverage the global competitiveness of supplier system and, in particular, the China ecosystem. We push the envelope in terms of battery technology, we'll see. So we have combined many ingredients to come up with, I think, the right receipt. And on top, as you can see, it doesn't prevent us from offering a super attractive car with an outstanding design. When it comes to development time, which I mentioned before, a few years ago, two years would have looked unbelievable. It took us between, I would say, four, five, six years to develop a car. Today we are making it. So we stay true to our ecosystemic approach. We partner with the best. We learn from them. And that's what we did by setting up, and the reason why we have been setting up the Shanghai Ampere project China Development Center to put Renault directly into the most vibrant engineering ecosystem globally. I think that Twingo also showcases Ampere's ability to deliver best-in-class efficiency. The car will consume 10 kilowatts of electricity per 100 kilometers, which is a benchmark. And Ampere has also achieved a battery plan to get LFP technology to our cars, not only the Twingo, by the way. in just 18 months. It shows the strategic agility and operational agility and the ability to pivot fast that Ampere is bringing to the group. Twingo, for your information, Twingo variable costs will be 40% lower than those of the Renault 5. We will, of course, transfer this experience to other products, including Renault 5 and Renault 4. And with all of that, we set the condition allowing us to make a small EV in Europe in a very, very competitive way. So we also dramatically reduce diversity and complexity. In 2019, our cars had 2,200 parts, between 2,200 and 2,600 parts on average. The new Twingo will have around 750. And it's actually compared to the Renault 5, it's a reduction of 30%. So it's a completely different way of designing the cars. And we push for systematic reuse of on-the-shelf or off-cycle parts. So before the revolution, our carryover, carry-across never exceeded 50%. And now we achieve up to 80%. And the bottom line is a price that will be... below €20,000 without subsidies. So this is less than €100 a month for our clients. So the car is going to be, in my opinion, a game changer like Twingo was 30 years ago. And this is the kind of fit for purpose urban vehicle, state-of-the-art EV with no compromise over its entire life cycle. The future Twingo will emit 75% less CO2 than the average car sold in Europe in 2023. And, of course, with zero tailpipe CO2 emission, it will also, by the way, occupy 20% less space than the average European cars in very busy European cities. So I think this is a strong, clever, inclusive... counter-proposal of the European industry to the challenges of sustainable mobility. And actually, the story of the Twingo is much bigger than just one breakthrough product. With the Twingo, we take the opportunity to set a new standard for Renault with a program that we call Alipa 100. And from now on, that means that we target to make all our cars in 100 weeks. So in less than two years, actually, the Twingo will be done in 21 months. So I think we've just moved to Chinese speed, thanks especially to the people of Ampere. And as the news of the day, we are even preparing to go one step further in terms of EV affordability. In fact, back in the kitchen, Dacha and Denise there is preparing with Ampere and ACDC a new A-segment EV. made in Europe, and will develop it in 16 months. I repeat, 16 months. So 21 months for the Twingo, it would be already pretty fast, but 16 months, I defy any competitor in the world to do that, including the Chinese when they come to Europe. Moreover, it's a true Dacia, always best value for money. So we're planning to sell the car below €18,000, of course making money the way Dacia is used to. We are moving fast on the EV side, but we're not slowing down on the ICE. Renault Group is, I think, strongly positioned as the number two OEM in Europe for hybrid vehicles, just four years after we launched for the first time the E-Tech technology. So with an HEV market share that rose from 2% to 20% since 2020. So we make 20% of the hybrid market in Europe. And I think with the best-in-class carbon footprint because the e-tech of Renault is between 10 to 20 grams below our direct competitors for the C-segment product category. It's now pretty obvious, I think, that our leadership position on the hybrid technology is, I think, a great asset to absorb the shocks on the EV market while continuing to lower average emissions. We know that the race to decarbonization will be uneven across markets and geographies. That's why we put ourselves in the position to reinvent the IC technology ultra-low, ultra-low emission solution working on, for example, on synthetic fuels or hydrogen or biofuels. That's what ORS is all about. ORS is our champion when it comes to supplying powertrains. So by joining ORS, forces with Gili and Aramco also, with sales of more than 15 billion in 130 countries and five R&D centers. I think we're gaining productivity. You can already see that. We reduce our fixed costs, obviously, because they are deconsolidated, and we have the right scale and expertise to build the future of ICE. And we significantly improve, I think, our balance sheet and keep a substantial stake in a growing and cash-generating business. For your information, Orso signed up to five new customers in the last six months with products that are innovative and for some of them outside the automotive space. So the story with ORS is actually just starting. And so my conclusion is that probably no other OEM can pretend today to be so flexible as Renault Group to cope with what comes next, whatever it might be. On top of that, you can also count on us to push the envelope on excellence and look for performance improvement in the wake of what we have already demonstrated over the past years. For example, our value over volume policy is, I think, embodied or materialized by our exposure to retail channel mix. We have achieved to position ourselves more than 20 points above the market average. So we have set our target of being around two months order book and two months inventories. We are within our sweet spot in terms of residual value in just four years. We have gained almost 10 points, so we are now between plus 4 to plus 12 points above the others in Europe in terms of residual value. And we have also done the job to right-size our industrial capacity, achieving around 90 percent utilization rate of our plants. So we've done the job in the past four or five years to put Renault back at its best level ever. And we are now ready to go much further and faster. So I will tell you more about it in a few minutes. But before that, it's time to hear our beloved CFO going into more detail on the financial results. Thierry?

Thanks very much, Luca. Good morning, everyone. It's a pleasure, as usual, to be here to present our 2024 full-year results, which, as Luca already mentioned, display record levels of operating profit and a record net cash position. So going straight into the group revenue, Renault Group enjoyed a 7.4% revenue growth at €56.2 billion in 2024. As you will see, this result has been achieved. while, as Lucas said, staying true to our value over volume credo. At constant exchange rate, revenue was up 9%. Automotive revenue stood at 50.5 billion euros, up 4.9%. At constant effects, it increased by 6.3 points. The mobility services contribution amounted to 69 million, up 24 million. And mobilized financial services revenue increased by 35% to 5.6 billion euros, mainly driven by higher interest rates and by the increase in average ticket per vehicle. Let's drill down in the automotive revenue. It included 1.4 points of negative exchange rates, mainly related to the Argentinian peso and the Turkish lira devaluations, and to a lesser extent to the Brazilian real. Volume effect was positive at 1.3 points, in line with the increase of our registrations, which were up 1.3% worldwide. Let's have a look at our sales performance. In 2024, registrations continue to grow for the third consecutive year to reach 2.3 million units at group level. Each of our three brands, Renault, Dacia, and Alpine, contributed to this growth, reflecting the growing success of our product offensive. In 2024, new launches represented 14% of our invoices. This share grew steadily from, if you recall, 5% in the first half to 18% in Q3. It represented 25% of our invoices in Q4. and this trend is going to continue in the coming quarters. In Europe, Renault Group consolidated its third position, progressing twice as fast as the market with sales up 3.5%. Renault Brands remained the best-selling French car brand in the world and continued its progression with global sales up 1.8%. In Europe, the brands grew by 3.3%, also twice as fast as the market, breaking the 1 million mark. Renault Brands ranked number three in passenger cars and light commercial vehicles, Renault was also leader in the light commercial van segment, thanks to the success of its flagship vehicles, Kangoo and Traffic, and in a year of transition with the launch of Newmaster. Overseas, Renault started to roll out the product offensive of its international game plan. In South Korea, the launch of Grand Coleos last September drove an impressive 80% growth. The SUV is currently being launched in the Gulf countries and in Latin America. Sales in Brazil rose by 10%, supported by the launch of Cardian. The model was also subsequently deployed in other Latin American markets and also in Morocco in December. Cardian was elected Car of the Year, both in Brazil and in Argentina. This international offensive has been reinforced with the launch of Renault Duster in Turkey in H2. Duster will complete its geographic expansion in 2025 in Ukraine, Egypt, South Africa, Australia, and in the Gulf. Dacia sales were up 2.7%. Dacia was in the top 10 best-selling brands in Europe, as Lucas said, with a record-breaking market share. It also confirmed its place on the podium of passenger car retail market, thanks to very high new customer conquest and loyalty rates. On top of having Sandero as the best model in Europe across all channels, Sandero and Duster were respectively first and second best-selling vehicles to retail customers in Europe. Bigster, the future C-segment SUV, will complete the lineup in the first half of 2025. Alpine also continued its progression with more than 4,500 units sold, even before its product offensive really started, as the A390 only hit the showrooms very recently. First car at the Dream Garage, the A390 inaugurates Alpine, Alpine's 100% electric lineup, which will be strengthened this year with the A390. Overall, our brands have continued to grow, but always with a strong focus on value and sales quality, as illustrated by these three KPIs. First, the retail channel represented more than 63%. of passenger car group sales, almost 21 points above the European market average. Second, Renault Brands pursued its conquest of the C and above segments in our five main European countries. They represented 41% of the brand's European sales, up 15 points in four years, driven by Rafale, Espace, Scenic, Symbiose, in addition to Arcana and Austral. Third, top of the range versions continue to represent a significant share of our mix. Finally, let's have a look at our electrification offensive. In 2024, nearly 33% of our European group passenger car sales were electrified, an increase of 4.1 points versus 2023. HEV sales increased by 47% in 2024, accounting for almost 24% of group sales, up 7.1 points versus 2023. Renault Brands strengthened its second place on hybrid in Europe with a 16% market share. Dacia is also further electrifying its range by expanding its hybrid offerings, initially introduced on jogger. The hybrid version is now available on Duster. Furthermore, Bigster will feature the hybrid 155 engine, making it the first Renault group model to benefit from this new powertrain. Full electric vehicles accounted for almost 9% of group sales in Europe. In the year of transition in terms of product plan, the EV offensive started to be reflected in our Q4 mix, during which EVs amounted to more than 12% of sales at group level, almost five points more than the rest of the year. 13% of Renault brand's European sales were fully electric. rising above 16% in Q4. At the end of 2024, EVs represented 19% of Renault brand's order book. Commercialized since the end of 2024 in France and elected car of the year in 25, Renault 5 made a strong start in its first countries of sale and was already the best-selling EV in France for January. In 2025, Renault will continue its electrification offensive with the commercial launch of Renault 4 and the introduction of Renault 5 in its various markets, reinforced by a new version with a 40-kilowatt battery. Switching gears to inventories, we had a high restocking within the dealership network in 24 compared to 23, in line with our expectations and to support our ongoing product offensive. At the end of 2024, total inventories of new vehicles stood at 450,000 cars. of which 437,000 at independent dealers and 103,000 at group level. New products represent more than 24% of this amount. Overall, we continue to monitor carefully our inventories and are very comfortable with the current level, given the launch activity and given the order book, which remains very healthy at two months of forward sales. Sales to partners effect was negative 0.9 points. As anticipated, new vehicle sales to partners decreased in a transition year before the launch of the new products. This will start with new Micra for Nissan this year. R&D billings to partners offset part of the decrease, especially in H1. The 0.6 points of price effect was mostly related to the offset of currency devaluations. mainly in Argentina and Turkey. As said in H1, we've entered a phase of price stabilization. And we're pricing a portion of our cost savings to our customers, primarily through enhanced content. And we'll talk more about this when we talk about the margins later on. The positive product mix effect of 2.7 points was in constant improvement over the year, with all groups' recent launches and stood at 4.1 points in the last quarter. Product mix will continue to be a strong positive driver in the next quarters. Geographic mix impacted positively for 0.4 points. And to conclude on our revenue bridge, the other bucket posted a positive 2.2 points, mainly thanks to the strong activity of parts and accessories, as well as used car sales. Now, let's switch to the operating margin analysis. Once again, this year, we posted a record operating profit in absolute value, delivering 4.3 billion euros. It represented 7.6% of revenue and more than three and a half times 2021 group operating margin. Adjusted from the impacts of horse on a like-for-like basis, group operating margin was up 15% and 50 basis points versus 2023. The automotive segment operating margin stood at €3 billion or 5.9% of auto revenue. Mobilized financial services operating profit increased by €194 million to reach €1.3 billion. Let's deep dive on the group's operating margin evolution, which was up 146 million. First, currency impacted positively by 143 million, reflecting mainly the positive impact of the Turkish year-round production costs. The volume impact was flat, as the positive effect of group sales was offset by lower sales to partners, as already mentioned. Looking at the next two buckets, the group continued to work on the combination of the two effects, cost on one side and price mix enrichment on the other, to further improve contribution margins. Passing a portion of our cost reduction to our customers is for us an efficient way to drive competitiveness on the products. It allows to offer more attractive vehicles in terms of price and content, while offsetting regulatory requirements, especially on new models and facelifts, for example. In 2024, costs decreased by almost 800 million thanks to the great work from our procurement teams in particular that delivered nearly half a billion euros of savings And also supported by raw material tailwinds of almost 300 million. This operational cost performance more than offset the 467 million of price mix enrichment. Net, these two buckets drove a positive impact of 325 million. R&D costs impacted negatively by 115 million euros. The higher R&D spends in 24 of about 90 million and the effect of a lower capitalization rate were partially offset by lower amortization and R&D billings to our partners. The capitalization rate decreased 7.4 points versus 23 to 43.6%, mainly due to the non-capitalization of the R&D spend on SDV, the software-defined vehicle, in line with our practice in this area. SG&A expenses were up $177 million. mainly driven by higher marketing costs related to product launches and to a lesser extent by the current performance in Formula One. The others item was a positive 157 million, thanks to the strong performance of the after sales and services business. The last bucket highlights the impact of the deconsolidation of HORS. I think you're now familiar with the mechanism. Since November 2022 and until it was deconsolidated on May 31st of 24, HORS was treated under IFRS 5 assets held for sale, and therefore the amortization of its assets in our accounts had been suspended. Since the deconsolidation invoices paid to HORS by Renault Group, include the cost of amortization again, as well as horses markup. The accumulated effect of these two elements represented 55 million for the month of June, and 330 million in H2, meaning, in total, €385 million for the full year. As a reminder, the synergies generated by Horse Powertrain will more than offset the market pay to Horse from the second year of implementation of the JV. We'll then start to buy the engines cheaper than when we were manufacturing them ourselves. Switching to mobilized financial services, the business generated $21.5 billion of new financings, up 2.4% thanks to the growth in registrations mainly. Average performing assets amounted to $56 billion, up $4.8 billion versus 23%. mainly driven by the growth of the auto business, both in volume and in average ticket per vehicle. Net banking income as a percentage of average performing assets slightly increased. It's worth noting that 2023 had been impacted by negative swaps to the tune of 84 million euros versus while the 2024 impact of this item was not significant. The cost of risk at 31 basis points remained in line with last year and below our historical levels. Operating costs and absolute value remain well contained and improved by eight basis points as a percentage of average performing assets. Overall, Mobilize Financial Services posted a solid operating profit of €1,295,000,000, up €194 million year-over-year. Now let's move on to the key elements of Groups P&L below the operating margin line. Other operating income and expenses were negative at €1.7 billion, including €1.5 billion of capital loss on the disposals of Nissan shares made in March and September. It also included €0.3 billion of impairment on vehicle developments and specific production assets, and €0.3 billion of restructuring costs. These effects were partially offset by half a billion euros of capital gain on the horse deconsolidation. Net financial income and expenses amounted to 517 million compared to 527 and 23. The lower cost of debt was partially offset by the negative impact of hyperinflation in Argentina. Associated companies contributed negatively for 521 million euros. It included two things. First, Nissan's contribution, which stood at 211 million euros compared to 797 million posted in 23, so down more than 500 million. Second, a partial markdown of 694 million euros was recorded on the Nissan shares in our balance sheet, This resulted from the annual impairment test, which took into account lower assumptions received from Nissan as regards their business plan. The contribution of horse is also on this line and amounted to 64 million euros for the seven months since deconsolidation. Current and deferred taxes represented a charge of 647 million compared to 523 and 23. The increase in tax charges is linked to an increase in taxable income. The effective tax rate was stable at 18%. All in all, including 1.5 billion euros of capital loss on the disposals of Nissan shares, 200 million of Nissan's contribution, and a partial impairment of the Nissan shares, net income group share stood at 0.8 billion. Excluding the capital loss, the sharp decline in Nissan's contribution, and the partial impairments, our net result group share increased by 21% to reach €2.8 billion versus €2.3 billion in 2023. Just a quick word on return on capital employed, which is not on the screen. In 2024, we remained totally disciplined towards maximizing returns. Our return on capital employed was, again, close to 30%. This is an industry benchmark level, and we'll continue to focus on it constantly. Now let's switch to free cash flow. Cash flow stood at $5.2 billion, including a $600 million dividend inflow from MFS in 2023. Group capex and R&D as a percentage of sales, excluding the impact of assets disposals. represented 7.2% of revenue, down 0.1 points year on year, but remained well within the limits of our guidance, which is below 8% of revenue. Assets disposals amounted to 94 million euros compared to 282 in 2023. Changing capital and working capital requirements was a tailwind of 844 million euros driven by the high level of activity, in particular in Q4 compared to last year with the product launches. Restructuring cash out amounted to 379 million compared to 496 in the previous year. Finally, Renault Group generated a solid 3.9 billion euros of free cash flow in 2024, Over the last three years, this represents a free cash flow generation of 8 billion euros. The free cash flow contributed to almost doubling our automotive net cash position, which improved by 3.4 billion, and reached the historical record level of 7.1 billion euros. Net financial investments and dividend paid include around 260 million of investment in Flexis. Dividends paid to Renault SA shareholders strongly increased in 24, as you know, at 1.85 euros per share, representing 540 million, while we benefited from 142 million of dividends received from Nissan. The horse operation generated $1.1 billion benefit on the automotive net financial position. Around 300 million of that came from the 10% stake disposal of Aramco, while the rest corresponded to the deconsolidation of that business's net debt. The disposal of nearly 295 million Nissan shares generated 852 million euros of cash inflow. And to finish, the others effect, mainly driven by the purchase of treasury stock, and IFRS 16 impacts amounted to 454 million. At the end of 2024, automotive liquidity reserve stood at a very comfortable 18.5 billion euros versus 17.8 on December 31st of 23. I'll end my presentation with a dividend that we will submit to the approval of the General Assembly on April 30th of 25. We will increase the payout from 17.5% on 23 results to 21.5% of 2024 net income pair and share, from which we have excluded the 1.5 billion euros of capital loss on Nissan shares. and the €0.7 billion of impairments of the investment in Nissan. This dividend of €2.20 per share for the financial year 2024 represents an increase of 19% versus last year. And now, a handover back to Luca for the financial outlook.