Renault Sa Unsp/Adr

Good morning, everyone, and welcome to our 2025 Q1 revenue presentation. This presentation will be made by Duncan Minto, CFO of Renault Group, and will be followed by a Q&A session. Duncan, the floor is yours.

Thanks, Philippine. Good morning, everybody, or good afternoon, wherever you're joining from around the world. Pleasure to be with you this morning to present the Group Q1 revenue results for 2025. So, in Q1, Group revenue was broadly in line with last year at €11.7 billion. Constant exchange rates it was up 0.6%. Automotive revenues stood at 10.1 billion euros, down 3%, or down 2.2% at constant exchange rates. Mobility services amounted to 23 million euros, up 8 million compared with last year. Mobilise financial services revenue was up 22.3% to €1.5 billion, mainly driven by the increase in average ticket per vehicle and still benefiting from growing interest rate trend over the last years. It increased by 23.5% at constant exchange rates. So moving on to the drill down of the automotive revenue. They stood at 10.1 billion euros, as I said, down 2.2 at constant exchange rates, with a negative forex impact of 0.8 points. As in previous quarters, this impact was driven by the devaluation of the Brazilian Riais, the Argentinian Peso, and the Turkish Lira. As you know, the Turkish Lira has a positive impact on our production costs though, so it's not all bad news. The second part is the volume. Volume effect was negative for minus 2.6 points in the quarter as the growth of 2.9% in group registrations was offset by a higher destocking at independent dealers this quarter compared to the same quarter last year. We'll come back to this in just a second. So to look into the registrations, the 2.9% growth worldwide in Q1 translated to 565,000 registrations at the group level. In Europe, we confirm our number three position in passenger car and light commercial vehicle market with 402,000 registrations. That's up 2.8% in a market that was down 2%. The situation is quite different between passenger cars and light commercial vehicles. In Europe, for passenger cars, we posted a 10% growth in a market down 0.5%. We strongly outperformed the market in all major European countries, with particularly strong growth in Spain, UK and Germany. In the latter, our sales were back to growth in a market that's still down. We remained and we will do fully focused on sales quality and we use four key PIs internally. First, the retail channel represented 58.5% of passenger car group sales. It's around 17 points above the European market average. Second one for us is pursuing the conquest as previously announced of the C and above segments in our five main European countries. For the Renault brand, they represented 40.6% of the brand's European sales. This is up four points compared to last year, driven by Rafale, Espace, Scenic and Sambios, in addition to Arcana and Austral, and soon completed by the C-SUV for International. At Dacia, the launch of Bigster will open the way of the conquest of the C segment as of Q2. Third KPI for us is the version mix. So top of the range versions continue to represent a significant share of our mix. At Renault, the Esprit Alpine and Iconic versions represented 27% of the mix in Q1. It's an increase of seven points compared to last year. Adacia high trim mix represented 71% of sales of Duster and 64% of Jogger in Q1. Finally, we keep preserving our focus on residual values on passenger cars, which remain in the scale of 4 to 13 points above our peers. This will be continued in our ongoing product offensive and we continue to track these four KPIs as part of our key plan. On LCV in Europe, the situation is quite different. On top of a decreasing market of close to 12%, we had to cope with the end of sales of Express last year, not yet fully offset by Kangoo, and the progressive ramp-up of Newmaster, which has not yet reached its full diversity. As you know, it always takes longer to deploy an LCV because of the large diversity compared to the passenger car range. LCV's performance should improve by the end of H2 with the availability of the full diversity of master. So this was for Europe. On international markets, we enjoyed double-digit growth in all regions except Eurasia, strongly outperforming in all markets, plus 21.1% in Latin America, more than doubling the growth of the market, and 13.9% in Asia-Pacific, versus a market up 4.2%. Africa Middle East was also up 12.3% in a market that grew by only 5.5%. Eurasia is the only exception due to Turkey, which suffered from an unfavorable comparison base last year in Q1 2024 in relation to the anticipation of sales pre-elections. and accentuated by the change of branding strategy we have for Duster, switching from Dacia to the Renault brand. Looking at the Renault brand, it continued its progression in Q1 2025 with global sales up 6.5% at 389,000 units. In Europe, passenger car sales were up 17.7% and strongly outperformed the market which was down 0.5% thanks to the success of Renault 5 and hybrid vehicles combined with a continued growth in C segment and above. Looking at passenger cars and light commercial vehicles, Renault ranks number three in Europe, number one in France and Spain. Clio is also number three in Europe across all channels. On LCV in Europe, despite the market and our transitioning product plan, the brand remains number two. Overseas, Renault started to benefit from the strong success of our international game plan. In South Korea, sales were boosted by the strong commercial success of Grand Corios, launched in September last year. The SUV is currently being launched in Gulf countries and in Latin America. The progressive deployment of Cardian in Latin America drove a 21.1% sales increase in Q1, with particularly strong growth in Argentina at plus 89%, and Colombia plus 40%, followed by Brazil plus 11%. Cardian's launch in Morocco in December contributed to the 45% sales growth in the country in Q1. Renault brand is pursuing its electrification strategy. EV sales increased by 88% in Q1 compared to last year. After a remarkable progression of EV mix throughout the year in 2024, we started at 10.7% in Q1, we're at 16.2% in Q4. EV mix increased again in Q1 2025 to reach 17.1% of sales. This increase will be pursued with the ramp up of our recent EV launches, Renault 5, Scenic, Newmaster, and with a launch this year of Renault 4. Renault 5 E-Tech is the number one EV in France across all segments, the number one B segment EV in Europe. Its deployment in Europe is still ongoing, notably in the UK and the Nordics. Hybrid sales increased by 46% in Q1 2025, further driving the continuous increase in our hybrid mix to 44.1%. We were 35% in Q1 in 2024. As we went out of Q4, we were 38%, so the strong dynamic continues. The brand also confirms its second position in the hybrid European market, thanks to Clio, Captcha, and Sambios. All in all, electrified sales represented 61.2% of Renault brand sales in Q1. At the group level, electrified sales mix stood at 44.2% in Europe, up 15.3 points compared to last year. With a hybrid mix at 31%, up 10.2 points and an EV mix at 13.2%, which is up 5.1 points. Turning now to Dacia, Dacia outpaced the market with sales up 0.6% in Europe at 154,000 registrations despite a market down too. Sandero is once again the best selling car across all channels in Europe in Q1 with 68,000 units sold. Duster sales increased by nearly 12% with 50,000 units sold and remains the best selling SUV in retail. Bigster is getting ready for its launch in Q2. It embodies the Dacia offensive for the C SUV segment. It's already recorded more than 13,000 orders, largely above the plan and even before its arrival in the dealer network. Worldwide, Dacia recorded sales down 2%, mainly, as I said earlier, to the switch of the brand strategy for Duster in Turkey, which is now sold under the Renault brand as per the international game plan. Turning to Alpine, which recorded more than 2,000 registrations in Q1. It's always double compared to last year, as we have the very start of the ramp-up of A290, the first sporty electric hot hatch in France. In March, the Alpine A110 lineup evolved with two new versions, the GTS and the R70. The R70 is a limited series of 770 units to celebrate the 70th anniversary of Alpine. We will celebrate that on May 27th, 2025, where we will present the new A390 in Dieppe next to Alpine Dieppe Jean Redelet Manufacture, the name of the plant in which it will be produced. The future five-seat sports fastback will be the brand's second 100% electric model. Turning from the brands to the inventories, I did say that the growth in sales registration was offset by the negative impact of stock evolution. Inventories at the end of March 2025 stood at 560,000 units. This is slightly up 20,000 units compared to December due to a restocking at the group level in line with a regular seasonal pattern. It will allow us to operate smoothly and be prepared for the ongoing launches we have coming up. This stock increase at group level is partially offset by a destocking at independent dealers in line with regular seasonal patterns. Looking at the impact on our volume bucket in the walk-down, this quarter destocking independent dealers was stronger. As you can see on the graph, 97,000 units in Q1 2025, which is more than the same decrease in the previous period, which was 73,000 units. last year, so this larger destocking impacted negatively our volume effect. We continue to implement a strict discipline on the management of our global inventories and we confirm that we will reduce total inventories towards the end of H1. The total stock is underpinned by sound order book. We stood at around two months of forward sales at the end of March with indicators all clear on aging and customer matching. Return from stock to partners in the next part of the walk down. Sales to partners had a negative effect of 3.5 points in Q1 2025. mainly due to the high comparison base, we had two things. First, a positive R&D billing one-off was recorded in Q1 2024. And second, revenues from powertrains have been deconsolidated as we move to horse at the end of May 2024. These two impacts explain most of the decrease. In addition, we're also in a transition prior to the production of Nissan Micra, which will come in H2. I think this will therefore turn back to positive in the next nine months of the year. If we look now at the price, product mix and geographical mix impacts, As expected, the price effect was stable in Q1, though positive at 0.5 points, reflecting a phase of price stabilisation. As already mentioned, Rena Group aims to offset negative currency effects by pricing actions, while giving a portion of its cost reduction back to its customers, mainly through content. This way, this supports the competitiveness of the Group's vehicles while protecting margins. The product mix effect was solid at 3.7 points, explained by the ramp up of new models, Scenic E-Tech, Sambios, Rafale, Renault 5, Gran Collios, Duster. New models represented in the quarter 28.3% of our invoices. This was 5% back in H1 last year, moving to 18.2 in Q3 and 24.7, so The acceleration to 28.3 confirms the dynamic. It will continue to be a key driver in the coming quarters. The positive impact of new products more than offset the negative impact of the transition between Master 3 and Master 4 that should improve, as I said, with increase of diversity towards the end of the year. The geographical mix stood at minus 0.7 points, mainly due to the increase of sales in Latin America, thanks to the rampart of Cardian, and to a lesser extent, the increase of sales in South Africa. The last item on the walk down is other, which impacted our revenue by plus 0.4 points. This was mainly driven by the solid performance of the after sales business. So having gone through the auto revenue, let's move to mobilise financial services. New contract production was stable over Q1 2024. The average performing assets increased by 8.9% to 59.1 billion euros, mostly thanks to the increase in average ticket per vehicle over the last years. All in all, mobilised financial services revenues were up 22.3% to €1.5 billion, mainly driven by the increase in average ticket again and still benefiting from the growing interest rate trend over the past years. So looking from Q1 towards the end of the year and before going into the Q&A, I'd just like to confirm our guidance for 2025 with a group operating margin above 7%. and a free cash flow above €2bn. Cost management continues to be a key priority for us. In this unstable macroeconomic environment, we have decided to proactively engage additional cost reduction measures internally. These effects will enhance our competitiveness. Above that we have seven launches and two facelifts this year. Bigster, which will be available in both internal combustion and hybrid versions, will be the first to be launched in Q2. It's currently arriving at dealerships in Europe, but has already enjoyed strong orders, largely above our objectives, as I'd already mentioned. Renault 4 will arrive at the end of Q2, together with the facelifts of Vespas and Austral. They'll be followed in H2 with A390 for Alpine and two new vehicles for Renault, of which a C-segment for international markets. So yes, external environment may be complicated, but you can count on us to continue to accelerate and for once we're not directly exposed to the headwinds, allowing our teams to remain fully dedicated to the execution of our strategy and the preparation of our next strategic plan called Futurama. So, that concludes my presentation. Thanks for your attention this morning, and with Philippine and the team now ready to take your questions.

Thank you, Duncan. So, we now start the Q&A session with Horst Schneider from Bank of America. Horst, please, could you open your mic?