Renault Sa Unsp/Adr

Hello, everyone. Welcome to Renault Group's 2025 Financial Results Conference Call. I remind you that this call is recorded and will be made available in replay on our website after the call. During today's call, we will outline the 2025 strong performance from our group and we'll discuss the 2026 and medium-term outlook. This presentation will be made by François Provost, CEO of Renault Group, And Duncan Minto, CFO of Renault Group. François, the floor is yours.

Thank you, Florent. Hello, everyone. Thank you for joining the call. It's a pleasure to be here with you for this important moment, not only to present, as mentioned by Florent, our 2025 full year results, but also to share. our 26 outlook and medium-term financial ambitions. But first, I would like to start with our strong momentum since July 2025. One month after my nomination, I could release our new leadership team. And with this team, we already took several important decisions to simplify, streamline our organization. Fabrice Cambolive, as the chief growth officer, enhanced complementarity between Renault and Dacia, and they start to deliver results. Our CTO, Philippe Brunet, set one unified engineering organization, and the team was capable To reorganize this within four months, we released our Ampère 2.0 project in order to extend the mindset of Ampère to all our Renault Group operations. I decided to stop Mobilize Beyond Automotive, focusing more on customer experience for our EV customers. On India side, we appointed a CEO in charge of the full-fledged operation in India in order to prepare our next mid-term plan in India. And last but not least, we reshuffled our light commercial vehicle operation in order to put this important operation back on track. On the partnership side, we also grant an important milestone with the closing of our agreement with Geely in Brazil. So today, Renault Geely do Brasil is selling Geely cars, and the localization of the Geely platform, both for Geely and Renault products, is on a good track. And we also, as you well know, released our partnership with Ford in Europe. Let's move now to our financial results. We got the job done. July guidance has been delivered with operating margin 6.3%, which means 3.6 billion euros, free cash flow 1.5 billion euros, and record high automotive net cash position at 7.4 billion euros. All our brands delivered strong performance in 2025. We recorded 2.3 million units overall in total with third consecutive years of growth for Renault Group. Renault brand first, also third consecutive year of growth, plus 10% growth in passenger cars, second brand in Europe for PC and LCV, first French brand worldwide. Dacia also delivered good results with plus 3.1% growth. We have more than 10 million vehicles sold with Dacia brand since 2004. Dacia is second brand in retail passenger cars in Europe and Sandero is the best model sold in passenger cars in Europe. But also Alpine because with Alpine we have triple digit growth. First time ever we over achieved 10,000 sales in a year for Alpine. A290 now is gaining a good momentum and we just launched A390 in the European market. Our so-called two-leg strategy is working well. We continue to push on EV and software, plus 72% sales growth for Renault brand, EVs in Europe, plus 77%. for the group in Europe. The mix of full EV for Renault brand is 20%, 14% for Renault group. But we have also very good results on hybrid. Our hybrid detect, full hybrid is second best in Europe. We grew plus 35% sales growth in hybrid in Europe and the mix of hybrid for the Renault brand is 36% but also overall 30% mix of full hybrid for Renault Group in Europe. All of this is due to the successful launches of our new product. with Europe, and I start, of course, by Renault 5 with over 100,000 units sold in 2025, leader in EV B-segment in Europe. Symbio's successful launch as well, with 89,000 units sold since the launch. It's Renault's best-selling full hybrid model, and it is C-segment growth for Renault brand in Europe. On Dacia side, Bigster was a big hit in terms of launching last year. We already sold 67,000 cells. It is the best selling C SUV to retail customers in Europe in H2 2025. Outside Europe, our push outside Europe started. As you know, we launched Grand Coleos in South Korea, about 44,000 units sold in 2025. It is a top 3D SUV in South Korea. Cardian is also a success with about 50,000 sales sold in 2025, both in South America, but also very successful launch in Morocco. And the Duster, over 27,000 cells sold outside Europe in new markets like Colombia, Australia, and Saudi Arabia. All of this is based on strong fundamentals supporting the performance. We keep healthy inventories, 539,000 total inventories. as you know we have high utilization rates over 85 percent for our manufacturing footprint we have solid order intake fueling order book plus three percent we continue to value to focus on value over volume, plus 17% point above market average on retail channel mix for brands. All of this leading to increase of the residual value from 5 to 12 points above peers in Europe. We have also on cost side a very strong performance with over 400 euros COGS reduction per vehicle in average worldwide in 2025. Duncan, please detail the results.

Thank you, Francois. Good morning, everyone. Thanks for joining the call with us this morning. Without ado, let's go straight into the Zoom on the financial results, starting with group revenue. Renner Group enjoyed a 3% revenue growth at €57.9 billion in 2025. As you've just seen, the result has been achieved while staying true to our value over volume credo. At constant exchange rates, revenue was up 4.5%. Automotive revenue stood at €51.4 billion, up 1.8%. The mobility services contribution amounted to 91 million, up 22 million versus last year. And last but not least, mobilized financial services revenue increased 13.2% to 6.4 billion euros, mainly driven by higher interest rates of the portfolio and the increase in average performing assets. Drilling into automotive revenue, It included in the first bucket negative 1.6 points of exchange rate, mainly related to the devaluation of the Turkish lira and Argentinian peso. Constant exchange rates, revenues increased 3.4%. The volume effect was positive at 0.7 points, driven by an increase in registrations, which was partly offset by a lower restocking within the dealership network in 2025 compared to 2024. As mentioned, my François Group registrations rose by 3.2% this year, totalling 2.3 million units, marking the third consecutive year of growth, driven by three distinct brands. Each brand surpassed market performance, aided by the deployment of the International Game Plan and the expansion of our electrified line-up. The 3.2% increase in registrations was partially offset by a lower restocking within the network in 2025 compared to 2024. As you can see on the graph, the stock rose 5,000 units in the year compared to 62,000 in the previous period. As of December 31st, Total inventories of new vehicles stood at a healthy level to operate and represented 539,000 units, of which 442,000 at independent dealers and 97,000 at group level. This level of inventories is supported by a 3% growth of the order intake, resulting in an order book of 1.5 months of forward sales at year-end 2025. Order trend continued to be positive also at the beginning of the year with a double-digit increase over the year in both PC and LCB. The sales to partners, which was the next bucket effect, was slightly negative, mainly due to the positive R&D billing one-off in the first half of 2024 and the deconsolidation of horse powertrain revenues from the end of May. These were partly offset by gains from partner programs, particularly Nissan Micra and several models for Mitsubishi. Additionally, our Indian activities, RANIPL, inclusion in the consolidation perimeter, This happened since 1st of August, which contributed positively. Let's review price, product mix and geographical mix effects. The price effect was slightly negative at 0.2 points, mainly due to the ongoing commercial pressure, especially in Europe. Price increases helped partially offset negative currency impacts. the group continues to prioritize residual values as part of its value of a volume strategy, as mentioned earlier. Product mix had a positive effect of plus 3.2 points, driven by the recent launches. notably Dacia Bigster, Renault Samyos, Renault 5, the A290 from Alpine, the Renault 4 and the Renault Colios. This trend will continue to support results in 2026. Geographical mix was negative at minor 0.5 points, attributed to increased sales outside of Europe. The international mix rose to 30.4% in 2025, up from 28.6% in 2024. Finally, the other impact resulted in a 0.3 point increase, primarily due to the performance of parts and accessories and distribution activities. So let's turn now to analyse the operating margin. This year we posted an operating profit at €3.63 billion, representing 6.3% of revenue. The automotive segment operating margin stood at €2.18 billion, or 4.2% of auto revenue. Mobilized financial services operating profit reached 1.47 billion euros. So looking at the evolution of the group operating margin. In the first point, currencies had a negative impact of 282 million, mainly due to the Argentinian peso. The Turkish lira positive impact on production costs was offset by the increase of the group sales in Turkey. Volume effects contributed a positive 186 million, thanks to the increase of our invoicing and increased sales to partners in H2. Price, mix and enrichment and cost factors together had a negative impact of 341 million, that's the sum of the 733 and the 391, reflecting strong commercial pressure, especially in Europe. a higher EV mix, higher international sales, and fewer high-margin LCV sales. Efficient cost management helped partially offset these impacts. When it comes to costs, we achieved our target of reducing the cost of goods sold by €400 per vehicle in 2025, mainly due to our strong purchasing performance and the initial benefits we're seeing from the powertrain synergies delivered by horse. That said, even with these positive results on COGS, our overall costs were affected by higher warranty expenses in the second half of the year largely due to a recall campaign on Powertrain. Also, despite a strong performance, industrial and logistic costs were impacted by higher amortization related to recent launches. R&D posted a negative impact of €87 million, primarily due to an unfavorable comparison base with non-recurring R&D billings to partners in the first half of the previous year. SG&A improved by 59 million thanks to strict control of expenses, and others' effect was negative by 59 million. Mobilised Financial Services posted a record operating profit, I'll just comment that in a minute, but the last bucket highlights the impact of horse deconsolidation. It represented a negative impact of 279 million euros in 2025 compared to 2024, explaining a significant part of our operating margin decrease. From now on, there will be no more impact of horse deconsolidation on the bridge. Competitiveness from horse will be tracked in the cost bucket. As I said, mobilised financial services generated a record result, recording €22.3 billion of new financing, up 3.3%, thanks to growth in both registrations and in the average financed amount. Average performing assets hit €59.3 billion, up €3.3 billion versus 2024. driven mainly by strong commercial activity on the customer financing business over the last years, following the end of the electronic component shortage. Net banking income as a percentage of average performing assets improved by 19 basis points, highlighting a robust margin policy. Cost of risk at 0.36% remained in line with their historical levels. Operating costs in absolute value improved by four basis points as a percentage of average performing assets and remained stable in absolute value, excluding positive one-offs in 2024. Overall, Mobilised Financial Services posted a record operating profit of €1,468,000,000, up €173,000,000 year-on-year. Moving to key items from our Group P&L below the operating margin line, other operating income and expenses were negative at £11.5 billion, mainly included the non-cash loss linked to the change of the accounting treatment of Renault Group's stake in Nissan for £9.3 billion that was recorded in the first half of the year. It also included impairments for £0.9 billion, restructuring costs for £0.4 billion. These restructuring costs notably embedded an early retirement scheme. Other items included here are the FCA penalty provision of MFS. Indeed, we took this year an additional provision of €222 million to address potential risks related to the UK Motor Commission matter. Other items are also included were the EU CAFE LCV provision for a total of around €100 million at the end of 2025. Moving down to net financial income and expenses, this amounted to €208 million compared to €517 million in 2024. Hyperinflation in Argentina had a lower negative impact in 2025 compared to the previous year. The contribution of associated companies amounted to €2.2 million compared to €521 million in 2024, including Nissan's contribution for €2.3 billion in the first half while the contribution of horse powertrain amounted to a positive €245 million this year. I remind you, Nissan no longer impacts the net results since the change of accounting method end of June. Current and deferred taxes represented a charge of €522 million, including €24 million related to the French exceptional surtax. All in all, and excluding Nissan's impacts, net income group share reached €715 million. Let's now move to free cash flow generation. Starting from the top line, the cash flow reached €4.7 billion in 2025 compared to €5.2 billion last year. The year-on-year decrease was meaningfully lower than the decrease we experienced on our operating profit, highlighting the resilience of our performance. Worth highlighting as well is that 2025 cash flow included €300 million dividend from MFS versus a €600 million dividend in 2024. The 300 was 150 million of dividend for the year 2024, paid in the first half of 2025, and 150 million anticipated for the year 2025, paid in H2 2025. Tangible and intangible investments, cash outflow including asset sales, amounted to 2.8 billion euros, rather stable compared to 2024. Including the part of R&D expenses accounted for in the P&L, And excluding the impact of asset disposals, the total amount of groups net capex and R&D stood at 4 billion, relating to 6.9% of revenue compared to 7.2% of revenue in 2024. The change in working capital requirements was a headwind of 190 million euros. This underscores the group's willingness to have a healthy and sustainable working capital requirement management. In this context, the group aims to unwind in 2025 and 2026 the significantly positive 844 million change in working capital recorded in 2024. Finally, restructuring charges had a 300 million euro cash impact. All in all, Renault Group generated €1.5 billion of automotive free cash flow in 2025, demonstrating a resilient profile. The automotive net cash financial position stood at €7.4 billion on December 31, 2025, compared to €7.1 billion a year before. This evolution was mainly driven by the strong free cash flow generated, dividends paid to shareholders for €697 million, and the impact of foreign exchange, IFR16 and others, which resulted in a negative €392 million, partly due to the employee share plan. Liquidity reserves stood at a comfortable level of €17.7 billion. I'll end this presentation of our 25 results with a dividend that we will submit for the approval of the General Assembly on April 30th, 2026. The proposed dividend for the financial year 2025 is €2.20 per share. This dividend, I think, is a clear signal of confidence in the future of our company and confirms our intention to remain attractive in terms of return. I now hand back over to François for the 26th and midterm financial outlook.