Renault Sa Unsp/Adr

Welcome to Renault Group's first quarter 2026 conference call. I remind you that this call is broadcast live and will be available in replay version on our website. This presentation will be done by Duncan Minto, the Group CFO, and will be followed by a Q&A session. Duncan, the floor is yours.

Thanks, Florent. Good morning, everybody, or good afternoon, depending on where you're connecting. It's pleased to be with you this morning to present our Q1 revenue and sales performance. So let's go straight ahead. In Q1, group revenue increased by 7.3% compared to last year and stood at 12.5 billion euros. At constant exchange rates, it was up 8.8%. As you know, in 2026, mobility services revenue has been reintegrated in the automotive segment following the reorganization of these activities. This reintegration amounted to 17 million euros in Q1 2026 and to 23 million euros in Q1 last year. Thus, automotive revenue stood at €10.8 billion this quarter compared to the €10.2 billion in Q1 2025, which is an increase of 6.5% or 8% at constant exchange rates. Mobilised financial services revenue was up 13% to €1.7 billion. So drilling into the automotive revenue, which stood once again at 10.8 billion euros in q1 up eight percent at constant exchange rates the negative forex impact was minus 1.5 points mainly related to the devaluation of the turkish lira and to a lesser extent the argentinian piso a strong sales increase in turkey implied a more negative impact of the turkish lira on revenue however it should be partly offset in terms of margin by the positive effect on production costs. The volume effect, the second slot, was negative by minus 2.1 points in the quarter, mainly due to the minus 3.3 decrease in group registrations. In addition, it's worth highlighting that the independent dealer network reduction in Q126 versus Q125 had no impact on the volume effect. It reflected timing differences mainly related to Euro 6 EBIS regulatory change. We had vehicles registered and invoiced at the end of 2025, which were delivered in the first quarter of this year and thus removed from inventory at this moment in time. So looking at the registrations, worldwide sales stood at 546,000 units in the first quarter, down 3.3% compared to Q1 2025. This was mainly due to one-off issues at Dacia, while Renault and Alpine sales grew. In Europe, the group confirmed its number three position in the passenger car and light commercial vehicle market. So, looking by brand, we see Renault brand sales were up 2.2% globally versus last year, thanks to the growth of electrified vehicles and the full diversity availability of light commercial vehicles. On international markets, Renault brand continues to consolidate its international footprint, supported by a renewed product lineup, notably in India, Morocco, and Colombia, which were all up double digits. In Turkey, Renault maintained its leadership with a total sales up 13% and a market down 4%. This trend will be reinforced throughout the year with our recent launches such as Renault Duster in India as well as the upcoming launch of Renault Boreal in Turkey. Dacia sales were down 16.3% versus last year. The severe weather conditions implied a 10-day closure of the Strait of Gibraltar and floods in our Tangier plant leading to logistics and production disruptions in the first two months of the year. Sales, however, are showing signs of recovery in March with a 1.9% growth in Europe compared to March 2025. And Dacia can rely on a strong order book fuelled by double-digit order intake year-to-date. The several thousand units of reduction losses should be caught up progressively in the course of the first half of the year. Alpine sales were up by 54.7%, essentially driven by A290 – and I'll come back later on this – In March, the group sales started to recover in total, with a 5.3% global performance year-on-year outperforming the market. As illustrated in recent years, a two-leg strategy is playing out very positively for Renault Group, and we are set to continue benefiting from a strong product momentum and the right technologies to address these growing markets. First, we're accelerating in electric vehicles in Europe. At group level, BEV sales were up 21% and the mix reached 17% of the sales in the first quarter 2026, which is up four points year on year. Under the Renault brand, we now offer five electric passenger cars covering the A to C segments, securing a strong position in Europe's core market. Renault brand EV sales increased by 43% in Q1 compared to last year. Renault EV mix continued to improve and reached 24% of sales at the end of Q1 2026. The brand was number one EV in France and in the B segment EV in Europe, benefiting from the success of Renault 5, which was the number one BEV in most European markets, the progressive ramp-up of Renault 4 and the solid performance of Scenic. This momentum will be further supported by the launch of Twingo, for which deliveries are just about to start. Beyond the Renault brand, the group's EV offer and momentum is complemented by Dacia Spring model year 2026, already a key player in affordable EVs, and by Alpine's electric offensive with the A290 already on the road and the A390 to come soon. On the other hand... We intend to pursue the electrification of our ICE engines thanks to best-in-class hybrid technology. The group confirmed its second position in the HEV market in Europe. Hybrid mix stood at 35% for the group in Q1 2026, up strongly compared to last year. Dacia HEV sales were up 49%, driven by Duster and Bigster, supporting the group's performance. Full hybrid e-tech also continued to perform strongly across Renault brand's core models, representing more than 40% of the total sales, confirming their key role in the brand's balanced electrification strategy. The brand stood second place in HEV in Europe. All in all, electrified sales of the group grew 12% and represented respectively nearly two-thirds of Renault brand's sales and more than 30% of Dacia's sales in Q1. Thus, at group level, electrified vehicles represented more than one out of two sales in Europe, up nine points compared to the previous year. This momentum is expected to pursue in the coming quarters with the recent launch of Twingo and the full rollout of Clio Full Hybrid. In Europe, Renault brand sales were up 3.8% versus last year. Renault gained one position and was ranked number two in passenger car and light commercial vehicles, with Clio as best-selling model. The brand was also number two in LCV in Europe. Supported by the full diversity availability of the LCV range, we benefited from a 15% sales growth following a transition year in 2025. Worldwide LCV sales increased by almost 7% year-on-year this quarter. Dacia maintained its position in the top 10 automotive brands across all channels for passenger cars in Europe and is top three in the retail channel. The brand's performance was especially strong on the retail market, which remains at the heart of the strategy. This reached a high level of 77% of passenger car sales. Duster is number three SUV in the retail channel in Europe. We benefit from an increasingly attractive product lineup, notably thanks to the success of LPG and hybrid engines. The launch of Duster and Bigster hybrid G150 4x4, as well as the Sandero LPG automatic transmission, also strongly contributed to order intake momentum. This gives us good confidence in improving Dacia's sales performance in the coming months. Let's move to Alpine. After a triple-digit growth record in 2025, Alpine confirms the upward trend in Q126 with more than 3,200 registrations worldwide, which is up 55%. Alpine continues to expand sales in Europe, particularly in the UK, which becomes its second most significant market, and also in Germany and Spain. A290 is the bestseller brands model with almost 2,500 registrations worldwide, up 64%. And the A390, the brand's first five-seat sport fastback, now being launched in most European countries, will support the brand by reaching new customers and further consolidating the sales growth. But above and beyond growth, we remain fully focused on sales quality, as we illustrate on this slide. We still run our plants at a high utilization rate of above 90%. This was supported by the improvement of Chennai utilization rate in India. We continue to implement a strict discipline to the management of our total inventories, which stood at 554,000 units to the end of March. This level of inventory will enable us to smoothly operate during Q2, which is traditionally stronger in terms of registrations. This total level of stock is underpinned by a strong order book in Europe, which stood at two months of forward sales versus 1.5 months at the end of December 2025. It was fueled by a double-digit order intake growth since the start of the year, with a significant acceleration in electric vehicles. We continue to uphold our commercial policy, which sets for residual value over volume. As an example, our group's retail channel mix was 58% of PC sales, 16 points above the market. Renobrand reduced its exposure to short-term rental channel and grew in the retail channel by 8.5% on our five main European countries. This notably supports meaningfully higher residual values against competition. Our residual values are 4 to 13 points above market average, thanks to this holistic approach to a commercial policy. All this will continue to be embodied in our ongoing product offensive. On inventories, as mentioned earlier, the total stood at 554,000 units at the end of March. We expect total inventories to be slightly lower at the end of June compared to March. So let's turn now to one of the major parts of growth, which was sales to partners. The strong positive impact was 5.9 points of revenue growth in the first quarter, driven primarily by the performance of partner programs, especially Nissan Micra. It also benefited from positive effects of scope evolution, as we'd highlighted. The integration of RNA-IPL, our Indian manufacturing site, contributed around €200 million in Q1 2026. The full-year revenue for this should be around €1 billion, but I remind you, with a margin close to zero on this activity. Secondly, we began the ramp-up of the distribution of GD vehicles in Brazil, It's the first phase of our agreement with Gili, with local production through the Renault-Brasil joint venture set to begin in the coming months. Let's now have a look at price, product mix and geographical effects. Price effect was slightly positive, plus one point in the first quarter. Price increases in international markets, which were there to compensate for the negative effects, were partly offset by pricing pressure in Europe. This price pressure in Europe is expected to be pursued throughout the year. Product mix was solid, plus 2.6 points, mostly due to the success of electric vehicles, and also the transition phase between Clio 5 and Clio 6, the ramp-up of Bigster, and to some extent also Master. The geographical mix at minus 0.1 points was mainly explained by the sales increase in India. The last item, other, impacted positively revenue by 0.7 points in the quarter, primarily related to solid performance of parts and accessory sales. Let's move to mobilized financial services. New financing production was stable versus quarter one 2025. The average performing assets increased by 4.8% to 61.9 billion euros. thanks mostly to the increase in the average ticket per vehicle over the last years. All in all, Mobilize financial services revenues were up 13% to 1.7 billion euros, mainly driven, as I said, by the ticket per vehicle, but also still benefiting from the growing interest rate portfolio from previous years. So, having gone through the revenues, let's look towards the outlook, or This morning we confirm our guidance for 2026 with a group operating margin around 5.5% of group revenue and an automotive free cash flow around 1 billion euros. As per the usual seasonal patterns, H2 operating margin is expected to be higher than H1. I remind you that last year H1 margin stood at 6% while H2 margin stood at 6.5% of revenue. In 2026, international expansion, increasing sales to partners, the growing share of electric vehicles and the consolidation of RNIPL on a full year basis will drive revenue growth, although being dilutive on margins. Cost reduction remains a key priority in 2026 and beyond. And as we communicated during the 2025 full year results, our 26 guidance assumes a substantial negative impact from raw materials and inflation. For a reminder, I said it would probably be close to twice the positive or the negative impact. We close to twice the positive impact we saw in 2025. As a Q1, our purchasing and functions performance are well orientated. Considering the geopolitical environment, we've decided to take additional measures to mitigate the potential impact of the Middle East crisis on raw materials, energy, and logistics costs. At this stage, we see no meaningful impact, but we are monitoring the situation very closely. There are some potential risks, considering the degree of uncertainty related to this situation. But as an automotive manufacturer, we must remain vigilant. 2026 automotive free cash flow will, as I remind you, include the 350 million dividend from mobilized financial services. And we have expected a negative change in working capital in 2026 to continue to unwind the positive change we saw at the end of 2024. So to conclude, as you can see today. We delivered strong revenue growth in Q1, despite the challenging environment. It was supported by both automotive and mobilized financial services, demonstrating the robustness of the operating model, and as stated in Future Ready. In March, we started to recover in terms of sales performance, and we see that our order intake continues to evolve positively. This confirms the relevance of our comprehensive model. product lineup, and the current environment supported by a two-leg strategy, both EV and HEV. So thank you for your attention this morning, and I think we can now go over to the Q&A.

Thank you, Duncan. Yes, indeed, we will open the Q&A session. So I will ask you to limit yourself to two questions at first, and we'll come back to you in a second time if you have some follow-up. And the first question will come from Michael Founoukidis from OdoBHF. Michael, do you hear us?