Renault Sa Unsp/Adr

Good morning everyone and welcome to Renault Group's third quarter revenue call. Thank you for joining us. With me today Duncan Minto, our CFO, together with Fabrice Cambolive, Chief Growth Officer and CEO of the Renault brand, and Catherine Hatt, CEO of Dacia. Please note that this call is being recorded and will be available for replay on Renault Group's website. As usual, before we start, I'd like to remind you that today's discussion may contain forward-looking statements reflecting the Group's current expectations. Actual results may differ due to a number of risks and uncertainties as detailed in Renault Group's public disclosure. Duncan will walk you through the key highlights of the quarter and will then move to a Q&A with Duncan, Fabrice and Catherine. Duncan, the floor is yours.

Thanks, Florent. Morning, everyone. Afternoon, if you're joining. Thank you very much for your presence today, as always. Maybe I should start with the key message today would be that the third quarter played out as we expected. Revenue was resilient. The quality of the revenue bridge, as you'll see, remained solid. And we confirm our 2026 financial guidance. So let's begin with the clear acceleration in EV demand. In Q3, our EV passenger car sales in Europe increased by 85% year-on-year, bringing growth over the first nine months to 59%. This reflects the strength of our refreshed and attractive line-up, our dealer and after-sales network, and the financing solutions offered by Mobilise Financial Services. A captive is a key commercial enabler. It makes the transition to EVs more accessible through competitive financing and leasing solutions, supports dealer activity and customer conversion, and helps sustain loyalty and residual values over the vehicle lifecycle. A manufacturing and supply chain setup allowed us to capture this commercial momentum and I congratulate the efforts done by all of the teams. Our plants are running at high utilization rate, 85% worldwide and above 95% in Europe, and we've added a third shift in Dewey to sustain the pace. At the same time, inventory management remains disciplined. Total inventories stood at a healthy 532,000 units, with a more pronounced destocking at independent dealers than last year. Finally, at the bottom right, you'll see our European Autobook remains solid at around two months of forward sales, giving us good visibility while preserving the flexibility to align production with demand. As always, we remain focused on retail sales rather than pursuing volume through low quality channels. In Europe, retail accounted for 65% of our Q3 passenger car sales. That's around 20 points above the market average and grew by 5%. At the same time, in Q3, we reduced short-term rental and demo sales by 18%, despite these channels growing by 3%. This channel discipline supports residual values with Renault and Dacia 5 to 13 points above the market average. In turn, stronger residual values support competitive leasing offers and protect new car pricing. As a reminder, we estimate that one point of residual value is equal to around one point of discount. So if we look at group volumes over the first nine months of 26, Renault Group sold 1,662,000 vehicles, down 2.2% year on year. This headline reflects a contrasting brand and regional dynamics. So let's look at those starting with Renault brand sales, which rose 1.1% over the first nine months, taking the brand to second place in Europe. Renault brand outperformed the market across EVs, retail and LCVs. EV sales grew by 75% compared with 41% for the market. Supported by a renewed and attractive lineup, I'd like to stress that even if still slightly dilutive on group margin, our EV growth is profitable. Retail sales increased by 20% versus 11% for the market, reflecting the focus on sales quality. At the same time, Renault brand decreased its short-term rental and demo sales by 22% while the market was strongly up. And finally, LCV sales rose by 8% in a market growing by only 1%. Master led the large van segment while Kangoo and Traffik both ranked in the top three. Turning to Dacia, as we'd already mentioned, the brand did suffer from a lack of product to fully capture the market shift towards electric vehicles, particularly considering their retail focus. With spring as its only EV and in transition phase ahead of the model's renewal, Dacia's addressable market was reduced significantly. As a result, sales declined 12.8% in Q3 and by 9.7% over the first nine months. This temporary product gap was amplified by an exceptionally high comparison base in Q3 previous year and stronger Chinese competition, particularly in the C segment. Dacia nevertheless remained on the European retail podium, with Sandero retaining its position as the best-selling passenger car among retail customers. At the same time, electrified vehicles continued to gain traction, reaching 31% of the sales mix. Full hybrids alone accounted for one out of four Dacia sales, making Dacia the fourth largest full hybrid brand in Europe. Beyond EVs and hybrids, LPG, representing 39% of Dacia sales, remains a key pillar of Dacia's value proposition, materially lowering running costs and reinforcing its total cost of ownership advantage. Looking ahead Q4 should progressively benefit from the ramp up of Sandero Hybrid, the new Spring and of course Stryker. Every Dacia model now offers an electrified powertrain. Q4 will also benefit from a stronger order book supported by improved order intake in the recent months. Turning to Alpine, registrations rose by over 60% to more than 12,000 units over the first nine months, already exceeding last year's volume full year. A290 led this growth with more than 8,000 units registered, while September was the best ever month for EV orders. Although its nearly 2,000 registrations remain below our volume ambition, the A390, which is now available in GTS version, is progressively establishing a second pillar for Alpine's electric growth. So turning now to the wave of the next products, our product offensive is fully electrified, reflecting the two complementary pillars of our strategy, all electric vehicles and hybrids. This approach allows us to capture accelerating EV demand while offering hybrid alternatives suited to different customer needs and charging infrastructure. Our launch momentum continues in the second half with the Newmigan E-Tech, Traffic Van E-Tech and Duster E-Tech for India, alongside the Dacia launches I just mentioned a couple of seconds ago. Alongside these electrified launches, Niagara will also support our international product offensive. Their contribution will build progressively, with a full year effect in 2027. So moving from product to the figures, let's go through the third quarter revenue and the main drivers behind the evolution. In Q3, group revenue reached €11.6 billion, up 1.5% on a reported basis, while registrations were down 6%. Automotive revenue was stable year on year at £9.8 billion. We'll dive into that in a couple of seconds. Before that, mobilised financial services revenue increased by 11% to £1.8 billion, confirming the strength and recurring nature of the captive's contribution. So in other words, despite lower volumes and without pushing the metal, we kept automotive revenue stable and grew group revenue. Over the first nine months, group revenue reached 41.8 billion, up 7.1% compared to last year. So drilling down to the stable automotive revenue in Q3, starting with currency, it was mainly related to the appreciation of the Brazilian real, the Colombian peso, partially offset by the depreciation of the Turkish lira. The second bucket volume effect was negative at 5.9 points, reflecting both the declining group registrations in a challenging environment and the higher destocking this quarter at independent dealers. Lower volumes were offset by sales to partners and positive price and mix effects, keeping automotive revenues stable. Looking now at registrations, in Q3 group sales declined by 6%, reflecting contrasting brand and regional dynamics as discussed. If we start by focusing on the Renault brand sales, on international markets Q3 was clearly intense, notably in Latin America, declining markets in Turkey, Argentina and South Korea. In Europe, PC sales were up 6.3% thanks to two main catalysts, EV and retail. EV sales doubled in Q3 against a market growing by 55% supported by the success of our renewed line-up. Twingo E-Tech Electric has recorded nearly 26,000 sales since its launch and already ranks first in its segment. Retail sales increased by 31% compared to 12% for the market, a strong demonstration of the focus on sales quality. Moving to Dacia, as we just commented, Q3 sales were down 12.8%, but I must highlight the high comparison base from last year in Q3. And finally, Alpine maintained the strong growth momentum with sales up 58%. Importantly, The decline in registrations did not translate into inventory build. Total inventories stood at 532,000 units as you can see on the chart at the end of September. This is down compared to June as per our guidance. Independent dealers reduced their inventories by 118,000 units in the quarter, versus 97,000 units in the quarter three of 2025. At group level, inventories followed their usual seasonal pattern and stood 220,000 units, in line with the end of September last year. As mentioned earlier, this healthy inventory management is supported by a solid order book of around two months of forward sales in Europe. Looking to year end, we expect total inventories to trend towards the lower end of the 2,500 to 5,500 range we give, enabling the group to smoothly operate in the last quarter. So if we move now to the next one, which is sales to partners, which had a strong positive effect of 4.9 points in the revenue growth, driven by two main factors. Firstly, our partnership with Geely in Brazil. It's strengthening. It's the ramp up of the distribution of Geely vehicles and the start of local production through Renault de Brésil joint venture since September. Secondly, in India, the integration of RNAiPL since the consolidation point, which was August 1st, 2025. contributed another €165 million or 1.7 points of growth in Q3. Ongoing partner programmes also contributed to this performance. I could note Nissan Micro, Mitsubishi Grandis and the Eclipse Cross. So if we review the next point, which is price, product mix, and geographical mix effects, the price bucket was positive at plus 1.1 points. Price increases on international markets to offset foreign exchange effects were partly offset by pricing pressure in Europe. Higher battery trim versions for the Renault 5 as an example, as well as HEV powertrain for Bigster, Duster, and Sandero also supported the positive price effect. Product mix was solid at 2.3 points. It was driven by the transition from Clio 5 to Clio 6, which is a higher average selling price, also by the light commercial vehicles, master and traffic, and the success of our EVs. The geographical mix contributed positively at plus 0.5 points, mainly thanks to higher sales in France and Germany and a lower exposure to Argentina. The last point in this quarter is the other effect was negative at 3.1 points. This mainly reflected a return to a more normal inventory level at Renault Retail Group after particularly low levels at the end of June 2026. By the end of September, RRG's inventories were back in line with the same period of previous year. Mobilised Financial Services delivered another strong quarter. New contracts increased by 1.6% year-on-year, while average performing assets grew by 5%, supported by the increasing of new financing and higher average vehicle selling prices over recent years. As a result, MFS revenue increased 11% to €1,761,000,000 in Q3. So if we now move towards the end of the year, while the environment has changed a lot since the start of the year, our commitment has not. Beyond the challenging market conditions, this year has brought a sharp shift towards electrification. Yet we confirm our 2026 financial guidance with a group operating margin of around 5.5% of group revenue and an automotive free cash flow around €1 billion. As stated at the first half results, we continue to expect a slight improvement of operating margin in H2 versus H1, with the usual seasonal uplift expected to be less pronounced than in previous years due to higher raw material costs and inflation. Our confidence rests on the strong fundamentals I've described, supported by the relentless execution on purchasing performance, productivity and strict cost discipline. So to conclude, Q3 demonstrates the strength and agility of our operating model. Our three complementary brands, highly utilized, flexible industrial footprint, strong dealer and after sales network, and supported by mobilized financial services. This has all allowed us to switch, adapt swiftly to a changing demand Thank you Duncan. So the first question will come from Thomas Besson from Kepler Cheveux. Thomas, can you please open your microphone?

Sure. Thank you, Florent. Good morning. I have two questions, please. The first is, as you just said, Duncan, the environment has changed quite substantially over the last few months. Can you just help us understand a bit better what allows you to offset what's going to be ultimately lower volumes in the second half than you probably initially planned? What looks like a bigger push from Chinese automakers in Europe before the introduction of the hybrid gap, substantially higher input costs and a bigger shift to electrification. Any kind of figures on the headwinds and the pluses you can see against that would be very helpful. The second question is about the evolution of used car prices in Europe. They've been sliding quite substantially over the last couple of months. I understand that you're doing everything you can for maintaining your own residual values substantially above market average. Do you still see a negative impact or do you believe that your retail policy isolates you from these issues about declining used car prices? Thank you.