RNSDF - Renault SA (RNSDF) H1 2024 Earnings Call Transcript

2024-07-29 16:56:09 ET

Renault SA (RNSDF)

H1 2024 Earnings Conference Call

July 25, 2024 2:00 AM ET

Company Participants

Philippine de Schonen – Director-Investor Relations

Luca de Meo – Chief Executive Officer

Thierry Pieton – Chief Financial Officer

François Provost – Chief Procurement, Partnerships & Public Affairs Officer

Gilles Le Borgne – Chief Technology Officer

Conference Call Participants

Thomas Besson – Kepler Cheuvreux

Michael Jacks – Bank of America

George Galliers – Goldman Sachs

Renato Gargiulo – Intesa

Stephen Reitman – Bernstein

Pushkar Tendolkar – HSBC

José Asumendi – JPMorgan

Presentation

Philippine de Schonen

Good morning, everyone, and welcome to Renault Group H1 Results. This presentation will be made by Luca de Meo, CEO; Thierry Pieton, CFO; and the management team of Renault Group. Luca, the floor is yours.

Luca de Meo

All right. [Technical Difficulty] H1 results. And also, it will be an opportunity for us to update you in – with the in-depth transformation that we keep developing in this company. In the first semester of 2024, Renault Group achieved 8.1% operating margin. This is actually the highest operating margin this company has ever achieved. We generated €1.3 billion of free cash flow, and we reached a very strong net financial position at almost €5 billion. I want to take the opportunity to thank all those who are supporting us and have supported us also in challenging times: our employees, of course, our clients, our distribution partners, our suppliers and, of course, our shareholders and investors.

These results confirm the, I would say, constantly improving operational performance of Renault. This is the consequence of the passionate job done by women and men of this company for almost four years now in depth at every level of the organization to put it back at the highest standards in the automotive industry. €2.7 billion of cash fixed cost reduction since the first half of 2019, over 90% utilization rate of our industrial footprint and a straight commercial policy focused on value. All this allowed us to reduce our breakeven point by 50% since 2020 and is reflected in our H1 results.

And these ingredients are going to support the financial profitability of our all-new lineup that is just beginning its ramp up in Europe and also globally. In H1, less than 5% of our invoices came from vehicle launched in 2024. It gives you an idea of what we have in the store. For us, putting Renault back at the top of the classical game that OEMs have been playing for 150 years was only the appetizer. We know that when it comes to the main course, the good hold receipts are not going to be enough. Everything is moving incredibly fast and crisis turn out to be the new normal.

So carmakers need something more, and they need something new. This is why we're working to transform Renault Group into one of the most progressive European companies. Setting up a new breed of organization designed for an environment that has turned radically volatile and unpredictable tech landscape. It means something very simple, putting flexibility, strategic agility and speed at the core of our model, injecting this mindset at every level of the organization. Probably, no other OEM, and we have proved that can pretend today to be so flexible as Renault Group when it comes to absorbing the shocks on the bumpy roads toward, for example, the old electric mobility.

On the EV side, we have Ampere, our EV and software champion. It's on track to cut its cost by 40% and to reduce prices while improving its margins. Every day we measure the benefits of having a dedicated entity. On the ICE side, we have power with highly cash generating businesses; Renault and Dacia are ICE and hybrid cars, as well as our LCV business. On top of making money, this team works as a safety net for the group in front of the aliveness of the EV shift. It is supported by Horse, the global ICE and hybrid powertrain leader that we have set up with Geely and Aramco. Horse is not only a supplier for Renault Group and Geely; it's a platform for the entire auto industry. It has the mission to reinvent the ICE technology and our core business to give it a future.

Concretely, this means developing smart hybridization, but also alternatives or why not renewable fuels, developing innovative, low-emission ICE and hybrid vehicles. Aramco's joining has given new evidence that setting up had been, I would say, the right move, establishing the value of the thing at €7.4 billion. I know that many suppliers, competitors are looking at this figure. Maybe this is also the reason why we receive so much interest from partners. On top Horse also allows us to gain in productivity, reduce fixed cost, gain scale. We improved our balance sheet significantly and keep a substantial stake in a growing and cash generating business....

For further details see: