Renault Group: 2023 first half results - Record profitability &
free cash flow
Press ReleaseJuly 27, 2023 |
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Press release_2023H1_Renault Group_27_07
2023
first half
resultsRecord
profitability
& free cash
flow
- 2023 H1:
further upside
versus guidance upgraded
on June 29,
2023:
|
Operating margin |
Free cash
flow |
2023 H1 guided on June 29 |
>7% |
~€1.5bn |
2023 H1
actual |
7.6% |
€1.8bn |
FY 2023 initial guidance |
≥6% |
≥€2bn |
FY 2023 upgraded guidance on June 29 |
between 7% and
8% |
≥€2.5bn |
-
Strong 2023
H1 results:
- Group
revenue: €26.8bn, +27.3% vs 2022 H11
-
Record
profitability:
- Group operating margin: 7.6% of
revenue (+3.0 points vs 2022 H1), more than doubled in value at
€2bn vs 2022 H1
- Automotive operating margin: 6.2%
of revenue (+4.1 points vs 2022 H1), more than tripled in value at
€1.5bn vs 2022 H1
- Net
income: €2.1bn, +€3.8bn vs 2022 H1
-
Record free cash flow: €1.8bn
including a €0.6bn dividend from Mobilize Financial Services,
+€0.8bn vs 2022 H1 driven by a strong operational performance
-
Solid Automotive net cash
financial position: €2.2bn at June 30, 2023 (+€1.6bn vs
December 2022)
- Breakeven
point lowered by
50% vs 2019
H1
“Renault Group achieved
a record performance in the first half of 2023, both in
terms of profitability and cash
generation. These results are the outcome of
our continuous efforts to reduce costs
over the last 3 years and of our strategy focused on value combined
with the first benefits of an
unprecedented product offensive.
Our fundamentals have
never been as
sound and
robust.
At the same time, we are
implementing at an incredible speed
our strategic
projects which
are transforming the Group in
depth: we have already carved-out Horse and signed
a joint-venture agreement with Geely
to give birth to a worldwide low-emission
powertrain champion. In line with
our plan, the carve out of Ampere will be
completed in the second
half: the more we are moving ahead with the
process, the more we foresee the competitive advantages of our EV
& Software business.
Renaulution is
delivering faster and stronger!
Our product
offensive and our strategic
projects will further improve the
Group’s performance.
Finally, the signature of the Alliance
definitive agreements marks the formal entrance into a new
cooperation era. These agreements secure the realization
of major business
opportunities for the three partners through our operational
projects, define the strong involvement of Nissan
into Ampere and give Renault Group significant additional capital
allocation flexibility by enabling the sell down of Nissan
shares.“
said Luca de
Meo, CEO of
Renault Group
-
First benefits of an unprecedented product
offensive:
-
Worldwide Group’s
sales reached 1,134,000 vehicles in 2023 H1, up 13%
compared to 2022 H1. In Europe, sales were up 24% in a market up
17%.
- Renault brand
worldwide sales reached more than 772,000 units, almost +12% versus
2022 H1. In Europe, Renault brand increased its sales by 21% to
more than 500,000 units and comes back on the podium, as the second
best-selling brand and the first one in France.
- Dacia recorded
sales up 24% to more than 345,000 units worldwide. In Europe, Dacia
sales were up 30% to 301,000 units thanks to the success of its
line-up. Dacia Sandero remains the best-seller to retail customers
in Europe. Dacia moves up to 2nd place on the European podium for
retail sales2.
- Alpine continued to
improve its sales with nearly 1,900 units, up 9% versus 2022
H1.
-
Strong price
effect at 8.8
points and further improvement in
product mix at
3.5 points in the first half of
2023 driven by the commercial policy focused on value and the
success of new products:
- 65% of
Group sales on the retail channel in the Group’s
five main countries in Europe3.
- Renault brand sales
in C-segment in Europe improved by 42% compared to
2022 H1, thanks to the success of Megane E-TECH Electric, Arkana
and Austral. C & above segments represented 42% of Renault
brand sales mix in Europe over the first half.
- Renault Megane
E-TECH Electric recorded 23,000 sales in 2023 H1, with 70% on high
trim versions and more than 80% on the most powerful engine.
- Renault Austral
recorded almost 40,000 sales in 2023 H1 with 65% of hybrid mix and
60% of high trim versions. Just launched, Renault Espace will
broaden the offer.
- Renault Group
pursues its electrification offensive:
- Renault brand
recorded a 18% volume increase in electrified passenger4 car sales
versus 2022 H1, accounting for 37% of the brand’s passenger car
sales in Europe. Full electric vehicles represented 11% of the
brand’s passenger car sales.
- The first hybrid
version in the Dacia range was launched in January 2023 on Jogger.
Dacia Jogger Hybrid 140 already represents more than 25% of its
order mix despite components constraints. Jogger is a key product
to attract new customer profiles and its hybrid version supports
Dacia smooth electrification strategy.
- Dacia Spring (100%
electric) recorded more than 27,000 sales in Europe in 2023 H1. It
was again on the podium of retail electric vehicles in Europe in
H1.
- This momentum will
be supported, in second half, by Espace E-TECH Hybrid and New Clio
with a hybrid engine at the core of its range. From 2024 onwards,
Renault’s electric line-up will further accelerate the dynamic,
with Scenic and Renault 5 in particular.
- Strong
Group's orderbook in Europe at 3.4 months of sales at the
end of June. It would remain above the target of 2 months of sales
through 2023, even with a market -30% below 2019.
-
Significant
progress on Revolution projects
-
Horse:
- Carve-out of Horse,
Renault Group’s dedicated entity for advanced low-emission ICE and
hybrid powertrains, effective on July 1st, 2023.
- Signing of a JV
agreement on July 11, 2023 combining Renault Group and Geely
entities to launch the leading powertrain technology company.
- As already
announced in March 2023, Aramco is evaluating a strategic
investment in this new company.
-
Ampere:
- Carve-out to be
completed in 2023 H2 as expected.
- Targeting the best
window for an IPO, most probably in 2024 H1.
- Progressing towards
40% cost reduction on a car-by-car basis in next vehicles
generation by 2027.
-
Alpine: RedBird Capital Partners,
Otro Capital and Maximum Effort Investments are investing €200
million in Alpine Racing Ltd (United Kingdom) capital, with a 24%
equity stake to accelerate Alpine’s growth strategy and sporting
ambitions in Formula 1. The transaction values Alpine Racing Ltd
(chassis entity only) around $900 million following this
investment.
-
Alliance: Renault Group and Nissan concluded on
July 26, 2023 the definitive agreements to reset the Alliance, to
strengthen their long-standing partnership and maximize value
creation for all stakeholders.
Boulogne-Billancourt,
July 27, 2023
Group revenue
reached €26,849 million, up 27.3% compared to 2022 H1. At constant
exchange rates5, it increased by 30.6%.
Automotive revenue stood at
€24,850 million, up 27.0% compared to 2022 H1. It includes 3.2
points of negative exchange rates effect mainly related to the
Argentinean peso and the Turkish lira devaluation. At constant
exchange rates1, it increased by 30.2%.
Volume effect stood at +15.0 points thanks to
the commercial success of vehicles combined with an improved
availability of electronic components. Invoices outperformed sales
because of the high level of vehicles still in transit between our
plants and our final customers due to remaining outbound logistic
tensions in the first half.
The price effect, positive by +8.8 points,
continued to be very strong and reflects the Group’s commercial
policy focused on value over volume, as well as price increases to
offset cost inflation, and an optimization of commercial
discounts.
In 2023 H1, the product mix effect stood at +3.5
points mainly thanks to the success of Megane E-TECH Electric
and Austral.
The impact of sales to partners was positive by
+1.6 points, supported by the production of the ASX for Mitsubishi
Motors since the beginning of the year as well as a dynamic LCV
market driving sales to Nissan, Renault Trucks and
Mercedes-Benz.
The Group posted a record
operating margin at 7.6% of revenue versus 4.6% in
2022 H1, up 3.0 points. It continued to improve sequentially
from 6.3% in 2022 H2 to 7.6% in 2023 H1. It stood at €2,040 million
and more than doubled versus 2022 H1.
Automotive operating
margin more than tripled in value and stood at €1,541
million versus €420 million in 2022 H1. It represented 6.2% of
Automotive revenue, improving by 4.1 points versus 2022 H1.
The volume effect at +€763 million and the
positive mix/price/enrichment effect of +€1,771 million illustrated
the success of vehicles and of the commercial policy focused on
value. The positive mix/price/enrichment effect more than
compensated the increase in costs which amounted to -€1,181
million. The latter was mainly explained by the impact of the
carry-over of raw materials and energy price increases, logistics
and labor costs.
The operating margin includes, since the
beginning of November 2022 and until the deconsolidation of Horse,
a positive non-cash effect of the cessation of amortization for
these assets held for sale. It accounted for €275 million in
2023 H1. Adjusted from Horse positive impact, the Group operating
margin would have been 6.6% in 2023 H1, compared to an operating
margin of 4.6% in 2022 H1.
The contribution of Mobilize Financial
Services (Sales Financing) to the Group's operating margin
reached €518 million, down €48 million compared to 2022 H16 due to
non-recurring impacts of the swaps valuation linked to the interest
rate increase in Europe since beginning 2022. Excluding this
one-off, Mobilize Financial Services posted an operating margin up
9% compared to 2022 H1. New financings increased by 19% compared to
2022 H1, notably due to the strong increase in registrations and
the 11% increase in the average financed amount.
Other operating income and
expenses were positive at €56 million (versus -€49 million
in 2022 H1) and were notably explained by +€227 million of asset
disposals related to the sale of land in Boulogne-Billancourt and
of several commercial subsidiaries of the Group and branches of
Renault Retail Group, which more than compensated the restructuring
costs linked to the Renaulution reorganization.
After taking into account other operating income
and expenses, the Group’s operating income stood
at €2,096 million versus €923 million in 2022 H1 (+€1,173 million
versus 2022 H1).
Net financial income and
expenses amounted to -€260 million compared to -€236
million in 2022 H1. The increase is explained by the impact of
hyperinflation in Argentina partially compensated by the positive
impact of the rise in interest rates on the net cash position.
The contribution of associated
companies amounted to €566 million compared to €214
million in 2022 H1. This included €582 million related to Nissan's
contribution.
Current and deferred taxes
represented a charge of -€278 million compared to a charge
of -€254 million in 2022 H1. The increase is linked to the
improvement of the pretax income.
Thus, net income stood at
€2,124 million, up €3,800 million compared to 2022 H1 and
net income, Group share, was €2,093 million (or
€7.70 per share). As a reminder, in 2022 H1, net income from
discontinued operations amounted to -€2,323 million due to the
non-cash adjustment related to the disposals of the Russian
industrial activities.
The cash flow of the
Automotive business is at record level in 2023 H1 and
reached €3,292 million, up around €650 million compared to 2022 H1.
It includes €600 million of Mobilize Financial Services dividend
versus €800 million in 2022 H1.
Excluding the impact of asset disposals, the
Group's net CAPEX and R&D stood at €1,859 million i.e.,
6.9% of revenue compared to 8.0% of revenue in 2022 H1. It amounted
to 6.2% including asset disposals.
Free cash
flow7 stood at €1,775 million taking into
account a negative change in working capital requirement of -€138
million. Restated from Mobilize Financial Services dividend, it
stood at €1,175 million versus €156 million in 2022 H1.
As of June 30, 2023, total
inventories of new vehicles (including the independent
dealer network) represented 569,000 vehicles. This level is
explained by continuing tensions on the downstream logistics which
weigh on the ability to deliver vehicles to the final customers. It
slightly decreased compared to 2023 Q1, which was at 580,000 units.
This improvement will pursue in 2023 H2 as tensions on logistics
start to ease.The level of inventories must be observed considering
the very strong orderbook at 3.4 months of sales at the end of
June, largely beyond our optimal level of around 2
months.
The Automotive
net financial position stood at
€2,185 million on June 30, 2023 compared to €549 million on
December 31, 2022, an improvement of €1.6 billion.
In the first half of 2023, Renault Group made,
in advance, the last repayment of €1 billion for the mandatory
annual repayment of the loan of a banking pool benefiting from the
guarantee of the French State (PGE). This loan is now fully
reimbursed.
Liquidity reserve at the end of
June 2023 stood at a high level at €16.8 billion.
2023 FY financial outlook
Renault Group confirms its 2023 FY financial
outlook upgraded on June 29, 2023:
- Group operating margin
between 7% and 8%
- Free cash
flow superior or equal to €2.5bn
Renault Group's consolidated results
In € million |
2022 H1(1) |
2023 H1 |
Change |
Group revenue |
21,089 |
26,849 |
+27.3% |
Operating margin |
972 |
2,040 |
+1,068 |
% of revenue |
4.6% |
7.6% |
+3.0 pts |
Other operating income and expenses |
-49 |
56 |
+105 |
Operating income |
923 |
2,096 |
+1,173 |
Net financial income and expenses |
-236 |
-260 |
-24 |
Contribution from
associated companies |
214 |
566 |
+352 |
of which Nissan |
325 |
582 |
+257 |
Current and deferred taxes |
-254 |
-278 |
-24 |
Net income |
-1,676 |
2,124 |
+3,800 |
of which continuing operations |
647 |
2,124 |
+1,477 |
of which discontinued operations |
-2,323 |
0 |
+2,323 |
Net income, Group share |
-1,367 |
2,093 |
+3,460 |
Free
cash
flow |
956 |
1,775 |
+819 |
Automotive Net Financial
Position |
549at 2022-12-31 |
2,185at 2023-06-30 |
+1,636 |
(1) The 2022 figures include restatements following the
first application of IFRS 17 "Insurance contracts".
Additional information
The condensed half-year consolidated financial
statements of Renault Group at June 30, 2023 were reviewed by the
Board of Directors on July 26, 2023.
The Group’s statutory auditors have conducted a
limited review of these financial statements and their half-year
report will be issued shortly.
The financial report, with a complete analysis
of the financial results in the first half of 2023, is available at
www.renaultgroup.com in the "Finance" section.
2023 H1 Financial Results Conference
Link to follow the conference at 8am CEST today and available in
replay: 2023 H1 conference streaming
About Renault Group
Renault Group is at the forefront of a mobility
that is reinventing itself. Strengthened by its alliance with
Nissan and Mitsubishi Motors, and its unique expertise in
electrification, Renault Group comprises 4 complementary brands -
Renault, Dacia, Alpine and Mobilize - offering sustainable and
innovative mobility solutions to its customers. Established in more
than 130 countries, the Group has sold 2.1 million vehicles in
2022. It employs nearly 106,000 people who embody its Purpose every
day, so that mobility brings people closer. Ready to pursue
challenges both on the road and in competition, Renault Group is
committed to an ambitious transformation that will generate value.
This is centred on the development of new technologies and
services, and a new range of even more competitive, balanced and
electrified vehicles. In line with environmental challenges, the
Group’s ambition is to achieve carbon neutrality in Europe by
2040.https://www.renaultgroup.com/en/
RENAULT
GROUP
INVESTORRELATIONS |
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Philippine de
Schonen+33 6 13 45 68 39philippine.de-schonen@renault.com
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RENAULT
GROUP PRESS RELATIONS
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Frédéric Texier+33
6 10 78 49 20frederic.texier@renault.com |
Rie Yamane+33 6
03 16 35 20rie.yamane@renault.com |
|
1 The 2022 figures include restatements following the first
application of IFRS 17 "Insurance contracts".
2 Passenger car sales to retail customers in
Europe (Dataforce Source, list of European countries with sales by
customer channel) = Austria, Belgium, Croatia, Czech Republic,
Denmark, Finland, France, Germany, Hungary, Italy, Luxembourg,
Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia,
Spain, Sweden, Switzerland, United Kingdom.3 Passenger cars in
France, Germany, Spain, Italy, United Kingdom.4 Includes EV, Hybrid
(HEV) and Plug-In Hybrid (PHEV), excludes Mild-Hybrid (MHEV).
5 In order to analyze the variation in
consolidated revenue at constant exchange rates, Renault Group
recalculates the revenue for the current period by applying average
exchange rates of the previous period.
6 The 2022 figures include restatements
following the first application of IFRS 17 "Insurance contracts".7
Free cash flow: cash flow after interest and taxes (excluding
dividends received from listed companies) less tangible and
intangible investments net of disposals +/- change in working
capital requirement.
- Press release_2023H1_Renault Group_27_07
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