FINANCIAL RESULTS 2020: A year of contrasts
The strong improvement in operational profitability in the second half of the year shows the first positive impacts of the actions carried out in the context of a year strongly impacted by Covid-19.
The results for the second half of 2020 (Group operating margin at 3.5% and positive Automotive operating free cash flow) mark the first step in the Group’s recovery. The achievement of 60% of the objectives of the 2 billion savings plan in the first year (against 30% announced), as well as the implementation of the new commercial policy of the Renaulution strategic plan have largely contributed to these results.
However, the 2020 fiscal year remains strongly impacted by Covid-19.
- Sales of 2.95 million units, down -21.3% (-6.8% in H2).
- Group turnover down -21.7% to 43.5 billion (-18.2% at constant exchange rates1). Group sales down -8.9% in H2.
- Group operating margin of -337 million (-0.8% of turnover). It is positive at 866 million (3.5% of sales) in H2.
- Group operating profit at -1999 million (+8 million in H2). It takes into account an increase in expenses related to the improvement of competitiveness (restructuring costs and depreciation) for nearly one billion euros.
- Net income of -8,046 million (-660 million in H2) against 19 million in 2019.
- Automotive operating free cash flow negative of -4,551 million after a positive contribution of 1,824 million in H2.
- Groupe Renault has achieved its CAFE objectives2 (passenger cars and light commercial vehicles) in Europe where it maintains its leadership in EVs.
- The shortage of electronic chips affecting the entire automotive industry does not spare the Group. It is entirely dedicated to limiting the impact on production as much as possible. The peak of the shortage should be reached in Q2. The most recent estimate, assuming a catch-up in production in H2, gives a net risk of around 100,000 vehicles for the year.
- In accordance with the Renaulution plan, the Group will continue to implement actions aimed at its recovery and confirms the 2023 objectives communicated when the plan was presented.
After a first semester impacted by Covid-19, the Group significantly turned around its performance in the second semester. This result is the fruit of the efforts of all employees, the successful acceleration of our plan to reduce fixed costs and improve the pricing policy. The priority is profitability and cash generation, as announced in our Renaulution strategic plan. 2021 promises to be difficult given the unknowns regarding the health crisis as well as the supply shortages of electronic components. We will face these challenges collectively, maintaining the momentum towards recovery that we have successfully embarked on since last summer, said Luca de Meo, CEO Groupe Renault
Boulogne-Billancourt, February 19, 2021
Group turnover reached 43,474 million (-21.7%). At constant exchange rates, the decrease would have been -18.2%.
Automotive excluding AVTOVAZ income stood at 37,736 million, down -23.0%.
The volume effect was -19.2 points. It is mainly the result of the health crisis and, to a lesser extent, of our commercial policy favoring profit over volume.
Sales to partners fell by -5.1 points, also impacted by the health crisis and the shutdown of production of the Nissan Rogue.
The impact of Forex was negative by -2.8 points, linked to the devaluation of the Argentine peso, Brazilian real and Turkish lira and to a lesser extent Russian rubble.
The price effect, up 3.9 points, stems from a more ambitious pricing policy and devaluation mitigation measures.
The product mix impacted by 1.1 points thanks to the increase in ZOE sales.
The others weighed -1 point, in particular due to the lower contribution from the spare parts business, largely impacted by the containment measures in the first half of the year.
The Group operating margin amounted to -337 million and represents -0.8% of sales (4.8% in 2019) thanks to a clear improvement in H2 (3.5% of sales).
Automotive excluding AVTOVAZ operating margin was down from -2,734 million to -1,450 million, which represents -3.8% of turnover against + 2.6% in 2019. In the second half, it was positive at 198 million (0.9 % of sales).
The change can be explained by the following:
- The volume effect had a negative impact of -2,556 million, including sales to partners.
- The mix / price / enrichment effect was positive at + 172 million despite the enrichment of new products and regulatory content.
- The Monozukuri effect is positive at +36 million after taking into account a negative impact of -479 million linked to the increase in depreciation and a decrease in the R&D capitalization rate.
- Commodities weighed -131 million largely on higher prices for precious metals.
- The improvement of + 172 million G&A expenses stems from the impact of the decline in activity in the first half of the year, but also from the company’s effort to limit its costs under the 2o22 plan.
- Currencies have an impact of -428 million reflecting the devaluation of our main currencies despite the positive impact of the Turkish lira on production costs.
The Contribution to AVTOVAZ’s operating margin amounted to 141 million, against 155 million in 2019 highlighting the resilience of AVTOVAZ in the context of Covid-19.
Sales financing contributes 1,007 million to the Group’s operating margin, compared to 1,223 million in 2019. This decrease is due to a decline in activity, with new financing down -17% and a cost of risk representing 0.75% of average productive assets against 0.42% last year.
The contribution of Mobility services the Group’s operating margin amounted to -35 million in 2020.
Other operating income and expenses amounted to -1662 million (compared
at -557 million in 2019) resulting from significantly higher restructuring and impairment charges.
Group Operating Income amounted to -1999 million compared to 2,105 million in 2019 after taking into account a sharp increase in expenses related to improving competitiveness.
Net financial income and expenses amounted to -482 million, compared to -442 million in 2019, due to higher average debt.
The contribution of associated companies amounted to -5,145 million, against -190 million in 2019. Nissans’ contribution was negative at -4,970 million and that of other companies amounted to -175 million.
Current and deferred taxes represents a charge of -420 million against a charge of -1454 million in 2019.
Report Income amounted to -8,046 million and net income, Group share amounted to -8,008 million (-29.51 per share compared to 0.52 per share in 2019).
Automotive operating free cash flow, including AVTOVAZ, was negative at -4,551 million. It takes into account the drop in operating margin, changes in working capital requirements and the absence of dividends received from RCI following decisions by European central banks. In the second half of the year alone, free cash flow was positive at +1 824 million euros due to the management of investments and a reversal of the change in working capital requirement, without however compensating for the change in first semester.
The Automotive net cash position is negative at -3579 million as of December 31, 2020 against a positive position of 1,734 million as of December 31, 2019.
The Automotive activity at December 31, 2020 held +16.4 billion liquidity reserves.
As of December 31, 2020, total inventories (including independent dealers) accounted for 486,000 vehicles, down more than 100,000 units (-19%). It represents 61 days of sales, compared to 68 days at the end of December 2019.
The Board of Directors will propose to the Ordinary General Meeting of shareholders, scheduled for April 23, 2021, not to pay a dividend for 2020.
Groupe Renault confirms the 2023 objectives communicated in the “Renaulution” strategic plan:
- Group operating margin greater than 3% by 2023,
- Cumulated free operating cash flow in the automotive sector3 (2021-2023) around 3 billion,
- Investments (R&D and capex) at around 8% of turnover by 2023.
RENAULT GROUP CONSOLIDATED RESULTS
| Operating margin|
|Other operating income and expenses||-1 662||-557||-1 105|
|Operating income||-1999||2 105||-4 104|
|Contribution of associated companies||-5,145||-190||-4 955|
|this: NISSAN||-4 970||242||-5,212|
|Current and deferred taxes||-420||-1 454||1,034|
|Net income, Group share||-8,008||-141||-7 867|
|Free operational automobile cash flow||-4,551||153||-4,704|
The consolidated financial statements of Groupe Renault and the parent company financial statements of Renault SA at December 31, 2020 were approved by the Board of Directors on February 18, 2021.
The Group’s Statutory Auditors have audited these financial statements and their report will be published shortly.
The results report, with a full analysis of the financial results for 2020, is available at www.group.renault.com under the “Finance” section.
About Groupe Renault
The Renault Group is at the forefront of mobility that is reinventing itself.
Backed by its alliance with Nissan and Mitsubishi Motors, and its unique expertise in electrification, the Renault Group includes 5 complementary brands – Renault, Dacia, LADA, Alpine and Mobilize – offering sustainable and innovative mobility solutions to its customers. With operations in more than 130 countries, it currently employs over 180,000 people and sold 2.95 million vehicles in 2020.
Ready to meet the challenges both on the road and in competition, Groupe Renault is embarking on an ambitious and value-creating transformation. This focuses 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 2050.
For more information, please contact:
Astrid from Latude
Corporate press officer
+33 6 25 63 22 08
Corporate press officer
+33 6 09 36 40 53
1In order to analyze the evolution of consolidated sales at constant exchange rates, Groupe Renault recalculates the sales for the current year by applying the average annual exchange rates of the previous year..
2These results should be consolidated and formalized by the European Commission in the coming months. CAFE = average fuel economy of the company
3Automotive operational 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
FINANCIAL RESULTS OF THE RENAULT GROUP FISCAL YEAR 2020 PR DEF
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