RENAULT SA REGIE NAT (
Q3 2010 Earnings Call
October 27, 2010 10:00 am ET
Duncan Minto - Director of IR
Dominique Thormann - EVP, CFO, Chairman and CEO, RCI Banque
Jérôme Stoll - EVP, Sales and Marketing, Leader of the Europe Region Management Committee, President of Renault Retail Group
Thomas Besson - Merrill Lynch
Gaetan Toulemonde - Deutsche Bank
Thierry Huon - Exane BNP Paribas
Kristina Church - Barclays Capital
Philip Watkins - Citigroup
John Buckland - MainFirst
Horst Schneider - HSBC
RENAULT SA REGIE NAT H1 2010 Earnings Call Transcript
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Good evening. Welcome everyone to Renault's third quarter conference broadcast live and replay versions on our websites. The presentation file and press release for this call are available on our website in the finance section. I would like to start by pointing at the disclaimer on slide two of this pack regarding information contained within the documents and in particular by forward-looking statements. I'd like all participants to read this.
Today's call is scheduled to last 45 minutes. We have two key speakers this afternoon. First up Mr. Jérôme Stoll, EVP, Sales and Marketing and leader of the Europe region. He will start with the review of commercial activity. That will be followed by Mr. Dominique Thormann, EVP and CFO, who'll present the Q3 revenues. Presentation should last 20 minutes and will be followed up by Q&A session. We don't have time to take everyone's questions in this session. Myself and Alain Meyer will be right to take your calls later on. Without further ado, I will just in fact pass the call over to Dominique Thormann, who has a couple of opening remarks.
Thank you, Duncan. Good evening everyone. Before diving into the numbers I would like to make just a few opening remarks regarding two financial events that occurred since we last spoke in July. The first of these took place on September 10
when we proceeded with the early reimbursement of a billion euros of the 3 billion euro loan from the French state taken in April of 2009. Now it's clear that back in 2009, this loan was welcome, it was very welcome. At the time when the financial markets were disrupted and access to liquidity was rare. You are all aware that the interest rates associated with this loan are high compared to today's markets. In the first half of 2010 with our performance clearly back on track and together with a more stable and liquid financial environment, we were able to start reducing the most expensive part of our funding. Renault's cash flow generation has considerably improved since the peak of the crisis and faster than most had forecast, allowing us to start to take the necessary actions to improve and strengthen our balance sheet.
The second step towards this improvement required more of a break in order to fulfill the short-term objective of reducing net automotive debt to below €3 billion on October 7th we disposed off our entire holding in Volvo B shares for €3 billion and thus achieving that objective. These two events have contributed to the strengthening of our balance sheet, prepare the Group for the post crisis period and helping through the transition. The liquidity situation of Renault is clearly reinforced and with lower net debt we have returned to a more normalized condition.
However the conference call this evening is more focused on our commercial performance in the last quarter so without further ado, I will pass the call over to Jérôme to take you through the details of our sales results. Jérôme?
Thanks Dominique and good evening everyone. My part of the presentation will focus on commercial performance in Q3 alone. In the annexes, you will find the same slides on a year-to-date basis, for your information.
So, let me start on slide 3, with TIV evolution by region. First in Europe, the market declined by 11.5% due to a high comparison base in 2009 when deliveries on scrappage incentives were at an all time high. However the level of European market in Q3 was better than expected, leading us to improve our forecast on the full year evolution from around minus 7% to minus 5%.
Thanks to the Russian scrappage scheme implemented in March, the Eurasia market increased by 40.1%. The Euromed market was positive at plus 11.8% with a very dynamic Turkish market at plus 28.2% versus Q3 2009. Americans, Americas posted 14.1% increase with a strong increase of the three largest markets in the region, Brazil plus 6.8% Mexico, plus 12.2% and Argentina was an incredible 32.3%. And for Asia/Africa, Asia/Africa is still the TIV gross in the world with plus 11% which represents an increase of nearly 800,000 units versus Q3 2009. China obviously increased by 14.1%, Japan by 14% and India by 7.3%.
In conclusion, global TIV increased by 4.6% in Q3 2010 at plus around 750,000 units.
If we turn to slide four, we can see the evolution of Renault Group sales next to that of the TIV for its region. In Q3 2010, Renault continued to out perform the market and increase market share in Europe, in Americas and Euromed or Russia and Asia/Africa market share was (inaudible).
Group sales grew by 5.7% in the third quarter driven by double digit growth of sales in each region outside Europe.
On the next slide number five, you can see the evolution by region and number of units. Renault Group sales amounted to 592,000 units in the third quarter with a mix of 42% in international regions. International sales continued to grow at a strong base at plus 22.8% of which plus 41.3% in Americas plus 37 in Russian plus 11.3 in Euromed and plus 10.4% in Asia/Africa. In the same period, Group sales declined by 4% in Europe, nevertheless at a slower pace than TIV.