Groupe Renault - 2020 Universal Registration Document

72 GROUPE RENAULT I UNIVERSAL REGISTRATION DOCUMENT 2020 Find out more at group.renault.com 01 EARNINGS REPORT – 2020 GROUPE RENAULT the Monozukuri effect was positive by +€36 million after taking P into account a negative impact of -€479 million due to the increase in depreciation and amortization and a lower R&D capitalization rate; raw materials weighed for -€131 million largely on higher prices P for precious metals; the improvement of +€172 million of G&A spending stemmed P from the impact of lower activity in H1 but also from the company’s effort to limit its costs under the "2o22 plan"; currencies impacted by -€428 million reflecting the devaluation of P our main currencies despite the positive impact of the Turkish lira on production costs. The AVTOVAZ operating margin contribution amounted to €141 million, compared to €155 million in 2019, highlighting the resilience of AVTOVAZ in the COVID-19 context. Sales Financing contributed €1,007 million to the Group’s operating margin , compared to €1,223 million in 2019. This decrease was due to a lower activity, with new financings down -17% and a cost of risk representing 0.75% of average performing assets compared to 0.42% last year. The contribution of Mobility Services to the Group’s operating margin amounted to -€35 million in 2020. Other operating income and expenses amounted to -€1,662 million (compared to -€557 million in 2019) coming from significantly higher restructuring charges and impairments. Group operating income came to -€1,999 million compared with €2,105 million in 2019 after taking into account a strong increase of charges related to competitiveness improvement. Net financial income and expenses amounted to -€482 million, compared with -€442 million in 2019, due to higher average indebtedness. The contribution of associated companies came to -€5,145 million, compared with -€190 million in 2019. Nissan’s contribution was negative at -€4,970 million and the one of other companies amounted to -€175 million. Current and deferred taxes represented a charge of -€420 million compared to a charge of -€1,454 million in 2019. Net income stood at -€8,046 million and net income, Group share totaled -€8,008 million (-€29.51 per share compared with €0.52 per share in 2019). Automotive operational free cash flow, including AVTOVAZ , was negative at -€4,551 million. It takes into account the fall in operating margin, the change in working capital requirements and the absence of dividend received from RCI following European Central Bank’s decisions. On the sole second half, the free cash flow was positive at +€1,824 million due to investment management and a reverse of the change in working capital requirement, without, however, offsetting the change in the first half of the year. The Automotive net cash position was negative at -€3,579 million at December 31, 2020 compared with a positive position of €1,734 million at December 31, 2019. The Automotive activity at December 31, 2020 held +€16.4 billion of liquidity reserves . At December 31, 2020, total inventories (including independent dealers) represented 486,000 vehicles, down more than 100,000 units (-19%). It represented 61 days of sales, compared to 68 days at end-December 2019. The Board of Directors will propose at the Shareholders’ Annual General Meeting, scheduled for April 23, 2021, not to pay a dividend in respect of 2020. Outlook The electronic chip shortage impacting the whole auto industry does not spare the Group. It is entirely dedicated to limit as much as possible the impact on production. The peak of the shortage should be reached in Q2. The most recent estimate, assuming a production catch-up in H2, gives a net risk of about 100,000 vehicles for the year 2021. In accordance with the Renaulution plan, the Group will continue the implementation of the actions aiming at its recovery and confirms the 2023 objectives communicated during the plan presentation: Group operating margin above 3% by 2023; P cumulative automotive operational free cash flow (1) (2021-2023) P about €3 billion; investments (R&D and capex) at about 8% of revenues by 2023. P Automotive operational free cash flow: cash flows after interest and tax (excluding dividends received from publicly listed companies) minus (1) tangible and intangible investments net of disposals +/- change in the working capital requirement.