Thierry Huon - IR Clotilde Delbos - CFO and EVP Stefan Mueller - Chief Performance Officer and EVP Thierry Bolloré - Chief Competitive Officer Thierry Koskas - Head of Sales of Marketing

Thomas Besson - Kepler Cheuvreux Gaetan Toulemonde - Deutsche Bank Charles Winston - Redburn Horst Schneider - HSBC Michael Tyndall - Citigroup Jose Asumendi - JPMorgan George Dieng - Natixis Stephen Reitman - Societe Generale Harald Hendrikse - Morgan Stanley

Ladies and gentlemen, welcome to the H1 2017 Financial Results Conference of Group Renault. I now hand over to Mr. Thierry Huon. Sir, please go ahead.

Good morning, everyone, and welcome to Renault's first half results conference call, which is broadcast live and then replay versions on our website. Presentation slides, press release and activity pack for this call are all available on our website in the finance section. I would like to point out the disclaimer on Slide 2 of this pack regarding the information contained within this document and, in particular, about forward-looking statements. I invite all participants to read this. Today's call is scheduled to last about 1 hour. The presentation will be made by our CFO, Clotilde Delbos. She will start with a review of our operations and will then follow up with the highlights our financial results and the outlook. Presentation will last about 20 minutes and will be followed by a Q&A session. For this last part, Clotilde will be joined by Thierry Bolloré, our CCO; Stefan Mueller, our CPO; and Thierry Koskas, Head of Sales of Marketing. Without further ado, I would hand over to Clotilde.

Good morning everyone. As you have already seen from the headlines, the Group's financial results for the first half of 2017 marked a new record for Group Renault. The Group's consolidated operating margin before VAZ consolidation set a new record for our first half at 6.4% versus 6.1% in H1 2016. With AVTOVAZ, the Group's margin stood at 6.2% and is up almost 18%. Excluding AVTOVAZ, the auto margin increased by 15.3%, and represented 4.8% compared to 4.7% in the first half of 2016. I would like to mention that the Micra business had a dilutive impact on this percentage as we have to recognize the full value of the car in our top line, but we cannot charge a full margin to Nissan as we did not develop the car. RCI Banque's contribution amounted to a record €525 million, up 25%. We are also pleased to report that AVTOVAZ contributed positively for €3 million. Automotive operating free cash flow, including AVTOVAZ is positive at the end of June at €358 million. What are the main takeaways for H1? A solid revenue growth coming from positive performance in all regions, and sales to partners, a good Monozukuri performance despite higher investment in R&D and depreciation, a negative mixed price enrichment due to lower price action in emerging markets, a headwind from raw materials, but at this stage less adverse than expected and an improved VAZ situation resulting in a breakeven operating profits. In line of these results, we are confirming today our overall guidance for the full year. Let me start our performance analysis with our commercial figures on slide 6. The worldwide TIV increased 2.6%. All regions showed a positive TIV development with the exception of the AME region, down 0.3%. Europe TIV was up 4.4%, Eurasia 2.5%, Americas 8.3% and Asia 3.6%. Our registrations grew 10.4% to 1,879,000 units. This performance has been largely driven by our international operation, up 16.8%, while Europe was up 5.6%. Consequently, our registrations outside of Europe represented 45% of a total versus 43% a year ago, including Lada and 38% without. On slide 7, you see that now only 5 of top 10 markets are in Europe, and we have increased our market share in 7 of these markets. It is worth noting that following VAZ consolidation, Russia is our second largest market. In the Europe region, we increased our registration 5.6%, exceeding the million units in the first half. Market dynamic explained the largest parts of this environment. Our market share was up 10 basis points at 10.8%. This performance came from the success of Clio phase 2 and a solid contributions from the Asia. Please note that we have not yet fully benefited from new Scenic launch as production was disrupted by supply issue. The order book reflects the strong deliveries achieved in Q2, but remains at a good level and above 2016. In Eurasia, slide 9, registration grew 8.6%, reflecting the recovery of Russian market up 6.9% in the first half. With Lada, the Russian market represent now more than 60% of our registration in the region, ahead of Turkey and Romania. We increased our registration in the region, largely on the back of our good performance in Russia, where we improved our market share by 1.7 points. In Turkey, our second largest market in the region, registration were down 5.2%, after several years of positive development. The Group Renault outperformed the market, thanks to New Megane sedan launched end of last year. Turning to slide 10, registration in Africa, Middle East, India increased 19.3% and reached 249,000 units. The region is now the third largest one throughout the Group, after Europe and Eurasia. Our three top markets were Iran, India and Morocco. The performance has been driven by our outstanding success in Iran, where our deliveries were up 100%. In Mayabb [ph], we managed to grow 10.1% in spite of the situation in Algeria where the markets down 23% is still penalized by import quotas. In India, our performance was negative, but on a very demanding comparison basis since we were delivering the order book of Kwid a year ago. In the Americas region on slide 11, the market showed an increase of 8.3%, thanks to some recovery in Brazil of 4.2% in the half. Argentina was still booming with registration up 34%, Colombia decreased 1.8%. In this environment, Renault outperformed with registration of 14.6%. In Brazil, our market share was flat, waiting for the launch of Kwid in the region, while in Argentina, Renault continued to gain market share of 1.1 points. Thanks to the localization of Sandero and Logan. Finally, concluding the regional review on slide 12. In the Asia Pacific region, registrations were up 15% and reached a 100,000 units, thanks to the take off of our Chinese registration, multiplied by 3.6 times in the period. In South Korea, despite a declining market, RSM's registration increased 12.7%, thanks to the success of SM 6 and QM 6. This ends our sales update and I will now turn to the financial review. On slide 14, we show the full P&L for the Group. Starting with the top line, Group revenues reached €29,537 billion, an increase of 17.3% over last year. These revenues include for the first time AVTOVAZ. The next slide shows an operating margin improvement of 0.1 points at 6.2% compared to the previous period. Without VAZ consolidation, the improvement would have been 0.3 points. Net income came to €2,416 billion, up €839 million compared to the first half 2016. Let me now start with the detailed financial performance review. On the next slide, number 15, we show the revenue contribution by activity. Group revenues for the first half were 17.3% above last year. Automotive excluding AVTOVAZ contributed for almost €27 billion, meaning an increase of 12.1%. This implied a 6.5% growth in Q2 after a 20.1% in Q1, which benefited from the fresh start, thanks to good inventory position end of last year. AVTOVAZ consolidation contributed to €1,291 billion. Revenues from our captive sales financing company, RCI Banque were up 13% €1,251 billion. I will start by reviewing the breakdown of revenues for the automotive activity excluding AVTOVAZ on slide 16. Started on the left hand side of the page, the first item volume shows a positive impact of 4.4 points, the gap with the registration increase came from the CKD business in Iran and in China, that you can find in the sales to partner box, as well as the change in inventory, which impacted negatively for 1.2 points. The geographical mix impact is almost neutral. The third item to note is the model mix effect, which had the positive impact of 0.6 points and contributed €140 million in the first half, in line with the first quarter. The first item is the price effect, which is positive by 2.3 points. This impact reflects primarily the better pricing of our recently launched cars in Europe, South Korea and Turkey, as well as action to offset the weakness of the British pound, and the Argentinean peso. Sales to partners continued to be a positive driver of our revenues, impacting by 2.5 points in the first half, showing a deceleration in Q2. These came from lower demand for diesel engine and Nissan Rogue. However, this business remains supported by CKDs for Iran and China, as well as Micra production implant [ph]. The next item foreign exchange impacted positively €494 million or 0.8 points. These positive impacts reflect the strengthening of most currencies from the emerging countries against the euro, including Brazilian real and Russian ruble. The last item named others accounting for 1.6 points, it represents the other activities outside the scope of new car activity. It result from some positives like used car, and spare parts businesses of the wholly-owned dealer margin contribution and some negatives like the adjustment for buybacks. I will now turn from automotive revenues to the Group operating margin variance analysis on slide 17. The first half operating margin for the Group totalled €1,820 billion, an increase of €279 million compared to last year. Without AVTOVAZ, the operating profit would have amounted to €1,817 billion. The work down on this slide compares this year's impact to the previous period. I will start the work down reading left to right. Total monozukuri savings amounted to €204 million in the first half of 2017 compared to €6 million in H1 '16, which had been penalized by production issues. This improvement has been achieved despite some production with destruction related to suppliers and the cyber attack. Let's focus on our monozukuri activity. In more detail, cost reductions came from purchasing savings totalling €382 million versus €296 million last year, reflecting higher economies of scale. Warranty cost was negative of €11 million after a negative of €21 million booked last year. R&D in the profit and loss account increased by €83 million in the period, capitalization rates to that that 40.1% when it was at 37.2% a year ago. Manufacturing and logistics cost increased by €84 million, while showing an improvement over last year and beyond what I had already mentioned regarding supplier disruption and cyber attacks. This item have been impacted by higher depreciation and some starting costs related to our hyper competitivity plan. Finally, G&A costs increased €44 million, which is consistent with the business development. Let's go back to the walk-down on page 19. As expected raw materials produced the headwind amounting to a €132 million. Mix/price/enrichment impacted negatively for €180 million. This half we have far less tailwinds from price increases in emerging markets to offset fast evaluation as currency development in most countries had improved versus last year. On the other hand, we still have the impact of the plan enrichment of cars recently launched including higher cost linked to regulation. The next item, which includes Group's volume and sales to partners shows a €346 million positive impact. It results primarily from the increase in units invoice, but also from the development of our business to partners. RCI Banque combined with the other businesses outside of the scope of new cars sales, yielded a positive contribution of €177 million. I will comment more on details RCI results in a minute. During this half currency movements produced a headwind representing €95 million when it was a positive on the top line. This came from some strengthening currency impacted most cost - more cost than revenue such as Korean, won; Japanese, yen; and the Brazilian, real. However, the largest negative came from the British, pounds. In total for the first half 2017, the Group's operating margin reached a €1,820 billion or 6.2% of revenue to be compared to 61.1% in the same period last year. Page 20 shows the split by operating sector. The Automotive excluding AVTOVAZ delivered €1,292 billion operating margin of 4.8% of revenues for 4.7% a year ago. AVTOVAZ contributed positively for €3 million confirming that it is on the right track to achieve it's towards '18 targets. Our financing activities was again a solid pillar of our profit pool as RCI Banque delivered a €525 million contribution to the Group margin. This shows a strong improvement of a €105 million. The next slide, number 21 provides more detail on RCI Banque's performance. New financing in the period increased significantly to €10.4 billion versus €8.9 billion in the corresponding period last year, primarily reflecting the strong activity in Europe. Average performing asset grew 21% at €38.6 billion. Net banking income stood at 4.34%, up 5 basis points. It is worth noting the growing contribution of the margin on services is now at almost €244 million representing nearly 30% of the net banking income. The cost of risk continued to be under strict control, and was at a new record low was 29 basis points of average performing assets versus 30 basis points last year. Finally, cost was contained keeping our operating expense ratio at 1.37% of average performing assets or 4 basis point improvements over last year. In total, the pretax return on assets reached 2.83% versus 2.71% in the first half of 2016, while return on equity reached 17.6% versus 16.7% last year. The strong performance explain these new record of RCI contribution to group operating profit at €525 million, up 25% over last year. Now that we have covered the operating margin volumes. I will continue down the P&L, with the other operating income and expense items on slide 22. Order operating income and expenses amounted to minus €31 million versus minus €65 million a year ago. This improvement came from capital gains real estate disposal. Continuing down the P&L, the next item is net financial income and expenses on slide 23. The net charged increased from €67 million to €211 million. The main reason for this deterioration while the consolidation of AVTOVAZ, negative non-cash impact of the mark-to-market valuation of redeemable shares and one off foreign exchange gains booked last year. The next slide, number 24, shows the impact of associated companies in Renault's P&L. Following Nissan's results published yesterday, the contribution for the second calendar quarter in Renault's accounts came to €477 million taking the first half year contribution to €1,288 billion. I remind you that Nissan's results for the first calendar quarter has been positively impacted by the capital gain on cars and can [indiscernible] disposal. AVTOVAZ is not impacting this item anymore. I will turn back to the P&L for the last time on slide 25, where the net tax charge the first half came to €479 million versus €520 million. The slower tax rate came mainly from the absence of adjustments on deferred tax asset that we booked last year. Bottom line net profit after tax came to €2,416 billion versus a €1,567 billion in the first half of 2016. After taking into account minorities the net result per share came to €8.77 compared to €5.51 in the first half of '16. Now, that I have completed the analysis of the P&L, I will turn to slide 26 on the evolution of net automotive debt. Cash flow from operation excluding AVTOVAZ totalled €2,089 billion, down €19 [ph] million compared to the first half of 2016. This decrease came primarily from higher tax cash payment of €243 million and related mainly to Korea, where we have no more tax loss carry forward. Changes in the working capital requirements impacted positively by €100 million, when it was a negative €129 million a year ago. Net tangible and intangible investment came to €1,864 billion in the first half, up €195 million over last year's level. As a result after taking into account the positive free cash flow from AVTOVAZ for €33 million, automotive operating free cash flow came to a positive €358 million in the period. However, our automotive net financial position decreased by €287 million versus end of 2016. Dividends received from quoted companies totalled €391 million, while dividends paid during the first half came to €990 million. Other financial items were negative for €85 million and mainly related to negative ForEx translation impact on financial assets and liabilities, plus some financial investments. Due to some ForEx adjustment there was a positive impact of €39 million from AVTOVAZ consolidation. In total, our net automotive financial position came to €2,433 billion at the end of June 2017, down from €2,720 billion at the end of December, 2016. Slide 27 shows the inventory across the consolidated chain of both Renault's balance sheet and the independent dealer network. As you can see on the slide, we were at 63 days of business at the end of the first half. This increase of 3 days reflect the need of available cars to show the business and remains within our targeted range. Global inventories increased about 8.2% compared with a year ago. At the end of the first half, this stood at 618,000 units compared to 571,000 units at the end of June '16. This increase was needed to respond to the market growth. Independent dealer inventory were at 410,000 units compared to 371,000 units a year ago. The Group's dealer stocks stood at 208,000 units, up 800 units. This completes my review for the first half of 2017. Before concluding and taking your questions. I would now like to share with you our views on the rest of the year and the risk and opportunities as we see them. The first risk to mention for the second half is the uncertainties related to currency. After having seen strengthening currency in the key emerging countries in Q1, the trend has reversed at the end of Q2. We told you at the end of last year that raw material should turn adverse this year, while this could drive in H1, the headwind has not been as strong as expected as we managed to delay some price increases in our negotiation with suppliers. Therefore, there is a risk to a catch up effect and to have price increasing being higher than initially expected in H2. Last but not least, in Europe we have noticed a deterioration of the channel mix in some markets. While volume remains positive in almost all countries, the quality of the business tends to deteriorate. On opportunities, monozukuri should continue to improve and to support our profitability, outside of Europe we are expecting the recovery in Russia and Brazil to continue. Lastly, we will benefit from our new models in Europe with Koleos Captur phase 2 and the full availability of new Scenic and outside of Europe, Kwid in Brazil should help to fully leverage the recovery of the market. To conclude my presentation, I confirm our guidance for the year. Thanks for your attention, I will now hand the call back to the conference operator for the question-and-answer session.

[Operator Instructions] And we have our first question from Thomas Besson with Kepler Cheuvreux. Please go ahead, sir.

Thank you. Thomas Besson from Kepler Cheuvreux I have three questions please. Firstly, can you talk about what we should expect in October, the timing, the exact event, whether it's just going to be Renault or whether we're going to be into a Renault, Nissan, Mitsubishi event. And what will be effectively the additional event? That's the first question. The second, we've seen AVTOVAZ turning a very positive in H1, generating cash already in H1, can you help us understanding the upside for the new perimeter of the Renault Group in Russia, in ‘18, ‘19 and ‘20. It's seems that the markets are finally ticking up, so the ambition could be to grow way beyond 5% security you have mentioned? And thirdly, sorry for that, I don't really understand two elements of your bridge. Both FX and mix enrichments were surprising to me. Can you tell us what we should expect in the second half, if it's going to be of the sub magnitude deteriorating proof, because of these were completely different from my expectations? Thank you.

So, on your questions, first on the MTP, so we are, as I mentioned already, we are planning to unveil more details on the MTP in the first 10 days of October, the precise date will be given to you, beginning of September. And we are planning to have a Capital Market Day or actually should be a half a day with you analysts and investors with presentation from members of the executive committee for Renault. At this stage, we do not plan to have a common presentation from Renault, Nissan and Mitsubishi. Mitsubishi and Nissan should come slightly later either in October or November. In terms of VAZ, yes, first I think we do recognize that we are pretty happy is that, it has been breakeven for the first half, but you can really see that is barely breakeven, so it's too early to call it a long-lasting break even, where our target is still as announced to be comfortably a positive breakeven, I mean in P&L in ‘16 and later for the free cash flow. It will obviously depend on the market situation, and I can turn to my colleague here on the table for discussing the market situation. But for VAZ, obviously, it's very much depending on the market. It's depending also on the FX, you saw that on the first half, the FX was quite favourable for AVTOVAZ, it is turning -- the ruble is turning up. So it might not be as favourable in the coming half and it's also due obviously to the success of our new model, that we have launched lately in AVTOVAZ and obviously from the first results, that we can see as a recovery. But it is still fragile, we still need to consolidate these good results in order to be in the areas where we wanted to be. The breakeven towards the ‘18, now you are seeing ‘16. On the rest of the upside for the whole Group, obviously as you have mentioned Russia is our second market now, so it's quite important for us and we do see on the mid to long term, a good recovery of the Russian markets that should bring us good leverage both from Renault and from VAZ on our results. Thierry, do you want to add a few words on the Russian market?

No, just to mention that, we think that 2016 was obviously the bottom of the market, and now we stop to see the Russian market recovering and we think that within the next years, this trend of recovering the goals will continue.

On your last questions, FX and mixed price enrichment, so on FX, yes, as I mentioned it's mostly due to the mix of currency that you have a positive impact on the turnover and a negative on the P&L. The negative on the P&L as I mentioned is really mostly due to the British pound and if you want guidance for the second half, it's difficult to say, because by nature our currency are quite volatile. We do expect the British pound to be slightly less adverse in H2, because as a Brexit was voted in June last year, the deterioration of the British pound started already pretty soon after that. So, on a comparative basis, it should be less adverse in the second half. Ruble, Japan yen, and Korean won should be relatively neutral. We expect the biggest headwind on the Argentinian peso, but I have difficulties to give you a forecast, what I can tell you is that, if we do a simulation today with the current rate, we expect the impact to be relatively neutral in H2, meaning that the full year should stay a slight negative on the ForEx. On the mixed price enrichment, first I would like to remind everyone, what we have said when we presented the plan -- the driver change plan a few years ago. Our plan was indeed to continue to enrich our cars in order to improve the quality and the content to be in line with customer expectation, and our competitors. So it was expected that this box was to be a negative on a year-over-year basis. That being said, in the previous year as we had quite adverse negative foreign exchange impact in emerging countries, we have pushed our teams to make sure that they would try surpass price increases in order to offset these negative impacted and they have been quite successful in doing so in the past years. As the FX is now turning more positive in these very same region, you have a very low impact on this box of price offset, I would say in emerging countries and you only see the impact of the enrichment. So for H1 as you can see, you have almost a very limited impact of carryover FX offsets in emerging countries, but you see the full impact of enrichment in our car and especially where we have implementing items in order to be in line with regulation and I can take as an example for the LCV which were introduced in the market in the second half of last year to which it is not possible to completely charge back to the customer, this impact of regulation. Another item that I can mention for H1 is that, as I mentioned in my risk and opportunities, there is a negative trend, I would say in the channel mix that we see in Europe and you have here on the market, I am really seeing market is turning on the negative trend and you see this impact on this box, and we also have seen some price pressure in some countries, especially in Korea. So, what can I say for H2, in my view, there is no real reason to see a very different trend in H2, it might be a little less adverse as the comparative on the LCV regulation is going to be more positive and as we are trying in the various countries to increase prices to offset the raw material impact, but obviously this will be depending on the competition, if the competition does the same, we will be able to pass through these increasing, if it don't, it's going to be more difficult obviously.

Thank you very much.

So we have another question from Gaetan Toulemonde from Deutsche Bank. Please go ahead, sir.

Yes. Good morning. Gaetan Toulemonde, speaking. I have a few question on the work down of the operating results, where a little bit less like term to before. I want to come back on that point. I'm a little bit close when I look at product mix and price increase in the first half on the revenues, which has been relatively strong, and when I flip the page of the impact of the operating result. I see a pretty negative mix/net/enrichment, which tell me that you have been very aggressive on the pricing side. Can you clarify, that a little bit because this pretty negative to me. I have two other questions afterwards?

Yes. This is Stefan Mueller. Let me quickly answer the question on the pricing. So, as you know, pricing is very important. First, we have in the last years putting a very heavy focus on pricing. And I can tell you that with every introduction of new car, we have achieved our target. Our target is to be priced right at basket level. That means right in the middle of our competition and this position has not moved with the cars that we have introduced some years ago, as well as new cars. So we can see that we are on track. Furthermore, we have to note that we have -- with introduction of our new cars substantially improved residual values.

Yes. And to complete the answer. As I said, enrichment by nature in our business model is negative. So, it's what you see also in this box. It's not only the price element but also the enrichment.

Yes, but the pricing, we don't see that the operating level will down. That’s elevated by concern. Anyway. I've two other small questions. When we look at the raw material, I remember initially you guided us for much bigger negative impact. What kind of number should we work with for the second half, should we double the impact of the first half, a little bit more, can you help us a little bit? And then last question I have is that when I look at the volume effect and sales to partner and the revenues and the impact of the operating level, is the sales to partner have relatively small impact for the operating result and mostly it's coming from the volume effect, this €346 million. Can you help us to better understand that number would be great? Thank you.

Yes. Thank you for your question, Gaetan. On the raw material, you're right. As I mentioned, the impact on the H1 was lower than expected for 2 reasons. The first one is we try to manage to negotiate a delay from the suppliers in this increase. And the second one is the flow through the inventory, obviously by the time the increase is being charged by the suppliers and by the time it goes through inventory - P&L - of the P&L lower in the period. So you're perfectly right, we should have a bigger impact. I think we said something around €400 million minimum for the full year and there is no reason to change this number because I mean, if you look at the market, you see that the price of commodity is up differently versus last year even if it has eased a little in the last weeks. On the volume versus partners, a few elements. Obviously, as I mentioned in my introduction, the volume that we sell to Nissan and Micra is clearly not at the same level of profitability than anything else that we sell with on our own names, because we only charge them the transformation costs plus the margin versus -- selling them the full cost of the car. So, clearly this has a dilutive impact and you see that in this box. On the other hand, you also have the margin in the partner's box that we make on Iraq and China, which is more comparable to the other businesses. But I think, your assumption to say that most of the income in H1, sorry the volumes in H1 is coming from our own volume rather than the volumes from sales to partner.

Okay. Thank you very much. And Micra is in the volume or sales to partner?

Sales to partners. It's clearly in sales to partner. It's not our car. So

Okay. Perfect, thank you.

We have another question from Charles Winston from Redburn.

Yes, hi. Charles Winston. The language is a bit fussy there. Thanks for taking my questions. Again two from me if you don't mind. In the walk down there was the number €177 million from others plus Bank RCI. RCI was about €105 million of that. Can you give us an idea what the other €73 million was in the first half impact some thoughts for that might in the second half. And monozukuri, you've been very clear that the contribution in 2017 should be a recovery from what we've seen in 2016, below that as all at one-time items there. Can you give us a bit of an update after the €204 million seems monozukuri in the first half? I mean comfortably north of €400 million, is that putting words in your mouth or apart from some sort of guidance that would be useful. Thank you.

Okay, thanks, Charles. All the others, yes, you are right. There is a big portion which is coming from RCI. The rest as you can still saw on the turnover box on the others, I mean, it's clearly coming from very good momentum also on our after sales business and from our own internal dealer network business, which is quite turning very positive. It's the sales also of used car vehicles. So you have quite a few things in this box which are positive and I don't see any reason at this stage to think that it will change in the second half. On the monozukuri. Maybe I will turn to Thierry Bolloré to give you some elements. Thierry Bolloré: Yes, good morning. So, on monozukuri, so we are back on track as you could see for H1 and we should at least keep the same momentum for H2, which means that a minimum €450 million is expected, absolutely.

Great. Thank you.

So we have another question from the Horst Schneider from HSBC. Please go ahead, sir.

Yes, good morning. And thanks for taking my questions too. The first one relates basically on your expected sales momentum for H2. I've observed in Q2, especially when we stripped out the non-consolidated business like China and Iran, that the sales momentum turned a little bit down, should we expect now for H2 that momentum increases again a bit, so that we can expect clearly a positive year-on-year sales growth in H2 ex-China and Iran. That's my first question. Second question is related to your net cash position which has declined a bit and in comparison to other peers in Europe you have now the lowest net cash position. I just want to know what you consider as a minimum net liquidity is that you need to have for automotive business in total. Thank you.

Yes, this is Stefan Mueller. For your first question on the sales momentum, it's true that H1 was very successful for us. So worldwide we improved market share by almost 0.3% and we were growing by more than 10%. We expect this momentum basically to continue, obviously this depends very much also on the TIV development and you are aware of our assessments, so for Europe and for France we continue to see a 2% for the full year which is prudent. For China, we see approximately 5% and for Brazil we see up to 5%, for Russia a little bit more than 5%, if everything goes well, today we are above 6% there in the market and India probably around 8%. So this is our view and this is where it depends on number one. Number two, to give you another important example Clotilde was already referring to the channel mix development in Europe, where we can see that the retail channel is not growing as strongly as other channels. Now obviously we say prudent here and we don't want to push tactical channels. So all of this will impact our performance in the next year. You are mentioning Iran. Yes, Iran is very successful for us. We more than doubled sales. We believe that that we continue to have a good momentum. So overall, the momentum will be good, will be achieved or will be stayed with the same 10%. I don't know too soon to tell, but we will continue to balance volume growth with profitability, but we are very positive on the outlook.

But in Europe, also positive sales growth year-on-year in H2 or you do not want to comment on that?

No. Positive, sales growth in Europe for the full year.

For the full year. All right. Thank you.

Okay. And your second question. Yes, on the cash position, let me remind you something. I mean, it's a seasonal effect that we have a negative impact on the net cash position. Let me remind you that Nissan pay their dividends in two instalments, one in H1 and one in H2. That's the reason why you have such a big disconnect on the dividend received and the dividend paid. Obviously we don't intend to be - to have a negative impact on our cash outflows at the end of the year. And the second part of your question is on the liquidity, minimum liquidity requirement. I think, we use to say something around €3 billion to €4 billion, and obviously now we have VAZ coming in, so it's slightly different obviously. But I think we're quite comfortable with the level we have today. Obviously, we are generating sufficient cash to invest what we want to invest to prepare the future. So if you want to take something like, a target of €3 billion, once VAZ is in a more stable situation, I think that's what you could take as an assumption.

All right. Thank you.

We have another question from Michael Tyndall from Citigroup. Please go ahead.

Hi, there. It’s Mike Tyndall from Citi. Just a question with regards to some of the components on monozukuri, manufacturing logistics negative number there. I wonder if you could talk a little bit through what drove that, you mentioned the cyber attack, I mean, remember last year we had some fictional costs that drove that number negative, but frankly surprised that it was as negative as it was. And then the second question, just in terms of your comments on channel mix, if I look at your inventory, your independent dealer inventory has gone up, how should I reconcile those two statements, should I be worried about the fact that the channel mix is getting weaker and it turns out, you have more cars in the hands of independent dealers or the two things unrelated? Thanks. Thierry Bolloré: Its Thierry Bolloré speaking, let me answer for the monozukuri. We have much less fractional cost in last year, but we still have some, for example with the Scenic launch, we have had the problem you know very well with our supplier, who got 1 plant into fire and this has created some extra cost for example, that we did not expect. The second point is that we are still answering to the market needs and to the growth of the company and clearly this as well as an impact, because it boost our supply chain under pension. And last but not least, we also have a higher depreciation as you know very well.

Yes, with regard to your question on channel Renault, this is not correlated, so the fluctuations that you see on independent dealer network is the regular fluctuation that we have, because of a number of variables supply, disruptions in supply, fleet deals, all kinds of things, vacations are coming up, so these are normal fluctuations. And you cannot connect them directly to what is happening over the longer term in the European market, as we observe it and that is that the retail channel is just not growing as strongly as other channels, especially the channel of technical sales, or short-term rental, demos and stuff like that. And we are not going to participate as much in these channels, because obviously this is not so much good business.

Perfect. Thank you.

So we have another question from Jose Asumendi with JPMorgan. Please go ahead.

Thank you very much. Jose, here. I have a couple of questions, the first one for Stefan maybe, so when you compare Renault with the other carmakers, it looks to me like some of them are being able to pass on bit more successfully, that cost of meeting emissions to customers. What is your view around Renault, in terms of passing on the incremental costs, the emission costs that you have to put into the car, how successful are you in these terms or maybe specifically showing up the enrichment at the end of the day? Second for Thierry, can you talk about the opportunity you have in Brazil, how much capacity have you added for the Kwid, when is the vehicle coming, and which segment are you targeting, and third item, please for Clotilde just in terms of pricing for the second half. Can you just talk about just in general, how you're seeing the European environment is going to evolve and what are the opportunities for Renault? Thank you.

So, this is Stefan speaking. On your first question, pricing power versus regulation. I mean obviously there is a lot of regulation coming up and for us it's very simple, we are always going to look and see what the competition is doing, because obviously from a customer point of view, we have to be where the basket of our competitors are. So we can obviously not afford to be significantly above everybody else in terms of pricing, when it comes to pricing of regulatory items. So, this is one important benchmark and the consequence of it is that we have to adjust our cost structure as to mention dis positioning. So, we will clearly remain from our transaction pricing right in the middle of the competition, fully knowing that we will have more costs to bear on regulation, that sometimes and is really difficult to answer because it depends, is it in LCV, is it a passenger car, what sort of passenger cars, sometimes we compares them 100% or more, sometimes not 100% as Clotilde said for instance mentioned on LCV, where we cannot pass 100%. Thierry Bolloré: Yes, for your question about Latin America and Brazil, especially, so that Latin America for instance is very active in 2017, because we have 3 crossovers that we have in the market, we have Captur, Kwid and Koleos, plus a new pickup, so this is a very active momentum in Latin America. I think you had a question about what capacity. So when capacity is over 250,000 habu [ph] measurements, and so we are perfectly equipped to face our ambition on the market.

And on your last question, I think I have already mentioned, I think it's very difficult to say what is going to be the pricing momentum in H2. It will depend on how much of the raw material increase we're going to be able to pass, depending on what competition is doing, it's going to depend on the FX devaluation in some countries, and how much we have to pass in order to offset that. Clearly it will depend on the industry pricing discipline, especially in Europe as just mentioned by Stefan, so it's very difficult to give you a forecast on that one.

Fair enough. Thank you.

And we have another question from George Dieng with Natixis. Please go ahead, sir. Mr. Dieng, your line is open. You can ask your question.

Yeah, sorry about that. Yes. Good morning to all. My question is on the RCI, we have seen a clear acceleration in profitability last year, and obviously another step forwarding? In H1, I was just wondering to what extent, let's say it is really sustainable, this really kind of trade off versus the auto margin. And when it comes to the dividend policy, if I am not mistaken, actually I have skipped the dividends, probably to strengthen on its equity base, I think really is kind of a new policy or is this supposed to be just temporary? Thank you.

Yeah. Thank you very much for your questions. I think on RCI, clearly for us it's very sustainable. I think it is clearly linked to increase in the profitability of RCI is linked to many things, first as RCI Is going along with Nissan and Renault and all the brands of the two groups. And these two groups are increasing their market shares and their volume, RCI going along is increasing also. Secondly RCI is also increasing its penetration rates in the financing activities towards these brands. So that - is participating also in the increase in profitability. Thirdly, RCI is developing as much as it can finance of used car. And fourth, it's also developing connected services connecting to the cars in order to not only rely on financing services. So, on that front, you can very well say that RCI is increasing and this is sustainable, because on top of, it is being done with strong attention to the cost of risk and the cost of expenditures, I would say, so it's done in a very prudent way in order to make sure that these results are sustainable. So that's your first question. The second, I don't think we can say or look at having trade off between the financing activity or the OEM, you should look at the global consolidated results, this is what gives the complete view of Renault results. On the third point, the dividend it is not definitely a policy not to pay any dividend to Renault, it is linked to the fact that with these such growing asset base and due to the fact that now that RCI is above €30 billion in terms of assets, it is under the supervision of the Central Bank, plus obviously the strong scrutiny of rating agency, we have rules for banks to which you have to ensure to have sufficient capital in order to face any potential problems in the future. Meaning that we have to make sure that we have the adequate capital level in front of our asset base in order to be in line with the ratio that are imposed by both the Central Bank and rating agency, which for the moment prevent us to pay any dividend, but this will not last in the coming years obviously, once the asset base is going to be a little more stable, we're going to be again in a position to pay dividend to RCI shareholder i.e., [indiscernible].

Right. Very clear. Thank you.

So we have another question from Stephen Reitman from Societe Generale. Please go ahead, sir.

Yes, good morning. Steve Reitman, Societe Generale in London. I'd like to go back to the margin of the automobile division excluding AVTOVAZ and the result. And 4 point [ph] extra margin slightly up on the first half of last year, but still a little bit below with maybe some of the benchmarks. Could you at least, when we looked at the performance of AVTOVAZ and that was clearly a significant piece to the consensus that you've gathered and also gathered externally. It does such as the Russian market is improving very strongly and you've already said those were at 17% in the first half as well. So what - we're missing something in terms of what also going on in other markets as well, because Europe seems to be pretty good, that we see from the sales momentum and you do have most of your products launched, you do try to take on board will comment about the Scenic. So in terms of driving the margin in first half and what's going to happen in the second half pretty there, any expectations of an improvement on that figure, please.

Well. Yes, first if you look at the Russian market, you're right that it is going a little better than we had expected. And it's true for both AVTOVAZ and from the Russian part of our activities within Renault. There is a strong recovery in the market that we hadn't foreseen as strong in the first half. Let's see how it's going to go in the second half, but I don't see any reason why it should be differently at least for the Renault part as a good result. Now, I guess your question was why is the automotive margin only increasing by 0.1% and what should we expect for the second half? While it's difficult to say for the second half for now, because if you look at the reasons that we have seen in the first half, which are basically strong headwind from -- sorry, from a raw material, other elements of channel mix and especially our strong increase in our investments. This is the reason why you don't see the whole flow through of our increase in turnover on our margin. Again raw material, FX, strong investment, strong depreciation and those are the element -- and the Micra, which is dilutive. Those are the reason why you don't see the whole flow through. In the second half as Stefan mentioned, we should see a similar level of growth in terms of sales and he can sell few element on that. We should see higher impact from depreciation, sorry from raw material, no reason at this stage to see worse adverse effect from FX. As Thierry Bolloré mentioned, a better impact from monozukuri. So in my view, there is no reason why we should not be at least a little better incomes of flow through in the second half.

Yes. This is Stefan Mueller, to answer your question on, why should we be optimistic in the second half and also looking into 2018. Well, if I look at the product renewal, we are in the middle of the product renewal, because all the new products that we have just launched in Europe last year and this year are still unfolding their effect. So this is true for the C-range. But this is also true for instance for the new Koleos that has just hit the market and for the products that will be coming. So of course, we want to be prudent on one side, but I think we can say we have all reasons to be optimistic for Europe. Now, if I look at China, we have developed. We're still small, but we have developed a much better than what we have planned. Koleos is a big success and we are moving on the right track. On Russia, you're venting [ph] Russia, Russia is right now benefiting on the Lada side very much from Xray and Vesta, we are achieving almost 20% market share with Lada. So we are on the right track to capital on the Renault side in Russia is also performing much better than we've thought. With the QM6 and SM6 the Talisman and Koleos variants that we are selling in South Korea we are at number two in the market and in Latin America we will be benefiting even more in the future from compete SUV range. And as some of you have mentioned the introduction of Kwid. So we're prudent, but we can be pretty optimistic for -- with regard to the strength of our product range in the future.

Can I just ask supplementary?

So Stephen say.

Yes. I'm sorry just because in terms of your pricing power in your -- because that's something that is talked about by your other French competitors very regularly. And you talked about once the price up your products in the middle of the basket whereas your primary competitors talking about always this French trying to get to the top of the - to be the price leader. Is there any contradiction in this do think?

No absolutely, there is no contradiction in this because it's, as usual a balance of the right pricing and growth. As you know, we have achieved to be the second brand in Europe and obviously we want to stay there and we have had continuous growth over the past years. And we continue to have - so far we believe that our strategy is working very well because the pricing is right where the pricing should be in terms of a customer expectation and we see the volume and the profit growth on the other side. So our strategy is really paying off.

Thank you. Thierry Bolloré: I think we have time for our last question.

So we have a question from Harald Hendrikse from Morgan Stanley. Please go ahead.

Yeah, morning. Thank you so much for taking my question. Just on the order book, where seasonally we always see a bit of a slowdown in the summer, is no different this year. But with your comments on the channel tactics and give a more diesels. Can you give us a little bit more color and where order books is right now, the strengths and weaknesses that you seeing across Europe specifically. And then also on the diesel specifically, our German friends are obviously talking to the government about potential for software at this stage, software upgrades to improve diesel emissions. What does the French government stands on this at the moment and will you come under pressure to do similar upgrades in France or across Europe as well? Thank you.

Yes, this is Stefan Mueller. I think I can start answering part of your question, then I would hand over to Thierry Bolloré. So, with regard to diesel mix evolution, but you have heard this number, I'm sure. Before the total diesel mix is coming down in Europe. So if you look at the data of year-to-date, June Europe is down from approximately - this is true for passenger cars and light commercial vehicles from approximately 61% last year same period to now approximately 55%. And we as a group are down from 54% last year, down to approximately 47% this year. So we are affected as anybody else. And now I would hand over to Thierry Bolloré to answer the other question. Thierry Bolloré: Yes, concerning your second point, while you know very well that we already took a lot of initiatives to launch since 2015, a set of action to reduce our noise emission. In customer use only Euro 6B diesel vehicles and this has been done from the end of 2015. In 2016 as well. We've also increased our performance by more than 50% on our cars, and all our cars already are very much enhanced in terms of performance and this has been totally been done with all of our authorities who have done show the flow out campaigns to refer to our customers with previous calibration therefore to upgrade this. And this has been all over Europe already. So that's why we are not in the same basket compared to our German friends.

Yes. This is Stefan Muller one more time just to complement the figures. So, for Renault the diesel share right now is for PC alone 47% and for PC and LCV it's 55%. Thierry Bolloré: Now just to complete on the customer order portfolio, so all you see there is a seasonality on that. So we compare most – most by most compared to that share and it's at around 5%. The graph it is probably a difficult to see. So it's in line with our growth of volume. So we are in consistent figure, it's especially strong in some models, for example electric cars overall, so 5% [indiscernible]

Perfect. Thank you

Thank you. Well, thank you all for your question. As a summary, I would say that we are pretty happy with these record results of the first year on many of the lines you have seen these are records. We strongly believe that this result are attained on a sustainable way, working on growing and investing in the future. And for us, we do look with a confidence to the rest of the year. And to our ability to post again new record numbers at the end of the year, I think you have to look at them as a growing steadily for the last years in a very good trend. There are some headwinds that we mentioned that every other OEMs are facing like we mentioned obviously a raw material and other things and the market situation. But globally, we have shown our ability to post record results regularly and this in my view will continue at least until the end of the year. And I hope I will see all of you in October when we will unveil the details of our new MTP, which again aims at achieving €70 billion in 2022 and 7% operating margin. Thank you and have a good summer.

Thank you, Clotilde. So this is the end of the call. So of course, as usual the IR team is fully available today to answer the question we may still have. Have a good day, bye.

Ladies and gentlemen, this concludes the conference call. Thank you for your participation. You may now disconnect.