Ladies and gentlemen, welcome to Groupe Renault First Quarter Revenue 2019 Conference Call. I now hand over to Mr. Thierry Huon. Sir, please go ahead.

Yes. Good morning, everyone. Welcome to Renault first quarter 2019 conference call broadcast live and with replay versions on our website. The presentation slide and press release 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, and in particular about forward-looking statements. I invite all participants to read this. Today's call is scheduled to last about 45 minutes. As usual, we have two speakers this morning, Olivier Murguet EVP, Head of Sales and Regions; and Clotilde Delbos, EVP and CFO. The presentation will last about 10 minutes and will be followed by Q&A sessions. If we don't have the times to take everyone's questions in this session, the IR team will be around to take your calls later. Therefore, I pass the call over to Clotilde for a few opening remarks.

Thank you, Thierry, and good morning everybody. Before reviewing Q1 commercial results with Olivier in a minute, I would like to highlight the key takeaways from the first quarter. As expected, Q1 revenues showed a negative growth of 4.8%. The first point, I would – I highlight is the European market, which has started a bit slow and showed a decline of 2.4% in the quarter. We can say the same thing about the Russian market, a touch below our expectation in Q1. Consequently, we have slightly adjusted our full year forecast for the Russian market. The second point is the still depressed situation of the demand in Argentina and Turkey and we do not have hope of a recovery by year-end. In this tough environment, the group has been able to gain some market share. This Q1 development confirmed, what we told you at the full year 2018 results presentation. We should see a marked seasonality in our performance this year as the comparison basis in H1 is quite challenging and major launches will take place in H2. But again, this doesn't come as a surprise, and we confirm our 2019 guidance. Having made these preliminary remarks, I will now pass over the call to Olivier who will review our commercial performance in the first quarter.

Thank you, Clotilde and good morning everybody. The first quarter of 2019 marked a change in the trend for some key markets across the world. As you can read in this slide, market volume in all our regions were declining in Q1. In Europe down 2.4%, Spain and Italy drove the negative trend, and to a lesser extent the U.K. In Eurasia, Russia was a bit weaker than expected and Turkey has continued to fall. The AMI region the positive development in North Africa did not offset the impact of the Iranian market closure. In Americas, we enjoyed a strong Brazilian market, but not so strong to compensate for the collapse of the demand in Argentina. Finally, Asia Pac region suffered from a downturn in the Chinese demand. In this context Groupe Renault over performed the market with a decline in sales of 5.6% at more than 900,000 sales. It is worth noting that adjusted for the Iranian market shutdown the drop would have been limited to 1.7%. The group showed positive sales development in Europe and managed to do better than the market in Eurasia, America, AMI adjusted for Iran. In Europe, the performance has been backed by the success of new Duster, Zoe and LCV. The performance of Clio IV is also to be noted. Despite seven years old, Clio is still the second bestseller in the European market and number one in its segment and this just before Clio V hits the market. Outside of Europe, in Russia, Lada Granta is the best seller in the market helping the momentum of Lada. In Brazil, Kwid confirmed its success with sales up 22%. From now, we will see an acceleration of our product cadence. We launched some key products in almost all regions with Clio V in Europe, Triber in India, Arkana in Russia, City K-ZE in China. This should support our activity in the second half. In terms of market development, we confirmed the forecast that we shared at the full year 2018 presentation except for Russia, where we are much less positive as we expect the market to be up about 3% when we are expecting 3% at least previously. This finishes my review. And now I hand over to Clotilde.

Thank you, Olivier. I will start this part of the presentation with the contribution of our different segments in first quarter revenues on slide 11 compared to last year. As you can see, group revenues were down 4.8% in the quarter at €12.5 billion. At constant exchange rates, revenues would have decreased by 2.7%. The Automotive division excluding AVTOVAZ showed revenues down 6.3%. At constant exchange rate, revenues of this division would have declined 4.8%. AVTOVAZ contribution was €767 million, up 7.1% despite a negative impact of €67 million from ForEx. This reflects the continuing good commercial performance of Lada in the Russian market. RCI revenues increased 6.4%, despite headwinds in some of our main emerging markets. I will start the analysis with the review of the Automotive division on slide 12. On this slide, we show the contribution to the change in Automotive revenues, excluding AVTOVAZ for the first quarter broken down by item. Reading from the left-hand side of the slide, the first item is currency. The impact was negative 1.5 points. The strongest headwind came from the Argentine peso, which has continued its dive. However, the demand free fall in the country has made this effect less impactful than in the previous quarters. The second item is volume impacting from minus 4.7% -- point, sorry. This is more negative than the decline visible in the registration which is linked to market condition. As usual, this gap between registration change and volume impact stem from the change in the dealer stocks. Next the geographical mix impacted positively by the 0.4 points, as the strongest commercial performance came from Europe. The product mix was also a positive of 0.6 points reflecting the success of the new Duster and the still strong performance of our B segment cars. The price effect was positive by 0.3 points. While we are still benefiting from the price increases implemented in some emerging markets, the fall of volume in these markets limited the impact. In addition, in Europe, the change in the mix between retail and fleet and between LCV and passenger cars weighted on this indicator. Sales to partner remain on the same negative trend as in the last quarters at minus 3.1 points. Once again this negative reflects the closure of the Iranian business and lower production for our partners. The last item, others, represent the activities outside the new car business. It has been impacted primarily by the time gap between invoices and registration for our wholly owned dealers and by restatement related to buyback commitments. It showed a positive contribution of 1.7 points. If you turn to slide 13, you will see the destocking effort achieved in Q1. Global inventories stood at 656,000 units versus 697,000 a year ago. In terms of the number of days on hand, we stood at 76 days in line with last year. We're comfortable with this level which is in line with our usual pattern at the end of the first quarter. I will now move on to slide 14 and comment RCI commercial performances. As you know, revenues is not a real meaningful gauge for RCI. The number of new contracts written by RCI Banque in the first quarter decreased by 2.7% as the business has been impacted by the collapse of the demand in some important emerging markets. Logically, this translated into new financing that decreased 2.1% at €5.1 billion, but average performing assets were still on the rise with plus 8.2% at €46.5 billion. Before moving on to the Q&A session, I will turn to the last slide which shows you our outlook for 2019. As I mentioned in my preliminary remarks, we are confirming our guidance for the year and that concludes our presentation. Together with Olivier we're ready to take your question and I remind you that this is a revenue call. I will now hand the call back to the conference operator. Thank you for your attention.

[Operator Instructions] Your first question is from Dominic O'Brien from Exane. Sir, please go ahead. Dominic O'Brien: Good morning, guys. Thanks for taking my question. I just had a question on your guidance specifically on free cash flow. I think -- it seems that number has quite a lot of risks to it this year. So wanted just to see if I'm thinking about it correctly. In 2018, it seemed ex the Nissan dividend more than 100% of your cash flow came from working capital inflow. When I think about 2019, I think the message is broadly for flattish EBIT and then perhaps slightly rising investment expenditure in cash terms, if I'm not mistaken. So, against this backdrop does that mean that Renault is entirely relying on a big working capital inflow in 2019 to meet its guidance? Am I missing something there? It just seems as though there's a huge amount of uncertainty attached with that particularly given the end market guidance. Sorry for the long question, but that would be very helpful. Thank you.

Hi, Dominic, if I may remind you this is not an earning call. We have confirmed our guidance so this is just confirm. You can do write whatever assumption you want for your model but we confirm that we will be free cash flow positive. Dominic O'Brien: Okay. Look, I'll ask a revenue question then secondly. Can I just get a bit more detail on the pricing that you mentioned? And specifically Europe, you were talking about changes in channel mix and changes in passenger versus light -- LCVs. Could you just give us an idea of what happened there and what the general pricing environment in Europe is like please?

Yeah. Thank you for the question. Olivier, speaking. So on channel mix here, we are -- in Europe as you know, we are now with an aging lineup, especially Clio. So we are on end of life on Clio. So, there was a bit more fleet than retail. This is the main reason. But it is a transitory end of life Clio. And on LCV, yes, we confirm that we increased strongly our performance in LCV by 9% end of March in Europe, which is good. LCV is very profitable lineup, but it has impacted also the mix.

Okay, great. Thank you.

The next question is from Jose Asumendi from JPMorgan. Sir, please go ahead.

Thanks very much. José, JPMorgan. Two items please. Clotilde, can you comment a bit on volume over the coming quarters? What kind of sort of volume trend do you expect? Or maybe to go the way around, which vehicles will drive the improvement of volume in sort of for the second half of the year? Also, do you expect an improvement in product mix? The second topic is for me. Can you just help me out a little bit? When I read the news flow, it looks like Renault is still pursuing a merger with Nissan. Can you maybe just comment? My understanding was much more of creating stability within the Renault-Nissan alliance and working much more on project-by-project generating synergies. Can you comment a little bit from a Renault board perspective? What is the situation at the moment? What is the message you're giving to investors? How do we think about the Renault-Nissan alliance? Are you still pursuing a merger within both entities? Any comments on that front please. Thank you so much.

Hi. I can answer on volume for the next quarter. So the -- at the beginning of the year and what we said that we were expecting a small increase during this year versus last year, with two very different period in the year. H1 with no particular launching so with the current lineup and a very unfavorable comparison on TIV, because of the TIV last year begin fall on H1. And second semester very, very different with plenty of important launch for Renault, beginning with Clio, which will be launched by summer, Arkana in Russia, which accounts for two-point market share, 30% volume, Triber in India and K-ZE in China. So in H2 really very different from H1, with a strong launching plan. So this is the story for the year. H2 should be -- should benefit much more on new product.

Thank you Olivier. On the alliance, what we always said, and we still say the exact same thing, is that what we want is the alliance to be irreversible. And this is what we're pursuing collectively with Nissan. There is no difference between Renault and Nissan. We need the alliance, and we need it, because it provides us with huge strength in a period where the automotive industry is really in turbulences, whether from the market, the technology change, et cetera, et cetera. And that has not changed. What Jean-Dominique Senard has been able to achieve less than two months after he's been nominated is to make sure that the different partners are around the table discussing, how to make this alliance even more efficient on its daily operation on the decision-making process. This is the reason why he implemented this new alliance board, which took place for the first time a few weeks ago with the three CEOs and himself reviewing how the alliance is working. They have spent a full half day on that topic. How is the alliance working today? What are the roadblocks? And how to make it improved? And the decision has been made as announced to look at it more on a project-by-project basis rather than function-by-function basis as it was the case before. So this is what is in process. We're working on proactive -- I mean, pragmatic topics, reviewing projects and making sure that we have the right information, and the speed in decision. I think the main important elements that today all the partners in the alliance are looking for is improving the speed into decision, making the decision on the consistent basis, but making them execute. So that's the first point. Now I'm not going to comment on the rumors that you see on the newspaper. There is one rumor per day and this is going to continue because the media likes to make rumors also. So, we are working project-by-project making it progress, a lot of discussion taking place between the different partners to make this project come to life. And that's it. That's all we can say at the moment.

Thank you very much. Appreciate it.

[Operator Instructions] The next question is from Thomas Besson from Kepler Cheuvreux. Sir, please go ahead.

Thank you very much. I'll ask two questions, please. First, can you comment on your EV volumes in 2019 and 2020? And give us a bit of an update whether that will be in Europe only and exclusively almost ZOE or whether there will be an additive product to your EV lineup in 2020. And what impact do you expect that to have on your profitability? And the second is linked with the new products you're launching, both in Russia with Arkana and in India I think the new Kwid derivatives. Can you give us a few words about the volume impact for I think the three products Arkana and the two in India and whether they will have a visible impact on the automotive EBIT? Thank you.

Okay. So a few questions I will begin by the end. On new product, on Arkana and Triber, those are very important products. On Arkana, the first one is as you know we have a strategic goal to take around 10% of the Russian market with the Renault brand. Arkana is the major piece in that strategy. We are around 7.5%, 8% today. Arkana is supposed to increase by 15%, 20%, the volume in Russia, so it's a very key product and the middle range product to increase our presence in Russia which is today around 29%. So this is really very strategic and it's an added model. It's a new model in the lineup it's not a substitute. And it's underway to be launched in the next month. The second model is very important. This is Triber in India. It is the second model concept Indian concept and produced in India. We will have three. The first one was Kwid which is selling today. The second was Triber and we have a third one next year. And those three model should allow us to have a very visible presence in India, let's say more than 200000 cars when we are visible in the country and make India a real asset of the company. So Triber will be launched also in the next month with high expectation. So this is for the new launch. On EV, the momentum is continuing. Let's give you some figure from the Q1 on ZOE especially. ZOE has been improving 31% in Q1 versus last year. So ZOE is in a good momentum. Kangoo on LCV also is improving. I don't have the figure by memory; I can give it to you later. And for next year, as we said several time, we will open a new chapter in our history with HEV and PHEV.

Yes. And then on the profitability side, as you said, I think there's a big difference between Renault and our main competitors on EV. We are not bleeding on EV by far. And in many elements -- I mean many segments cars/countries, we are already quite profitable on EV and this will continue. So the increase in volume that we see on EV for the coming years is not a problem for us. It's still dilutive as you know, but not by any means significantly dilutive on our profitability.

Thank you very much.

The next question is from Horst Schneider from HSBC. Horst, please go ahead.

Yes, good morning and thanks for taking my question as well. I'm sorry I joined the call in a little bit later because I had to fight with numbers of one of your competitors. So therefore I want to ask you Clotilde, if you could maybe repeat again what has driven the product mix in Q1 and what was the impact from the others line. And then maybe I've got a follow-up question. Thank you.

Okay, Horst. Thank you. So on the mix, the product mix, the main impact is a positive. As you see it's a positive. It's coming from Duster, the success of Duster and the success of our B segment line including ZOE, so that's where it comes as a positive. The second question is on others. So other, as you know this is a mixed bag of everything. This is everything which is not linked to a new car sales or CKDs or sales to partner, so this includes many things for example parts and accessory. But the main movement this quarter is linked to our internal dealer destocking impact. You know that we have quite a lot of stocks in our internal dealership at the end of last year, especially in France and we have considerably decreased these stocks over the quarter. So this is actually an offset of the negative that you have on the volume box. I think you should see these two box together in order to be more in line with the registration that you see on the market, so three things in this other box, the parts and accessories, internal dealer and the adjustments on buyback.

Okay. But it's not that you have done more short-term rental sales despite the commitment? That's not the case.

No, no. Actually the main impact, the most impact is the decrease in stock in our internal dealership network. There is some buyback commitments, but that's not at all the major point, because it's a positive actually. So it's mostly linked to internal dealership stock reduction.

Okay. And then the other question that I have regarding the sales pattern for the next few quarters. I mean, you say that you expect the pickup in sales in H2. I'm seeing at the moment when I look at your model mix, basically that all these models which have driven sales in the last two, three years so Megane, Talisman, Captur they are also declining substantially. And the sales at the moment more held up by the Clio and Captur which are phasing out. So should we expect then again a significant decline in Q2 this time more driven by Europe, since the Clio is phasing out and then subsequently the significant recovery in H2? So basically, my question is, is it first getting worse before it's getting better then thereafter?

Well I think Q2 will be in the line same line as Q1 I mean, because we have the comparating base, which is not different. We still won't have a difficult comparison versus Iran. While still we have a difficult comparison versus Turkey and Argentina, we don't expect a major change versus current Q1 sale in Q2 in all the cars you mentioned. Clio is holding, Clio is holding. It's normal seasonality in Q2. We don't expect any drop in market share should be stable. So Q2 should be more in line with Q1. I don't expect it to be worse in terms of sales. And it should as you said and as announced since February be a lot better in H2.

Okay. Then the last one. It's right, the conclusion is right that the most ambitious element in your guidance is the revenue guide. That is correct, right?

Revenue obviously is linked to markets and FX. So -- but I think we are -- what I can...

Yes. But just give an order in terms of conservativeness, right? My impression is sales is not -- the sales guidance is not more ambitious than the earnings and cash flow guidance?

Well I'll let you make your own opinion on our level of conservatism.

Okay. All right. I thought -- I hope I get a comment, but it's fine. It's okay.

Nevertheless, what I could say Horst, and it's very important the revenue that we announced you here at the end of Q1 is exactly -- it actually is even slightly better than our internal road map for the year. There have been pluses and minuses. Market is slightly worse than expected at the beginning of the year. FX is slightly better than expected. But all in all we're very much in line with our internal road map.

Okay. That's a good comment. Thank you.

Your next question is from Stephen Reitman from Societe Generale. Sir, please go ahead.

Yes. Good morning. Apologies as well also. I missed a little bit of the beginning of the call. A question on Russia. In your slide 8, you talk about the -- you're down about 0.1 points. And obviously there's quite a big difference between the performance of AVTOVAZ and Renault brand, which I think Renault brand down by 12% and AVTOVAZ up by 4% according to the Russian statistics. Can you talk a bit more about what you're doing on the Renault brand?

Okay. So as you say on the -- we are progressing one point market share with Lada and decreasing more or less one point in Renault. This correspond exactly to the situation of both brands. So Lada has a very good momentum with a very fresh lineup. As we said, Lada Granta is number one in Russia. We have very mature now team there, so Lada is naturally growing. On the contrary, we have an aged lineup -- aging lineup at Renault. New Duster we'll be launching 1.5 years. I think we're going to see it up one year ago. And we are still also on the current Sandero and Logan lineup, so three models. So Renault Russia is suffering on this market share minus 0.9, but it's normal. It is due to aging lineup and we are not pushing more, because we are going to launch Arkana in a couple of months which is a first -- which will be the first car to renew the Renault Russia lineup. So we keep our expectation to go to 10% market share thanks to lineup and sales and marketing efficiency by two years. And all that driven at 28%, 29% market share in Russia with both brands with a strong profit which is in Russia as you know it's a very profitable market, so we are managing that reasonably.

If I could follow-up with a second question. I know it's a Q1 conference call, but still about -- maybe about sales mix. Your principal competitor in France PSA has given some quite detailed information about how they plan to meet the CO2 mandate they need to do for 2020. And they're talking about achieving their targeted 93 grams with a 10% diesel share and 7% new energy, which I think breaks down as 4% plug-in hybrid at 3% battery electric vehicles. Could you share your thoughts on where Renault -- where it expects to be. I'm sure you're going to meet your mandates. But how do you expect to do that in terms of mix? Thank you.

On the CO2, you're right. We intend to meet the guidelines. This is no -- there is no question we would pay a penalty. That's clearly the internal ambition of the company. We don't give a specific mix, but let me my remind you the levers we're going to be using on the CO2. There are several ones. The first one is obviously leveraging our strength on EV. We already sell more than 2.3% I think of EV and we continue doing that with ZOE and other elements. As you -- as we have announced, we are launching PHEV and HEV cars in next year and into '20 and '21. So this is also going to help. But I don't think we need to give a specific target in terms of percentage of lineup. We are also working on the efficiency of engines. And we're also working -- we have also implemented a specific control tower in order to make sure that the mix that we deliver is in line with what we need in order to reach these guidelines. But we will be pragmatic. We will make the choice between profitability and volumes. And we will be flexible because we have all the technologies that we need. The market we won't -- we don't want to push aggressively cars that customers don't want to buy. So we'll have to make and be extremely flexible in terms of mix. And that's why we don't want to provide a specific energy mix because we will adapt to whatever is needed in order to reach the target on one side and ensure the profitability on the other side.

And if I could follow then what is the -- what was the diesel mix in the first quarter then and how has that changed from the end of the last year in Europe?

Just...

Stephen sorry we don't have the information here. I will come back to you at end of the day to give you the number.

Thank you.

[Operator Instructions]

Okay. Apparently there are no further questions. So I know it's going to be a very busy day for you guys, but if you wish we will be available for answering the questions you may have. Thank you. Have a good day.

This concludes the conference call. Thank you all for your participation. You may now disconnect.