Thank you. So good morning, everyone, and welcome to Renault’s first half results conference call, which is broadcast live and in replay versions on our website. The 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 one hour. The presentation will start with some preliminary remarks from our CEO, Thierry Bolloré, regarding H1 and risks and opportunities for H2. It will be followed by our CFO, Clotilde Delbos, who will take you through our usual presentation about H1 performance. Presentation will last about 20 minutes and will be followed by a Q&A session. For this last part, Thierry and Clotilde will be joined by Olivier Murguet, Head of Sales and Regions. Without further ado, I will hand over to Thierry. Thierry Bolloré: Yes. Good morning, everyone. So today, I will share my assessment of 2019 first half year achievements before commenting on the outlook for the year. In a declining automotive market with series of unexpected or aggravated downturns, Groupe Renault showed true resilience and performed in line with set objectives while preparing for the future. The group sales followed the sharply declining global trend, especially in regions outside Europe. In the first half of 2019, Renault sold 1.940 million units worldwide, a decrease of 6.7% in a market which fell by 7.1%. This led to revenues to EUR28 billion for an operating margin of 5.9% versus 6.4% last year. Because of the investments we made to prepare the future, the Automotive operating free cash flow was negative at minus EUR716 million. The first takeaway from these results is that, despite all headwinds, we delivered as anticipated. We maintained our market share worldwide, a real achievement considering we had no major product launches in the past six months, and we did it while focusing on the quality of our sales. Second, AVTOVAZ performance is in line with its objective despite difficult Russian market conditions, and RCI is still performing at record level. The second takeaway is that in tough times, we make progress on our fundamentals. To boost our ability to deliver on target, we improved our pricing policy on our existing models. The price effect on our revenues increased by one point during H1, and we keep it up for the new models as we just started with Clio V. As for cost control, all of our fundamentals have been activated and strengthened including better health and safety indicators, higher quality and higher monozukuri focused on hyper competitivity and deployment of digitalization. On top of this, our transformation program, FAST, by accelerating our processes and seeking efficiency in every business unit, aims at reducing our fixed cost by 5% every year over the next three years. All in all, during H1, we managed to lower our fixed cost by 4.7% in line with our commitment of 5% for the full year. We strengthened our financial discipline while investing in the future. To prepare for the lineup renewal, we invested more in research and development and CapEx with a 14% increase in our spendings versus last year. We also relied on the Alliance to share our investments. New Clio was produced on the new brand CMF-B platform, allowing us to make a real qualitative and technological leap while remaining cost-effective. We shared the investments required to build the CMF-EV platform on which we’ll start producing vehicles in the upcoming years. We also shared the R&D costs related to the latest generation of internal combustion engines, including HR10 and HR13, which equipped new Clio and new Captur for the latter. Our free cash flow, which was negative in the first half, naturally remains paramount for the company. We are putting in place a drastic plan enabling us to optimize the use of our financial resources. We will focus our investment efficiency to get back on track with our objectives of 9% R&D-CapEx ratio as soon as possible. And we will improve our inventory management. So we confirm our objective of a positive free cash flow for 2019. Moving on to our anticipation for the second part of 2019. We see three major risks for the second semester 2019. The first risk is a hard Brexit, which seems to become more likely given the recent political development in the U.K. The second risk is the impact of global trade tensions worldwide. The questioning of major trade agreement, notably the ones involving Europe and China, triggers lack of visibility. Third risk is unpredictability of environmental and safety regulations. Take for example the unexpected reduction of the incentive to renew the car fleet as decided by the French government, which impact on demand remains to be measured. As for opportunities, first, we have promising new product launches coming up our way in both emerging and mature markets: New Clio, new Captur, new ZOE in Europe, ARKANA in Russia, Triber in India and Renault City K-ZE in China. Second opportunity is the change in pricing policy, building upon our new and rich product lineup, which started with New Clio. Closely followed by new Captur, we intend to give priority to pricing over volume for the upcoming product launches. Finally, our performance programs including transformation program, FAST, and the digitalization of the company will also contribute to a healthier group performance on the short-term and beyond. As for our guidance. In 2019, the global automotive market is expected to decline by about 3% compared to 2018. The European market is expected to be stable, the Russian market to be down by 2% to 3% and Brazil market to grow by around 8%. In this context, and to prioritize the quality of our business, we anticipate revenues close to 2018. For group operating margin and Automotive operational free cash flow, we confirm our previously announced yearly objectives. These guides are including, of course, a hard Brexit situation. In conclusion, you can expect Groupe Renault’s full commitment to fight for its performance and deliver despite forecasted headwinds and risks coming up our way. It will be a tough yet necessary fight, which we take as an opportunity to accelerate, make progress and build a sustainable quality growth now and for the future. These are the main highlights I wanted to share with you. I now leave the floor to Clotilde who will present our H1 results in detail. We will then take your questions.

Good morning, everyone. As already mentioned by Thierry, the group’s financial results for the first half of 2019 showed the group’s resilience in an environment turning adverse in many regions. Let’s look in detail to these numbers and share the main explanations. Let me start with a brief summary of our commercial figures as released on July 16. Before reviewing the commercial performance, please note the evolution of our regional reporting with now a dedicated region for China. The other countries of the previous Asia Pacific region are now part of the Africa, Middle East, India Pacific region. This change has been made to have a better focus on China to develop the different JVs we have in the country. Let’s now turn to the worldwide market, which decreased 7.1% with all regions showing a negative development. In this tough context, Groupe Renault resisted with volumes down 6.7% and maintained a market share of 4.4% with 1.904 million vehicles sold. It is worth noting that the closure of the Iranian market following the American sanctions from August 2018 impacted minus 3.6 points. In Europe, our registrations were stable in a market down 2.5%. We gained market share in Spain, Italy, U.K. and Germany, thanks to the strong performance of our B-segment cars, Clio and Captur, and of Dacia. Dacia brand posted a plus 10.6% increase with the outstanding success of new Duster. On the EV side, ZOE sales in Europe were up 44.4% to 25,000 units in H1. Our sales outside Europe followed the worldwide market’s sharp decline and fell 13.9%. The group suffered, in particular, from the decline in the market in Turkey, minus 44.8%; in Argentina, minus 50.2% and of course, from the stoppage of sales in Iran, 78,000 units sold in the first half of 2018. In Russia, our second largest country in terms of sales, the group outperformed the market with sales down 0.9% in a market down 2.4%. This stems from the success of the new Lada Vesta and Granta, which are the two most sold vehicles in the countries. In India, our sales declined 13.8% as we’re suffering from a lack of new product in the declining market. We’re expecting a rebound with the launch of Triber, our new compact vehicle with unrivaled flexibility for transporting up to seven people for sub-4 meters. In Brazil, the group outperformed the market recovery, which rose 10.5% with sales up 20.2%, thanks to the strong success of Kwid with more than 40,000 units sold during the semester. We gained almost 0.7 point of market share. In China, our sales decreased 23.7% in a market down 12.7%. We will launch in the second semester our new affordable urban electric car named K-ZE and Koleos facelift. This ends our sales update, and I will now turn to the financial review. On Slide 10, we show the full P&L of the group. Starting with the top line, group revenues reached EUR28.050 billion, a decrease of 6.4% over the year. At constant scope and exchange rate, the decline would have been 5%. The next line shows an operating margin of – at 5.9% down 0.5 points compared to the previous period. Due to the fall of Nissan contribution, net income came to EUR1 billion, down EUR992 million compared to the first half 2018. On the next slide, we show the revenue contribution by activity. Group revenues for the first half were down 6.4%. Automotive, excluding AVTOVAZ, contributed for almost EUR24.8 billion, meaning a decrease of 7.7%. This implies an 8.8% fall in Q2 after minus 6.3% in Q1 linked with market deterioration. AVTOVAZ contributed for EUR1.6 billion, an increase of 5.4% despite a 2.4% decline in the market and a negative ForEx impact of EUR46 million. Revenues from our captive sales financing company, RCI Banque, were up 5.5% at EUR1.7 billion. It is worth noting that the combined impacts of Turkey and Argentina market collapse, ForEx deterioration and Iran shutdown accounts for 5.5 points. Excluding these major hits turnover we would have been down only 0.9 points. I will now review the breakdown of revenues for the automotive activity excluding AVTOVAZ on Slide 12. The first item, volume, shows a negative impact of 4.6 points, stemming primarily from the registration decrease. As usual, the gap between registration growth and volume impact came from the CKD business, activities outside new car sales and the impact from inventory changes, this last item this half being significant thanks to independent dealer stock reduction. The geographical mix and model mix impact are almost neutral at minus 0.1 points each. The fourth item is the price effect, which is positive one point. This impact reflects pricing action in emerging markets to offset the negative impact of the ForEx, and in Europe to mitigate the regulatory costs. Sales to partner impacted negatively for 3.1 points in the first half. This stays in line with Q1 impact and still came from a slowdown of the production for partners, the Iranian market shutdown since August 2018 and lower demand for diesel engines in Europe. The next item, foreign exchange, is a negative impact of EUR312 million or minus 1.2 points. This reflects, again, the weakness of the Argentinian peso in the first place, and to a lesser extent, the Turkish lira. The last item, named others, accounted positively for 0.4 points. It represents the other activities outside the scope of new car activity. The main impact came from group’s dealers inventory changes and the retreatment from sales with buyback commitments following the leasing development. Beyond these major effects, we had the usual ones on used car and spare parts. I will now turn from automotive revenues to the group operating margin by operating sector on Slide 13. The Automotive segment excluding AVTOVAZ delivered a EUR981 million operating margin or 4% of revenues versus 4.5% a year ago. This decline came mainly from the lower volume and sales to partner as we will see in the variance analysis in a minute. AVTOVAZ contributed positively for EUR82 million versus EUR105 million last year. This decrease was expected as last year benefited from positive one-offs amounting to EUR36 million. Adjusted for this effect, VAZ would have continued to show a margin improvement going from 4.7% in the same period last year to 5.3% for H1 2019. Our financing activity continued performing at record level as RCI Banque delivered a EUR591 million contribution to the group margin versus EUR594 million last year. Adjusted from previously mentioned headwinds, Groupe Renault operating margin would have shown a mere 0.1 points decrease. The next slide provides more detail on the group operating margin variance. The first half operating margin for the group totaled EUR1.654 billion, a decrease of EUR260 million compared to last year. Total monozukuri saving amounted to EUR385 million in the first half of 2019 compared to EUR254 million in H1 2018. In more details, cost reduction mostly stem from: purchasing saving totaling EUR258 million, the intrinsic performance despite being at the same level as last year in percentage is limited by lower purchasing volume and by the carryover effect of the Turkish situation; warranty cost change was a negative EUR24 million due to stricter assumption for provisioning. R&D impacted positively by EUR208 million as the capitalization ratio moved up 7.5 points and reached 54.2%; manufacturing and logistic costs increased by EUR57 million despite positive productivity gain for an amount of EUR112 million in the plants, this negative came largely from higher depreciation, energy cost and wage increase, especially in emerging markets. Finally, G&A cost decreased by EUR23 million thanks to strict expense control while investing in our transformation program, FAST. Let’s go back to the walk-down, Page 16. As expected, raw material produced a headwind amounting to EUR213 million, this is in line with our guidance and reflects higher steel and precious metal prices. Mix/price/enrichment impacted negatively for EUR95 million. This reflects lower price increase in some emerging markets, WLTP cost on a full base, lower diesel sales in Europe and Clio IV’s end-of-life management. The next item, which includes group decreasing volume and sales to partner shows a EUR471 million negative impact. RCI Banque, combined with the other businesses outside of the scope of new car sales, yielded a positive contribution of EUR56 million. I will comment more in detail RCI results in a minute. This item is always a mixture of different effects like buyback and own dealer inventory changes. During this half, currency movement resulted in a positive impact of EUR78 million. This stemmed from a positive impact of the Turkish lira on our costs and globally from less adverse currency situation than last year. The next slide provides more detail on RCI Banque performance. New financing in the period were almost flat at EUR10.9 billion versus EUR11.1 billion in H1 2018, primarily reflecting a less supportive auto market. Average performing assets continued to grow 6.9% and reached EUR46.7 billion. Net banking income stood at 4.35%, down 19 basis points. This decrease came from impairments related to our start-ups in the mobility services, the non-repetition of positive one-offs and swap valuation adjustments. The cost of risk continued to be under strict control, but increased a bit at 40 basis points when it stood at 37 basis points of average performing asset last year. Finally, costs were contained keeping our operating expense ratio stable at 1.36% of average performing assets. In total, the pretax return on asset reached 2.62% versus 2.85% in the first half of 2018. RCI contribution to group’s operating profit amounting to EUR591 million, down EUR3 million over last year after a negative ForEx impact of EUR14 million and provision booked on mobility services start-up for a total of EUR21 million. Now that we have covered the operating margin variance, I will continue down the P&L with the other operating income and expenses item on Slide 18. Other operating income and expenses amounted to minus EUR133 million versus minus EUR180 million a year ago. This decrease came primarily from lower restructuring charges related to our early retirement program in France. Continuing down the P&L, the next item is net financial income and expenses on Slide 19. The net charge increased from EUR121 million to EUR184 million. Despite lower cost of debt in many regions, we were penalized by a strong increase in the financial charges in Argentina, Brazil and Turkey and lower dividends received from different entities. The next slide shows the impact of associated companies in Renault’s P&L. Following result published yesterday, Nissan contribution for the second calendar quarter in Renault’s account came to EUR35 million, taking the first half year impact to minus EUR21 million. Contribution from other associates turned negative at minus EUR14 million, reflecting notably the negative results of our Chinese JVs. I will turn back to the P&L for the last time on Slide 21, where the net tax charge for the first half came to EUR254 million versus EUR387 million. This decrease came mainly from lower profit and some changes in different taxes. Bottom line, net profit after tax came at EUR1 billion versus EUR2 billion in the first half of 2018. After taking into account minorities, the net result per share came to EUR3.57 compared to EUR7.24 in the first half of 2018. Now that I have completed the analysis of the P&L, I will turn to Slide 22 on the evolution of the net Automotive debt. Cash flow from operation, excluding AVTOVAZ totaled EUR2.274 billion, almost at the same level compared to the first half of 2018. Changes in the working capital requirement impacted negatively by EUR131 million versus a positive of EUR212 million a year ago. Net tangible and intangible investments came to EUR2.910 billion in the first half, up EUR742 million over the last year level. This sharp increase reflects our continuing effort to prepare the future lineup including powertrain electrification, continuous modernization of the plants and the increase in leased vehicles. As a result, and after taking into account the positive free cash flow from AVTOVAZ for EUR51 million, Automotive operational free cash flow came to a negative of EUR716 million in the period. You have noticed that Thierry confirmed that we will deliver our positive free cash flow guidance for the full year. Our action plan is based on an efficient working capital management, investment activity lower than in H1 and higher dividend from RCI. In total, our net Automotive financial position decreased EUR1.6 billion compared to the end of last year before IFRS 16. Dividends received from quoted companies totaled EUR473 million, while dividend paid during the first half came to EUR1.077 billion. Other financial items were negative EUR447 million and partly related to IFRS 16 application on new leases treatment, but also to the impact of ForEx and different financial investments made in the first half. Other evolution from VAZ led to a negative EUR132 million mainly due to ForEx effects. After taking into account the negative impact of the IFRS 16 adjustment for EUR633 million on the opening balance sheet, the group Automotive net cash position amounted to EUR1.5 billion. Slide 23 shows the inventory situation in Renault’s balance sheet and for the independent dealer network. As you can see on this slide, while inventories decreased by 4.5% versus June 2018, we were at 65 days of business at the end of the first half, up four days compared to a year ago mainly from emerging markets. About two days out of the four came from the impact of the absence of business in Iran in the calculation. And on a forward basis, inventories are only up one day. This completes my review for the first half of 2019. And now, Thierry, Olivier and myself are ready to answer your questions.

[Operator Instructions] We have one, first question from Mr. Thomas Besson from Kepler Cheuvreux. Sir, please go ahead.

Thank you. It’s Thomas Besson, Kepler Cheuvreux. I have two questions, please. First on the cash flow, you have mentioned the RCI dividend as potential support for the second half and your target for the year. If I remember correctly, you said you reached the necessary level of equity. Can we assume that you could pay a dividend close to 100% of net income at RCI Banque? Or would you stay somewhere between 70% and 100%? That is first. And the second question, on the EBIT bridge, currency was positive. Could you explain where it comes from and what we should anticipate for the full year for the currency bucket in that EBIT bridge, please? Thank you.

Thank you, Thomas. On RCI, you’re fully right. As mentioned earlier, we have now back in a territory where we can pay dividend as we started to do last year. That being said, we know that requirements from Central Bank are never decreasing, always increasing, so we will stay cautious on the amount of dividend to be paid. Second point, it will be paid a portion in 2019, a portion in 2020 as we have done last year. So I would not go as up as what you mentioned. I would stay closer to 40% to 50% for the moment, and we will see at the end of the year if we can do better. On the currency, you’re fully right. On the first half, we have a negative impact on the turnover because of the major impact from the Argentinian peso and lower impact from the ruble and the Turkish lira. The positive impact on the P&L is due to the fact that as the Argentinian peso impact is fully offset – more than offset by the positive impact from the Turkish lira. As you know, we are exporting a lot of cars, especially Clio, from Turkey to Europe. This is what – where the positive impact come from. For the second half, we do expect this to turn back to breakeven or slightly negative as the positive of the Turkish lira should fully diminish in view of the fact that the foreign exchange variation started over summer last year. So on a comp basis, we will have less impact even if the Turkish lira stays at today’s level. So it should be breakeven, slightly negative for the full year, all in all.

Okay. If I can just do a quick follow-up on that. Did you recover a part of the compensation you give to suppliers – you gave to suppliers in H2 on that Turkish impact or is it to come?

No. Not yet. What we have done is we have stopped giving compensation, let’s put it that way, so this is behind us, but we still have the carryover effect of what has been given last year. We will see if the market condition allows us to recoup that in the second half.

Okay. Thank you very much.

Thank you, sir. We have another question from Mr. Dominic O’Brien from Exane. Sir, please go ahead. Dominic O’Brien: Good morning, everyone. Thanks for taking my questions. I actually have three questions all on free cash flow. Firstly, could you give us a bit more detail where the main drivers of getting to the free cash flow guidance on the full year are, please. Specifically, you mentioned working capital, could you just give us an idea of the magnitude there? And also what sort of magnitude do you expect the decline in investment spending to be? Secondly, just following up on the RCI question. Could you confirm that it was a EUR50 million inflow in the first half of the year? And when you said that part will be paid in 2019 and part will be paid in 2020, how should we think of that as a split of the sort of 40% to 50% of net income that you mentioned? And finally, sorry I’m being greedy here for a third question, but I see the change in the capitalized lease assets was a big drag in the free cash flow of around EUR484 million. Sorry if it’s a bit of a naïve question, but could you just remind us exactly what that line is and how you expect that to develop in the second half of the year? Thank you.

Thank you, Dominic. So on the free cash flow. Clearly, we have three – or a few elements in order to achieve the free cash flow positive for the full year. You rightly mentioned the working capital. It’s true that in the first half, there is an increase in working capital, which is not usual for Renault. This is mostly due to inventories where even though we’ve been quite strict on inventories and been able to put them under control, you’ve noticed that we have increased – or not decreased totally in line with the market decline our new vehicle inventories. You saw that in the slide on inventories and it’s even more true for industrial inventories. So our plan is clearly to go back to the same DIO, DPO, DSOs as we had in 2018 for the end of 2019 and this should be a major improvement in the working capital providing us with a big positive for the full year. That’s the first point. In terms of investment, we estimate that we should be around in line with what we had for the second half of last year, i.e., slightly less than what we had this year. For RCI, for modeling purposes, you can take maybe a 50-50 on what we intend to pay that would have the impact on H1 – sorry, on H2 2019 versus H1 2020. And yes, I do confirm that we have paid the remaining part of the 2018 fiscal year dividend of RCI in H1 2019 for an amount of EUR50 million. So basically, for free cash flow, our road map is extremely clear. We have already cascaded that to the whole company. Working capital back to 2018 level in terms of ratio and ending point, maintain investment under strict control and the benefit from RCI. I would add another one, which is on the financial cost where we have made a recapitalization of our Argentinian subsidiary and that should fully reduce our financial cost in this country, which was very heavy in the first half. So this is another layer we’re going to be using in order to reach free cash flow positive. Your second question on leasing. You know that we show leasing in the – when you have buybacks, according to accounting rules, you have to account for them in the balance sheet a portion in inventory and a portion in the investment line, but that has no real impact on the free cash flow. So you have offsetting amounts in the working capital roughly, if I make it very simple. Dominic O’Brien: Great. And just the expectation for that leasing side of things for H2. You typically see just as big an impact on H2 as H1, so is that going to be the same this time around?

No. No. This year should be very small for the second half. Dominic O’Brien: Great. Thank you very much guys.

Thank you, sir. We have another question from Mr. Stephen Reitman from Societe Generale. Sir, please go ahead.

Yes. Good morning. I have two questions. First of all, on R&D capitalization. I think you mentioned a figure of the impact of R&D in the EBIT bridge was about EUR208 million, which was about 80 basis points on the margin. Could you give us some idea of what you expect for the full year, if this – if the kind of rates are going to be maintained? And secondly, I haven’t had a chance obviously to look at all your figures, but just in terms of looking at your margins and where you feel you are against benchmark, where do you feel you can improve in the next 2 or 3 years? What kind of levels you think are really acceptable for the kind of business that you have? Thank you.

Thanks, Stephen. On the R&D capitalization ratio, you can assume that it’s going to stay flat for the second half at that level, 54%. But remember that last year, H2 was already higher than H1 last year, so the impact on the P&L is going to be lower in the second half. On the levers to reach higher margin, I will give it up to Thierry. Thierry Bolloré: No. I think this is absolutely key question. First, you know what we have committed for in our midterm plan, and we stick with that commitment to get beyond 7% operational margin before the end of the midterm plan. So that’s the first order of magnitude that you have to memorize. The second way is that really with all the improvements that we are putting in place and it’s visible already in H1, it will be more visible in H2, I’m thinking about pricing, quality of sales. It’s clear that this is the key, the major lever that we are putting in place, which means the value and the way to get paid for the value that we are putting in our vehicles and in our services. That’s the second. And clearly speaking, in terms of cost management, in terms of the way to fuel permanent progresses in terms of efficiency of the company we’ve, of course, subsequent visible improvements in costs. We are continuously making that happen and it works. So these are the key elements.

Thank you.

Thank you, sir. We have another question from Mr. Gaetan Toulemonde from Deutsche Bank. Sir, please go ahead.

Good morning. It’s Gaetan speaking. I have three questions, but they’re pretty quick. Raw material, negative EUR200 million in the first half, can you give us a little bit of an idea for the second half? My second question is on the FAST program. You mentioned that you have been able to save approximately 5% of your fixed cost base. If I assume EUR10 billion, 5% on the semester give you approximately EUR250 million. When I look at the walk-down of the operating profit, where do I find those numbers? So that’s my second question. And the third one is can you give us a little bit of an idea of the CapEx and R&D capitalized? I mean you reached almost 11%, the trend is 9%. Should we expect the second half to be very comparable to the first half? Should we expect that to decline next year or mostly the year after? Can you give us a little bit of an idea about the trend? That’s my three question.

Thank you, Gaetan. On raw material, I think H2 should be slightly lower, so we should stick to the guidance we gave at the beginning of the year of around EUR350 million, so down in H2 versus H1. Again, the most elements is really palladium and steel. Those are the two main points that are negative. On your second question, which if I understand well, is where do we see the fixed cost reduction in the walk-down, right? You see it in three places. The first place is in the mix/price/ enrichment where we have the fixed marketing expenses, which we have been extremely drastic on reducing in the first half. The second place obviously is monozukuri because you have fixed costs embedded in manufacturing, you have fixed costs embedded in R&D. And the third place is G&A. So that’s where it has been spread over these three elements over the period. And that’s where it’s going to continue because clearly FAST is really targeting fixed costs, support function, R&D efficiency and a reduction of cycle time so that’s exactly where it is spread. In terms of – what was the last question?

CapEx and R&D, almost 11% in the first half.

Yes. And just so one last point on FAST, this reduction is done despite the fact that we have costs to implement the FAST program. So we’ve achieved that net of the costs implemented to reach these results. On CapEx, yes, I think we clearly have the intention to reduce our R&D and CapEx over – turnover investments. That being said, you can understand that it will take time, so it will be done in the future. I think for modeling purposes for now, take as an assumption that we will have the same type of ratio for second half and that it will start decreasing through everything we’re doing in terms of R&D and CapEx. Let me remind you that we’re working a lot in reducing the diversity of our lineup and especially on the version of each model within this lineup. We’re also continuously working on partnership, more partnership with Nissan and others. And we’re working on FAST to reduce the cycle time. So we have many levers in order to go back to the 9% we mentioned, and I think Thierry wants to add something on it. Thierry Bolloré: I just, Gaetan, would like to add that we are clearly in a cycle at this first part of the year where we accumulate a very huge number of preparation in launches and this has an impact on our CapEx. And that’s the reason why this part – this seasonality in the way we are spending to prepare these launches will be different in H2, and that’s why we are totally confident to be back to the 9%.

But if we project for next year, this number should decline what, pedestrian level or still above 10%?

It’s too early to say. We have a lot of things in the pipe with partnerships, so it will go down, but too early to say if we’re going to go back to 9% in next year. But as soon as we have clarity on that, we can provide it. Thierry Bolloré: Yes. But it’s our goal, and that’s the reason why we are accelerating progresses in the efficiency of spending. And that’s – you have to know that in the FAST program, which is really delivering, we have a major accelerator which is on engineering precisely because we have already successfully experimented that when we put the agile methodology in engineering, we boost the efficiency in a way that, in fact, it’s a lot of money that we can spare. So we are in a very massive way accelerating that and especially on H2. So far we benefit of that for the next years.

Okay. Thank you. And tiny question, capitalization rate of 55% is it the limit or we’ll still go on in the coming years?

As Thierry mentioned, it really depend on the cycle time and we don’t think that capitalization ratio will go up – capitalization ratio will go up in the future. I think we’re at the time where everything comes at the same time. We’re launching Clio, we’re launching Captur and all that, and we strongly believe that we’re not going to go above 54% in the coming years in terms of capitalization ratio.

Super. Thank you.

Thank you, sir. We have our next question from Mr. José Asumendi from JPMorgan. Sir, please go ahead. José Asumendi: Thank you. José Asumendi, JPMorgan. Thierry, good morning. A couple of questions, please. On efficiency, Thierry, can you give us some examples on this stricter pricing discipline? Can you just maybe comment who’s your benchmark? What’s the price gap to the best-in-class? How do you basically improve pricing power? Also, can you comment on maybe the need to improve those labor cost-to-sales ratios in Europe? Any actions around workforce reduction that you’re thinking about? I think those two items are very important to improve those margins going forward. And then finally, Renault-FCA discussions, is this item completely frozen? There are no discussions at this point. Can you give us any update on this topic, please? Thank you so much. Thierry Bolloré: Concerning our pricing power, I think, first, it’s a pricing discipline and I think H1 has proven that despite very difficult conditions and existing range of cars, well, our sales team worldwide was absolutely able, thanks to the dynamism of the management, to make it such that we gained one net point in terms of price impact on our P&L. So there is a lot to do in terms of management and this is absolutely continuous. It’s all the more continuous that what we’re bringing to our salespeople in terms of products has a content value, which is at the highest level that Renault has ever done. And we have been preparing them to make it such that the pricing power is going to be visible in our accounts from H2, so you are going to see the impact very, very soon because it’s going to be massive compared to what we have done in the past. And we have been training our salespeople to recognize – not only recognize, but also to transfer that value in price and this is starting with Clio. And you can imagine that with all the other cars at the Renault brand coming up, it’s going to be the case. So we have a strict discipline on that. And to make it very blunt, our bench is still Volkswagen. So we want to get it up, getting closer and closer compared to what the pricings folks again is doing at the moment. And we want to make it such, and you can check, that our new Clio V will be at minimum at par with 208 if not beyond. So that’s what we want to do, and that’s the instructions which have been given to all our salespeople. Concerning the second question, if I understood properly, which is efficiency, right, of our global labor. I mean we are still fueling – if I talk first about the industry and I will talk about the white collar just after. If I talk about the industry, we are permanently fueling our increased efficiency in industry. More or less we are between 7% and 8% of productivity every year, which is being seen in our P&L, so that’s the permanent progress that we can do. If we look at this global KPI, which is bringing a lot of information, which is the number of cars per employee, you know that in the midterm plan, I gave instruction and objective to get to a 90 as a leverage for the whole company. You have to know, today at the end of H1, we are at close to 80 as the average. We have half a dozen of plants, which are much beyond 100, some are 120. So it means that we know exactly what’s in the road map to make it happen. It’s just a matter of implementation to the critical mass of our plants so far we can be even beyond the 90. So we are totally confident with that. The beauty of the FAST program we have launched is that everybody is concerned. We had in mind at the beginning, of course, the white collar, which are not in the industry. We have seen the industrial people extremely excited about that because they discovered that all their white collar workforce, and not only blue collar, can improve drastically as well their efficiency in changing their method of work, which is ongoing. So the whole company is taking advantage of that. And frankly speaking, the 5% fixed cost reduction that we have committed for, for us is absolutely the floor. It’s a minimum. It’s a minimum because what we can see in terms of getting efficiency, thanks to FAST, is much more in the magnitude of 20%, 30% minimum. So we believe that the impact should be much higher in terms of this global efficiency of workforce. And of course, we have put in place massive training programs. You have to understand that we have more than 7,000 people already working in the company in a trial mode. We are going to train before the end of the year 20,000 people and before the end of next year, 40,000 people are going to be trained, which means activated in making such that they are working in different way compared to the silo-type of organization. So that’s what we’re doing. And of course, we have an incredible change in the HR organization and processes. So far, the upscaling, rescaling, mobility in all directions is anticipating the needs. So far the recycling of all these is extremely efficient. Last question is about FCA. Well, we have no talks any longer with FCA. That’s extremely simple. And that’s a pity because the fundamentals of the quality of the Lille force are still totally vivid. Thank you. José Asumendi: Thank you, Clotilde.

We have our next question from Mr. Philippe Houchois from Jefferies. Sir, please go ahead.

Good morning. A lot of my questions were asked already, but I’m just wondering about the quality of earnings. I mean, this year, the first half, half of your earnings come from, I would say, proper profits and half is new accounting of R&D. You keep guidance. We can see on the cash flow how working capital reverses and how, et cetera. What is going to be the quality of the earnings in the second half? You have Clio coming in. Is Clio enough to really shift the ratio of earnings towards more earnings and less net capitalized R&D? Or that was – my point is we’ve been there before, Renault, where the earnings mostly come from accounting and then eventually if it doesn’t work, the accounting gets written down below the line. And I’m just trying to understand your level of confidence what’s going to drive the earnings in the second half so that we don’t have a repeat of this 50-50 proper profit and accounting?

I think you’re a little harsh because you mentioned the earnings coming from the capitalization of R&D, true. But you have almost an offsetting amount of extra depreciation. So basically, it’s net-net 0. All the rest is real performance from the company. And you see that if you look at the cash flow from operation, which is stable for the last 3.5 years. I mean, we have an EBITDA, cash flow from operations, which is fully stable from last year H1 and even the previous year H1. So I don’t agree with your statement, that’s basic. I think the quality of earning is not that bad versus what you say because, again, it’s a net-net wash between depreciation and capitalization of R&D. And what is going to come in the next year – in the next half is volume because you know that H1 was supposed to be lower than H2 because all the product launches are going to come in the second half and all these product launching are coming with, as we just mentioned, very high pricing power. Those cars are extremely well received by the public and by the people who saw them, the specialized newspaper, et cetera, et cetera. So in my view, in the second half, quality of earnings is going to come from new launches, pricing power, and what Thierry just mentioned, cost efficiency. So that’s what I would answer.

Okay. If I can stay on the harsh side for a moment, can I ask you about – so there’s no growth this year. Working capital is an outflow. It’s usually not the case, but overall it’s a relatively modest outflow. If you look at your balance sheet, the inventory position is up EUR1 billion, the receivable is up EUR300 million and the payables which is usually a strength of a company like Renault are actually down EUR200 million. What’s happening on working capital? That’s usually something that the French carmakers run fairly well.

Well, that’s exactly what I said before. I think on the working capital, we have done tremendous improvement in the last years. If you look at the – you’re right, if you look at the working capital inflow in cash flows from last year, it’s a tremendous amount. And this is continuous improvement. So we’re still continuously looking for better ways of managing the working capital. But it’s true that for H1, it was a little more complicated in view of the harsh decline of the market where we had to adapt to minus 7% in the market, and you don’t do that by clicking fingers. But this is now stabilizing, in our view, and that’s why we’re so confident that for the second part of the year, we’re going to be able to go back to DSOs, DPOs, DIO, as I already mentioned, for this working capital to go back in a working capital, which is in line with our sales. It’s as basic. But again, I mean there has been a harsh decline in Q2 and you know it takes time to adjust. Most of the decline in Russia, for example, in other countries, Europe started to turn a little in Q2 and that’s where we needed time to address the working capital and that has an impact on payable, for sure; that has an impact on inventory, for sure. And in terms of accounts receivable, it’s more a mixed question between region than anything else and not a deterioration per se and we’re working on it. We have a lot more sales, for example, in South Africa, which takes up more in the pipe, let’s put it that way. So we have to adjust and fight compensating actions for these flows, which are taking a little more in terms of either accounts receivable or inventory. But this is very clearly identified. By the way, it was planned. In our internal road map, H1, we are fully in line with our internal road map on H1 turnover. We’re fully in line with our road map in terms of operating margin, and we’re only a couple of hundred million below in terms of free cash flow. So this was planned. So there is no surprise on our side even though we were caught up by the stronger market situation than expected, but we have clear and deployed action plans in order to be back to a positive territory.

Okay, thank you very much.

Thank you sir. We have another question from Mr. Raghav Gupta-Chaudhary from Citigroup. Sir, please go ahead. Raghav Gupta-Chaudhary: Good morning. Thank you for taking my questions. I had a follow-up on the margin gap versus benchmark. When I look at your gross margins, they’re below your French peers despite the fact that you benefit from RCI. How much of an opportunity, I guess, do you have to negotiate harder with suppliers to kind of improve your gross margin? Secondly, you referenced regulatory enrichment as a driver of a cost headwind in the mix bucket. How should you think about that going into next year given the need to sell more EVs? Perhaps it kind of comes into a different bucket in the bridge, but I just would like to hear a little bit more about that. And then, finally, purchasing synergies were a bit disappointing in the first half of 2019. Any comment you can make on how you expect that to evolve? I’m talking particularly with reference to the rate that has been historically. I appreciate it was at similar level or a bit higher than the second half. But anything that you can add on that would be great. Thank you.

I’m going to take maybe the first one on EV and – so if I summarize your three questions to make sure I understand. The first one is how to improve our margin by taking more to suppliers. Is that your question? Raghav Gupta-Chaudhary: Yes. That was in essence. When I look the gap versus some of your peers on the gross margin level, it appears there is a gap. Is there an opportunity for you to perhaps negotiate harder with suppliers, that was the first one.

Okay. I will give that one to Thierry, but before I answer to the other ones. On the EV burden of what you think is going to be a burden on our margin, you know that we’re probably one of the only OEMs where EV is not bleeding. We are very close to breakeven in terms of EV profitability, so it’s a drag but not a major drag. And we strongly believe that we have all the knowledge of the industry as we are one of the leader, if not the leader in many instances, and we have a clear view with our road map on EV so that the development of EV sales should not be such a major drag on our profitability. So that’s the first point. The second point on purchasing, I’m just going to say where we stand today and then I will give to Thierry. On purchasing, if you look at the intrinsic performance in terms of percentage of amount bought to suppliers, our performance is equal to last year. The fact that it is lower in global amount is twofold. First, there’s lower volume over the year. I mean if we decrease the sales by 7%, you can imagine that we also decreased our purchasing by the same amount. So facially in the bridge, you see a lower amount. And the second one, as I mentioned already, is a carryover on the price increase that we consented to a Turkish supplier last year and we did not consent anymore this year. Now on the more global split of profit between suppliers and OEMs, I will give it to Thierry. Thierry Bolloré: Yes. Well, I think it’s a very key question because my view is that we have still a significant margin of maneuver in terms of progress with our suppliers. I will not elaborate or comment the results of our suppliers but when you see their results, you always can question about the share value. But more practically, we know that we have cost gaps between what we pay and what we estimate should be a reasonable margin with our cost calculation of what we order. So the reality is that our system of functioning with our suppliers is being driven to something – to a different paradigm, let’s put it that way, which is – and we are starting doing it with some of our suppliers in a much more partnership way from innovation till aftersales in a way that we really handle the fair share of the value from the beginning of the programs. Whereas today, and historically, you’ve got a given price that we called P0 at the beginning and then productivity commitments in the contracts, which are permanent negotiations, which are, well, a fight, and I can tell you how it works, because I was in the other side quite a number of years and I know we can do it in a much more efficient manner for everybody and especially for the good sake of our performance since the P0, since the P0 and get an integral, which is a much more efficient for us and at the benefit in terms of worldwide volumes for some of our key partners. So, this new paradigm, we are putting that in place, but it’s not going to be short-term results. It’s going to take a couple of financial years to make it happen at the level of the global portfolio of our suppliers. And you can imagine that the portfolio management, which will shrink the number of suppliers we will have with this type of approach. Raghav Gupta-Chaudhary: All clear. Can I ask a quick follow-up on EVs? Can you share with us perhaps a target number that you’re going to sell next year to kind of reach compliance in Europe? Do you have a number in mind or that your budgeting that you can share with us?

It’s a bit early to share 2020 figures for EV, but what I can say to you in H1, we have been increasing EV sales by 40% again, I would say. Last year, it was 40% – around 40%. H1, 40%. So, it’s a bit early to give you a figure for 2020, but I can tell you that we will be increasing strongly again in 2020. Raghav Gupta-Chaudhary: Okay. Thank you very much. Thierry Bolloré: More or less, if my memory is good, in our initial prediction it’s between 150,000 and 200,000 EV that we should have in our visibility of 2020, but we will go much more in details early next year with you about that.

I guess we have time for last question.

Sir, your micro is still open if you wish to talk. Raghav Gupta-Chaudhary: No, I’m done. Thank you.

Okay. We have another question from Mr. George Galliers from Goldman Sachs. Sir, please go ahead.

Thank you. Just following up on the comments around purchasing. If we look at purchasing in the bridge, it has gone from a fairly consistent EUR350 million to around EUR250 million in the second half of last year and the first half of this year. I understand the point about lower volumes having an impact and clearly that accounts for sort of 7% to 10%. But if we look at the overall decline, it’s actually closer to around 25% from around EUR350 million run rate to EUR250 million run rate. Is the rest of that largely attributable to the relief that you’ve given to the Turkish suppliers? And if that’s the case, does that continue in the second half of this year? Or is it more a case that the purchasing opportunities are just diminishing given the improvements seen to date?

Well, there’s not much I can say more than what I said before. In terms of intrinsic performance, we’re stable year-over-year. So, there is no decline in the performance of the purchasing. There might be a few other minor one-offs that I didn’t detail, but most of the impact is either volume related as we mentioned or linked to Turkish supplier. This question of Turkish supplier will not repeat in the second half, because the carryover is over, I would say. So, there should be no negative impact of Turkish supplier in the second half.

Okay. Thank you. And then just secondly, sort of from a strategic perspective, as I understand it, Renault’s management team did see merit in the proposed merger made by Fiat earlier this year. Are there any circumstances under which Renault might get back to Fiat with a counteroffer or proposal given that strategically this would appear to make sense? Or from your perspective, is this now confined to the past? Thierry Bolloré: If I understood properly your question, I would say and I will repeat that today, we don’t talk to FCA, first. Second, we are really making sure that we are going to support, help make everything possible to make it such that Nissan gets back on track, because for us, this is our top priority. The progress of the Alliance is a matter of necessary condition of progress, although it’s fully equipped, ready for in terms of these necessary conditions to progresses. It’s a reality and quite visible even more since yesterday that it’s not yet the case of Nissan for obvious reasons. That’s the reason why we want to help them so for everybody in the Alliance, Renault and Nissan, and for the good sake of the Alliance. All necessary conditions are back on track and ready for progresses, because it’s an industrial story. It’s between companies. And the companies have to be in the same shape to make it such that everything is moving forward at maximum speed. Today, we are benefiting from all what we have done in the past to make it happen and 100% of everything we are putting on the market today is really shared items from the Alliance platform, modules, developed technologies, everything, and it’s going to be the same for Nissan. And if you listen carefully to what Nissan said yesterday, they said that they need the Alliance. The Alliance is not the reason why they are in that situation today, and they need the Alliance. That’s exactly what they said in a very strong manner and it’s right. So that’s why today, we are really focusing on that and that’s the reason why our attractiveness, not only Renault, but of course, the global Alliance will be more and more vivid and then we will see, which are the next opportunities.

Okay. Thank you, Thierry. I think we are at the end of the call. So, if you have further questions, the IR team will be around all today to answer these questions. Thank you very much for being on the call. Have a nice day. Goodbye.