Ladies and gentlemen, welcome to the First Half 2020 Financial Results Conference of Groupe Renault. I now hand over to Mr. Thierry Huon. Sir, please go ahead.

Yes. Good morning, everyone, and welcome to Renault first half results conference, which is broadcast live and in replay versions on our website. The presentation file, 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 and 15 minutes. The presentation will start with a message of our new CEO, Luca de Meo; then Clotilde Delbos, our Deputy CEO, will share with you our takeaways from H1, and we'll take you through the usual presentation about H1 performance. Denis Le Vot, EVP, Head of Regions, Sales and Marketing; and Thierry Piéton, Deputy CFO and Head of Control, will be there for answering your questions during the Q&A session. I hand over to Luca.

So good morning, good morning everybody. Welcome to Groupe Renault. We are pleased to be here with you today, although, frankly, we would be happier if we could communicate better news. In a moment, as Thierry said, Clotilde will share our financial results. But first, a few words of introduction and, as a newcomer, I will also share my first impression to, hopefully, help put numbers into perspective. We are in a complex, difficult situation, we all are, but Renault took the COVID hit as we were already, I would say, feverish. So for sure, it is even harder for us. I am personally already pretty deep in the diagnostic of what went wrong, what is wrong and what we need to do to fix it. I quickly reviewed all major projects of the company, and I met personally, via video conference, all the most relevant people to assess the situation. I visited several plants, dealers, design and engineering centers. And look, the good news is that Renault is still a great company with a lot of substance, projects and also a lot of competence. People are frustrated, but I think that's what I feel very eager to change direction. The sense of urgency is also definitely there, I can confirm you, and I think that today's results would be a disturbing wake-up call for them, too, and I think also strong stimulus to react. I think we are currently touching from what I see the bottom of a negative curve that started several years ago and probably even earlier. So my message is that already now we know what we have to do. We have shared the concept and the ideas within the Executive Committee and agreed that this would be the way to move forward. Conceptually, it is very simple to summarize. We will move the whole system from volume to value. We will move the whole system from volume to value. So right now, we are focusing on how to make it happen. A few days after my arrival on July 6, we organized a top team of about 40 experts from all functions, all regions, all levels of the group, and this squad is physically located on the highest floor of our headquarter here in Boulogne and is working in a completely unconventional manner on the briefing that we gave them. They will spend the coming months on detailing the plan that we will present to you by at last – by January 2021. I can assure you that the plan will not be just a wish list, but rather some of actions that we will have already decided and organized by then. A lot will happen in this house in the next 6 months. Now it would be too early for me to give you all details just after 4 weeks in the job, but I'll take today's opportunity to give you some hints. The plan will be looking at 3 phases within a horizon of 6, 7 years. That goes from simply surviving the storm to putting this team in a place where we have never been. I consider the 2o22 plan project that was presented in May, especially fixed cost reduction part, as a crucial step to reestablish sound foundations for this company. We are going for it at full speed, and we already see that we are on track. But we have already agreed with the team that all the 4 dimensions of the problem will have to be attacked at the same time: fixed cost, variable cost, cash and revenue management. We are clear that the effort to make this company leaner and more focused should also feed the development of our future business potential. This is very important to motivate the organization and the stakeholders to go for it without hesitation, I would say. So said in another way, what we are also doing is making clear to everybody that better times are awaiting at the end of this twisty road because when – what is behind the corner, you are more confident and are willing to enter the curve much faster. I have seen a lot of potential to create value, and we are already taking a clear decision to catch it, in product, technology, market and brands. We have, in a very short time, substantially reworked the product plan to put the money on more profitable and growing segments. On the technology side, I actually found here some pearls. E-TECH is probably the best hybrid in the market when it comes to real usage for European drivers. The next, C segment, fully electric platform we share within the alliance has nothing to envy to the ones I've seen in my previous life, technically and cost-wise. We are also reshuffling our market priorities based on the simple criteria of profit contribution and not volume potential. And I can tell you it will change the geographical focus for Renault and unleash potential. On the brand side, which you know are pretty much my specialty, I have also seen 3 or 4 open highways in front of us. Renault brand, of course, needs to come back to where it deserves and where it belongs, in the heart of the market. Dacia, seen from the inside, looks like even more like a miracle. Nobody in the industry that I know can make that much money at that level of the market. It is time for Dacia to flourish as a full-fledged brand. As for Lada, it is an uncontested leader in its market. Alpine, I think, is and might remain a niche brand in the future, but it could be leveraged much better. It is the living example of how far this company can go when it comes to create emotions, and emotions, in my world, means pricing power. What I really like is – in Renault is the creativity that this organization still has. This is, I think, perfect in these times when business discontinuity challenges establish organization. What I didn't like is how we play the game. The new rule is simple: maximizing the opportunities to kick the ball and strike. We are planning on a fundamental reorganization of the team on the playground. It will be – it will put actually players into a position in which they are more accountable, leaner, faster and more oriented to the markets and to the score. Look, dear friends, I have ridden too many kilometers in this industry, and I have seen too many places and situations like this one, not to be able to make the difference between naive optimism and real potential. I think we are here closer to the second scenario. It will be tough. It will imply taking some high steps, strong decision. We will bring you with us in this journey before and beyond the presentation of the plan in January next year. What I can say for the time being and before leaving the stage to Clotilde is that you can count on Groupe Renault's management team's full determination to turn our share into one of the good and unexpected positive surprise in the portfolio of our investors. Clotilde, please.

Thank you, Luca, and good morning, everyone. As you have seen from our publication, the group's financial results for the first half of 2020 have been severely impacted by the unprecedented situation the world has experienced. We estimate that the COVID negative impact on our revenues is about €8 billion for the first half. The net impact on our operating margin for the same period is estimated at nearly €1.8 billion, after taking into account the benefit of the short time work schemes put in place in many countries and often supported by the local government. Our net result has been massively affected by the record losses booked by Nissan in the last two quarters. But Renault was facing some difficulties even before the COVID. Our main markets were already declining in almost all regions. Our costs went too high. Currency and raw material remained headwinds. Then we had lockdowns in most of the European countries, which stopped the business overnight. In spite of this context, we have done our best to continue our pricing discipline and to keep our product cadence. We have also relied on the resilience of RCI business model. After this H1, I'm convinced that we will now be on a more positive dynamic, provided the pandemic does not hit us with a second wave in Europe. But as just said by Luca, we're not naive, and we know that a recovery takes time. We can count on different levers that should put us back in the right track to show a gradual improvement started in the second half. First, we have started to get the fruits of our cost-cutting program, and this should continue going into H2. We told you that we should see about 30% of €2 billion saving project this year, and I confirm that it will be the case. Our electrified lineup, EV and hybrid, is unique and recognized as best-in-class. It is decisive to deal with the CAFE regulation. Third, RCI will continue to be a solid pillar of our business model. Last but not least, the €5 billion additional credit line signed with our banks and benefiting from the French state guarantee give us enough financial resources to get through these unpredictable times, leaving our automotive liquidity reserves at €16.8 billion at the end of June. Of course, I cannot end this introduction without welcoming the arrival of our new CEO, Luca de Meo, who is bring us – bringing in his undisputable experience in the car industry. All this makes me very confident about the recovery of our group. Let's look now in detail to these numbers and share the main explanation. Let me start with a brief summary of our commercial figures as released on July 20. The worldwide market decreased 28.3%, with all regions showing a negative development and Europe being the worst. In this context, Groupe Renault saw its volume falling by almost 35% with 1.26 million vehicles sold. In Europe, our registration declined by 42% in a market down 39%. Despite the success of our new models, namely Clio, Captur and ZOE, we have been penalized by our country mix, as our higher market share are in the countries where the lockdown has been the stricter. In addition, Dacia suffered from the – more than the Renault brand owing to its high presence in the retail channel, which has been the most impacted. One positive note has been the strong growth of ZOE with an increase in sale of nearly 50%. Our sales outside Europe followed the worldwide market's sharp decline and fell 26.4%. In Russia, the group outperformed the market with sales down 19.5% in a market down 23%, thanks to the success of ARKANA. Lada has been following the market trend with a decline of 24%. In Latin America, the situation has deteriorated further. In Argentina, despite a very low basis, the market fell again by 39% and our sale by 46%. In Brazil, which has – which was the bright spot of the region at the beginning of the year, the trend is now as bad as in Argentina, with a market down 39% at the end of June. In this context, our sales were up 47%, as we have decided to favor profitability over volume. In India, we benefited from the continuing success of Triber, and in a market failing – falling by 49%, our sales were down 29%. The only significant market, where demand was up, has been South Korea, up 7%. And thanks to the strong success of the new concept XM3, our sales were up 51%. To close this commercial part on a more positive tone, I can tell you that the business in June has been very encouraging, at least in Europe, and our order book is well filled. I will now turn to the financial review. On Slide 9, we show the full P&L of the group. Starting on the top line, group revenues reached €18.4 billion, a decrease of 34.3% over the last year. At constant scope and exchange rate, the decline would have been 32.9%. The next line shows negative operating margin at minus 6.5%. Due to the Nissan's losses, especially under IFRS, net income came to minus €7.4 billion, down €8.4 billion compared to the first half of 2019. On the next slide, we show the revenue contribution by activity. I remind you that we have created a new line of reporting for our mobility business at the beginning of the year, named Mobility Services. Group revenue for the first half were down 34.3%. Automotive, excluding AVTOVAZ, contributed for almost €15.7 billion, meaning a decrease of 37%. This implied a 49% fall in Q2 after minus 21% in Q1. AVTOVAZ contributed for €1.1 billion, a decrease of 30%. Revenues from our captive sales financing company, RCI Banque, were down 6% at €1.6 billion. While not easy to estimate, our best assumption is that the pandemic impact on our revenues has been close to €8 billion for the first half, that is to say, 80% of the auto revenue fall. I will now review the breakdown of revenues for the automotive activity, excluding AVTOVAZ. The first item, volume, is the most impacted by the confinement, as shown by the fall of registration. The impact is negative by almost 30 points, hence, a bit less than the registration. The gap between registration and volume comes primarily from the CKD business and inventory changes as we have reduced the stock of the independent dealers. The regional and model mix impact are slightly positive and account for 0.6 point. Despite this unprecedented situation, the price effect remains positive by two points as we have continued to apply a pricing policy as disciplined as possible in such an environment. Sales to partners impacted negatively for 7.3 points in the first half. On top of the already declining businesses, demand for powertrain, LCVs and CKD parts has almost disappeared for several weeks. The next item, foreign exchange, is a negative 1.5 points. This reflects the weakness of the Argentinian peso, Brazilian real and, to a lesser extent, the Turkish lira. The last item named Other accounted negatively for 0.8 point. It represents the other activities outside the scope of new car activities. This negative impact results from a constructed contribution from the different item in this bucket. Spare parts, used cars and dealers were negative while buyback restatement was positive due to lower volume, especially with short-term rental companies. I would stress that spare part activity, which is usually a very resilient business, has been almost stopped during the confinement. I will now turn from automotive revenues to the group operating margin by operating sector. The automotive segment, excluding AVTOVAZ, posted a negative operating margin for €1.648 billion. AVTOVAZ, in the context of supportive measures for the auto industry from the Russian state, managed to limit the negative impact of the volume decrease. It posted a negative €2 million contribution versus a positive €82 million in H1 2019. As already mentioned, we added a segment for the Mobility Services, which used to be mostly in RCI's contribution. This nascent activity reported a €22 million operating loss in the period. Our financing activity delivered a €469 million contribution to the group margin versus €591 million last year. I will comment more in detail later in the presentation. The next slide, number 13, provides more detail on the group operating margin variance. The first half operating margin is negative €1.203 billion, a decrease of €2.857 billion compared to last year. As said, we estimate that about €1.8 billion of the decrease came from the pandemic. The rest of the variance is coming from adverse ForEx and raw materials, higher depreciation and weaker intrinsic performance around 1/3 each. Let's see this in more details. Let me start with the monozukuri, which is a negative contribution of €40 million. This unusual negative performance comes from purchasing savings totaling €122 million. This relatively low performance is the consequence of the collapse in volume – in the volume of business and adverse environment for improving the purchasing conditions. Warranty cost change is a positive of €50 million, thanks to lower volume and defaults. R&D impacts negatively for €133 million despite a reduction in spending of €493 million, but the strong decrease in the capitalization ratio of 5.6 points and the increase in the depreciation explain this move. Manufacturing and logistics costs increased by €59 million. Higher depreciation, disruption in the manufacturing and additional costs related to COVID-19 are at the origin of this negative performance. I would like to stress that before the COVID-19 impact and before the increase in the capitalization ratio and depreciation, the monozukuri would have been slightly above €300 million. Let's get back to the walk down on Page 15. G&A brings €133 million of savings, thanks to the effort put on these expenses, but it can also be explained by the confinement. Raw material is a headwind and reflects higher prices from – for some materials, especially precious metal, but also lower scrapping activity. Mix price enrichment is negative at minus €203 million. This results mostly from our action to improve the attractiveness of our recent product with higher content, but also from some residual regulatory costs and a less favorable mix. Volume and partners account for more than 2/3 of the decline, with an impact of €2.1 billion. This is mostly the direct effect of the lockdown in the activity, but also the consequence of the termination of Rogue production for Nissan. RCI Banque, combined with the other businesses outside of the new car business, yields a negative contribution of €294 million. Beyond the lower RCI's contribution, this item is largely penalized by COVID-19 impact, since distribution of cars and spare parts were almost stopped for several weeks. Currency impact is negative €201 million, coming mainly from the fall of the Argentinian peso and the Turkish lira. AVTOVAZ contribution declined by €84 million as a consequence of the decline in its activity. RCI generated €7.7 billion of new financing in the first half versus €10.9 billion in H1 2019. Average performing assets continued to grow with an increase of 3% and reached €48.1 billion. Net banking income stood at 4.22%, down 13 basis points. This decrease came partly from the support offered to the customers during the health crisis such as deferring maturities on more than 500,000 financing contracts. Of course, the cost of risk increased with the crisis. It stood at 99 basis points of the average performing assets versus 40 basis points a year ago. Part of this increase can be explained by the statistical methodology used for the calculation of the provisioning and the poor reposition rate in the context of the COVID-19. Operating costs were contained partly thanks to the short time scheme put in place with the government support. The expense ratio stood at 1.29% versus 1.36% of average performing assets. As a result, RCI contribution to group operating profit amounted to €469 million versus €591 million last year. Now that we have covered the operating margin variance, I will continue down the P&L with the other operating income and expenses items on Slide 17. Other operating income and expenses amounted to minus €804 million versus minus €133 million a year ago. Several items explain the strong increase. Due to the uncertain environment, we reviewed some programs volume assumptions, which led us to book nearly €450 million of impairment. The restructuring costs and provision increased from €117 million to €166 million, coming mostly from early retirement packages. It is worth noting that this amount does not include any significant provisioning for the 2o22 plan. The remainder is mainly due to the termination of our JV for ICE passenger cars in China. Continuing down the P&L, the next item is net financial income and expenses. The net charge increased from €184 million to €214 million. Despite lower cost of debt in many regions, we were penalized by the absence of Daimler's dividend, which amounted to 40 – €54 million last year. On the next slide, you see the impact of the associated companies in Renault's P&L. I'm sure you have already seen Nissan's number. Nissan contribution for the second calendar quarter in Renault's accounts came to minus €1.244 billion, taking the first half impact to minus €4.817 billion. I would like to stress that about €4.3 billion of this loss are coming from impairment and restructuring charges, of which nearly €2 billion due to IFRS retreatments. Contribution from other associates turned negative at minus €75 million compared to minus €14 million, reflecting notably the negative results of our Chinese JVs. I will turn back to the P&L where the net tax charge for the first half came to €273 million versus €254 million. This amount includes a charge of €268 million coming from AVTOVAZ deferred tax reassessment due to lower midterm business assumption. Bottom line net profit after tax came in at minus €7.4 billion versus €1 billion in the first half of 2019. Now that I have completed the P&L, I will turn to Slide 21 on the evolution of the net automotive debt. Cash flow from operation, excluding AVTOVAZ and restructuring expenses, amounted to €22 million versus €2.274 billion a year ago, reflecting the decrease in the operating performance. Changes in the working capital requirement had a negative impact of €3.829 billion versus a negative €131 million a year ago. Net tangible and intangible investment came to €2.544 billion in the first half, down €367 million. CapEx remains in line with last year's level, as it is not easy to curb this kind of spending quickly, while capitalized R&D decreased to €658 million from €984 million. And leased vehicle represented an investment of €464 million. Restructuring costs led to a cash out of €135 million, and free cash flow from AVTOVAZ accounting positively €110 million. In total, our net financial position decreased €6.732 billion compared to the end of last year, after taking into account neutral dividend flow and financial investment for €427 million, mostly for our Chinese JVs. As a result, the group automotive net cash position turned negative at nearly €5 billion versus €1.7 billion positive cash at the end of 2019. However, auto's liquidity reserves improved from last publication and stood at €16.8 billion at the end of June versus €10.3 billion at the end of March. This amount includes various short-term loans and the €5 billion credit facilities benefiting from the French State guarantee. We will certainly draw down part of this facility, which expires at the end of the year, to secure our financing position while reducing our short-term debt in an environment which remains uncertain. Slide 23 shows the inventory situation in Renault's balance sheet and for the independent dealer network. As you can see on the slide, inventories decreased by 13% versus June 2019. This decrease is the same for the group and the independent dealers. And in terms of backward coverage, this leads to 107 days, but this is meaningless, as we had no business in some countries for 2 months in Q2. We believe it makes more sense to look at the forward coverage. Thanks to the good order book, it has improved by 7 days versus H1 2019. Before sharing with you some element on H2, let me give you an update on our 2o22 project plan. I told you when presenting this plan that we should have at least 30% of the €2 billion saving materializing this year. As you can see on this slide, we achieved €433 million in H1, with engineering contributing more than half of this amount as expected. This amount is, obviously, prior to any benefits related to COVID. It's real saving. So I confirm that we are well on track to deliver on our target for the year. To close this presentation, let's face, with realism, the risk and opportunity for H2. The pace of the recovery is unpredictable, given all the unknown on the economy. On the content cost, while we are working to improve them, the current environment is not helpful and limits our visibility on the speed at which we will be able to achieve our reduction target. And of course, no one can predict the pandemic evolution throughout the world. On the opportunities, we have the E-TECH technology, which is a clear competitive advantage and has been very well received by the press. It will help to increase the attractiveness of our vehicles and to achieve the CAFE target. We will continue to manage our pricing discipline to increase the revenue per unit sold. On top of our high order book, we expect also some positive impact from incentives currently being implementing in some market, especially in Europe. However, given the large uncertainties that are still looming around, we estimate that we are not in a position to give you a reliable guidance for the year. This completes my review for the first half of 2020. Now with Denis, Thierry and myself, we're ready to answer any of your questions. Thank you.

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

Thank you very much. It's Thomas Besson from Kepler Cheuvreux. I was wondering if it's possible to ask any question to Luca, as his contribution was limited to an introduction, first.

Well, I think, Thomas, you can answer Luca – ask question to Luca. We'll see what he answers.

I'm here. Don't worry.

Okay. I'll give it a try then. Sorry for that, Luca. It's a bit early to ask you questions, but I still have to ask one. First, welcome. And then effectively, the question is, how much are you willing to push and change Renault? And how far can you go? I mean we've seen 2 designers hired in the last couple of weeks. You really have a great designer at Renault. Is it a signal that many products could disappear or many products could emerge and that you could have, let's say, a different design direction between brands a lot more accentuated than in the past? So that would be a relatively general question that maybe you can already answer.

No, I think I can answer very easily. The answer is yes. So I think we have agreed with Laurens, who I think is a great designer and did a great job, that we should reinforce, let's say, the design team to create a team of superstars on that field. You know the people buy cars also because of design. And actually, it's one of the biggest reasons to buy. So we want to be very, very strong on that. It gives also us a chance to differentiate between the brands. I come from a brand culture, and so I have seen that when you start really working on the potential of the brands you have in your portfolio, it works. So this is definitely the direction we're going to go. So – yes, and let me say that – I'm a product guy, so I think that the first thing I had to attack was the product portfolio thing. We did it with the team together with Clotilde, with Denis, with everybody, with Gilles. And in the last 4 weeks, I think we took as many decisions on product that were taken in the last 2 years, to be honest. So – and it's going in the right direction. It's going in the direction of betting on segments and markets where there is money, which was, for me, not the case when I entered the first time in the room on the designs – in the design, where all the future products were displayed. But we're going very, very fast. People are excited. And the example of Vidal coming and Alejandro, it's, of course, good to see people so talented that are attracted by the project. But I have also to tell you that there are a lot of great people here in Renault, and we just have to put them in the right position on the field, give them responsibility, clear targets. And I have felt really in the last 4 weeks that people are really willing to take the ball and kick. So that makes me, in a way, optimistic in such a complicated, challenging situation. I've seen stuff like this, as you know, in my career. I know that you can get out relatively quickly if you make the right decision.

Great. On the topic of trough and volume versus value shift, I think Clotilde and the team before your arrival have been trying to shift already that. Can you, Clotilde, help us reconciling this approach with the bigger push that Renault has done in June, which is more consistent with, let's say, the previous Renault of having a strong month at the end of each semester. So which one should we think will be privileged effectively from here after what has been done in June?

I will ask Denis to take that, and I will comment after him.

Yes. Coming back on the word push, I would not use that word actually because when we look at what happened in June, the markets, especially in Europe, you saw were kind of up, right? The market in France was actually bigger than what we had last year. And Renault was pretty much present with consistent offer, electric offer, ICE offer on a market that was boosted by the government incentives. So what happened actually in the month of June is that the orders that we took were up 10%, the portfolio grew and, of course, the market share in France was very big at more than 31% because we hit exactly the demand. I would like also to point out the fact that as a result of this, the inventory decreased, which, of course, is the opposite of what we could call push. And at the same time, if you take the H1, because this is just kind of the last 10 weeks we're talking about, but if we take the H1 in Western Europe, the weight of the pure retail on the market has grown in Western Europe by 1.3 points, approximately, and for Renault, it has grown by 3 points. So it's bigger actually. Also, I would like to mention that in parallel to this, we have been – given up that was not in Europe, mostly in Brazil, bad channels because we gave up the leasing, and we gave up some short-term rentals in most of the zones. And last but not least, of course, is the effort on pricing. As you could see in the presentation, €496 million, almost €500 million in net pricing, which accounts for more than 2 points on our turnover in only 6 months. So I would say that we were present in Western Europe when the incentive came with the right quantity of car, number one, with a perfect offer. And I would just mention the fact that ZOE, for instance, in those months, has taken more than 10,000 orders and 10,000 sales on the Western territory.

And I can reinforce what Denis said. There has been absolutely no push at the end of June. I can assure you that with my several hats as CFO and Deputy CEO, we made sure there was none. And we can also prove that because when you see that we are not at full capacity – well, not even at the level of where we were last year in terms of production, we’re even 80% below where we were last year, that means if we wanted to do a push, we would have pushed also production. So no, clearly, Thomas, I can assure you there has been no push, not at all, and there will be none. We're really shifting, as I said, in the first half. Luca said the same thing. We're fully aligned. The whole company is aligned. We need to put this business sustainable and do the right thing and look for value and not for volume.

So Thomas, maybe – this is Luca. I give you a clear indication. I saw this kind of swing every semester looking at the data from the last years that was reminding my old times in another company that I was specialized in push. So I give clear indication that we need to kind of stop with the swing. And you can track us in the next months on a very simple indicator, which is you look at the portfolio above two months and a stock below two months. So this, for you, would be a clear indicator of whether we are pushing or not. If we kind of find that balance as quick as possible, I think that it will mean that we are doing the right things. And we were, at the same time last year, at 1.4 months of portfolio, we are at 1.9. So the thing is quickly going in the right direction. So I give you some kind of hint or KPIs to track us on that one.

Thank you very much. I confess, unfortunately, we don't have this data, but I'd love to get them if you want to give us the information. I have one last question, if I may, for Clotilde. We still had a solid contribution from RCI Banque in H1. Looking at the deterioration of Nissan's financial situation and Renault's financial situation, there is a different risk that Renault's credit rating falls further. Can you talk about your view on the chance of keeping these assets under control or having to put it eventually under a joint venture as other companies had to do in the past? And where you are on that matter, please?

Thank you, Thomas, for the question. As you know, the – you mentioned it, RCI has a solid contribution and is a solid company, and we don't see any risk – intrinsic risk of – to RCI. The question, you're right, is the spillover effect that could – that if there would be an additional downgrade on Renault, that it could have on RCI. But we're building our midterm plan. As Luca mentioned, it should be available by the end – by the beginning – their beginning of next year. And we are – we discussed regularly with rating agency, and they look at – they have mostly forward-looking. And I'm confident that if we show them a convincing plan based on facts, action already deployed and just waiting to give results because we know that in the automotive industry, you need at least two to three years to make a good step back; if we're able to show them a convincing plan, they will be forward-looking and that would have no impact on RCI. So that's the way we're working on it.

Great. Thank you very much.

The next question comes from José Asumendi from JPMorgan. Sir, please go ahead. José Asumendi: Thank you very much. Good morning, Clotilde. Most welcome, Luca. It's José at JPMorgan. Two topics, please, for Luca. Luca, when you think about regions of priority to do business, what is your impression – or your first impressions on the whole emerging market presence of Renault? And is this something you would like to grow or to scale back? Just your initial thoughts on this topic? And second, there have been a lot of discussions already on the future of plants in France and workforce, et cetera. So maybe could you just share some of the thoughts around when should we expect some additional visibility on this topic? And when should we expect additional announcements? Thank you.

[Foreign Language] Look, I... José Asumendi: [Foreign Language]

[Foreign Language] You have two questions. On the globalization process of Renault, I've looked at that pretty in detail. It's clear that the company, since I left Groupe worldwide in a very pretty impressive way or so with all, let's say, story of the Alliance. My feeling is that we have, in some markets, let's think about Russia, think about Brazil, really built the presence and, yes, kind of awareness of the brand that is strong in the presence. We are in a very volatile moment. So my, not only feeling, but the indication and the story we are kind of building is trying to make sure that those markets don't represent a negative surprise in the next two, three years, whilst we are refocusing on Europe where we need to reconquer, let's say, profit share of wallet, okay, if I can say it like this. So we are really discussing with the markets to make sure that their plan for the next two, three years is solid, that we don't take unnecessary risk, that we don't put the money that we don't have on products and projects that – with a suspicious level of profitability. This is the story. Everybody around Renault world needs to understand that the only KPI that counts is value, okay? So if they – if we see that this thing produces value, it's okay. If it doesn't produce value, we don't need it. Very simple. On the French situation, it's a pretty complex situation, but we have a plan. There is a discussion going on with the different stakeholders. So you can expect us be, let's say, more vocal about that at the time of the plan, where we will tell you exactly what we are trying to do, but always with the same logic, trying to create value out of it and, of course, respect all, let's say, stakeholders. I think there is a possibility to come up with something that makes a sense. José Asumendi: Thank you very much.

Thank you.

The next question comes from George Galliers from Goldman Sachs. Sir, please go ahead.

Great, thank you. The first question, if I may, to Luca. Luca, just with respect to Renault's product portfolio and the average selling price that Renault is able to achieve in B segment and C segment vehicles, do you – is the average selling price, in general, in your view, much lower than that as competitors such as Fiat and also PSA? And do you see any issue with respect to the revenue realization that Renault achieves on its products, curtailing ability to be profitable going forward? Or do you think Renault can achieve the same kind of revenue realization on its B segment and C segment vehicles as its key competitors?

Look, I think that – I mean it's – you have to look at different dimensions. The – when you look at simply the price positioning of the car, the lease price positioning, I think we're pretty much in line. Sometimes we are even higher. The problem I see is that in some cases, we have been too generous on incentives compared to our competitors, maybe pushing cars in some channels where we're trying to quickly get out, and that will be the exercise. But the fundamental issue, especially, for example, when you look in comparison with PSA that is doing great work, is the mix of product. And so one of the things that, obviously, I have to push is Renault, let's say, on higher segment – and I'm not talking about big cars or premium cars, I'm talking just finding back our position in the hearts of the European market. And on the center of gravity of the European market, it is more or less right now on the C, C-plus segment. That's what we have to do. We have some products there. They are actually pretty good products. Probably they are undervalued in the market and in the house. So there is some work that can be done from now to the time when the new cars are coming. But you can expect from us pushing for – lifting up the center of gravity because we can't do 70% of our volumes on the small car business. This thing is, let's say, pretty dangerous. And I think Renault can go up. I mean when I left Renault 23 years ago, was at that time the launch of the family of Megane, and there was a huge success, and that changed the company, I think. So we have to do the same, I believe. So I don't know if it answers all your questions, but basically, this is the situation. I think there is potential to get back revenue. We are also looking at the construction of the range, whether the range is kind of favoring, let's say, the mix. We are going really into the details of the things to find any penny it's available because that's what we want. That's our number one objective.

Thank you. And then the second question is, you're obviously in the process of launching your E-TECH product. Firstly, can you just confirm to us that from a cost perspective, the E-TECH product, in your view, is competitive versus 48 volt and plug-in hybrid systems being used by your competitors? And then secondly, how do you plan to communicate to the consumer the technical advantages and the unique proprietary nature of E-TECH? Do you have a strategy to convey that message to the average person on the street? Thank you.

Yes. Look, I think – I was actually pretty impressed by what E-TECH is from a technical point of view, from a cost point of view and, especially, from the benefit that this technology can give to the consumer. So I – as I said in my short introduction, I think for Europe, it's probably the best hybrid. For the way people use cars in Europe, it's probably the best technology available in the market, and I think we shouldn't be, let's say, shy as we have been maybe on – in the last years because there are a lot of people doubting about, whatever, the performance of – the engineering performance of our house, the ability – I think that this is really a piece of art, okay? You can simply – I can simply tell you that you can drive with the hybrid – so this is not the plug-in – you can drive basically 80% of the time in the city on electric. So it's really designed for the way European would use a hybrid. We have mixes already in the order thing, which are very, very important, okay, very, very important. So it's definitely, let's say, an alternative to the diesel. So we'd probably be able to compensate very, very quickly. And I would have loved to have such kind of technology in my different houses, in my different – previous lives. So we have a plan to make of E-TECH one of the key, let's say, pillars of our strategy. We are organizing in Aptean event. I think probably you would also be involved in that event. And you can be able to check by – personally what it means. I mean I did a trial. I mean I tried a car. Of course, I drove the car, et cetera, and we had a small exercise and a small challenge. With the hybrid, I did 2.4 liters per 100 kilometers. I mean we homologate that for around 4. I did 2.4 liters, 100 kilometers. Of course, I went with the feat very, very light, but that was, let's say, the challenge. But this tells you how good this technology is. In terms of cost, clearly, it's more expensive than a normal engine, but technically, it's pretty simple. So they actually combine the electric motor in the engine without a gearbox. So I think with the time and with the volume, it will go down in cost, and it will become a very competitive thing. You also have to understand that the – one of the intelligent thing about the story is that the plug-in hybrid is basically the same technology just with a bigger battery. So it's a modular concept. So the thing doesn't change fundamentally. These are not two different things. It's just the same thing with a bigger battery. So it's pretty smart, I have to say.

Great. And then if I could just squeeze in one more. Just with respect to how the profitability evolved during the quarter, is it fair to assume that as you exited June, the automotive margin would have been breakeven or better? Or at the kind of June production run rate, would you still have been loss-making? Thank you.

Well, I guess it's – it would not be fair to look at the operating margin on just one given month, which is still particular because you only have really France and a bit of Europe where we started. So I don't think it would be fair to just look at the performance on one given month. We have to see when the markets stabilize a little more.

Great. Thank you for taking my questions.

Sorry. I would ask the next participant to limit their questions to two, to give opportunity to many of you to ask questions. Thank you.

The next question comes from Philippe Houchois from Jefferies. Sir, please go ahead.

Yes, good morning. Thank you. And I have two questions, please. The first one, maybe for Clotilde, is more looking at what could be – I mean from some of your peers, we start to paint a picture where it could be kind of a V-shape recovery in the working capital outflow that we saw in Q – H1 and the balance sheet that might look a bit more like the year-end balance sheet, but it's something we reached the end of this year. And I was just wondering what you could tell us in terms of directional, keeping in mind it seems like your inventory reduction has been a bit less marked than what we saw at some of your competitors. That's my first question for you, Clotilde. And Luca, welcome back. The question I have is, you have worked and successfully so in companies that have a captive finance organizations and others that do not. And I'm just wondering if you have a view of how critical it is for Renault to control RCI or whether you could benefit from having better financial flexibility if Renault did not have control of RCI? Thank you.

Okay, Philippe. Just on the working capital, the working capital is dependent on the speed at which the market recovers. And as – we don't give guidance is because we think Q3 is going to be good, but we have no clue about Q4. And that's the reason why we did not want to give guidance. Obviously, if the market of Q4 would be roughly at the same level as last year, then you would be in some kind of a V shape. But I don't think that it is the assumption of most of our competitors nor from the ACAE that the market will be back to normal on Q4. I don't think so. So if it were to be the case, yes, then you would have a V-shape recovery on working capital. But this is not the assumption which I see around us when I hear our competitors and the industry organization talk about the market recovery. And on RCI, I can give you my view, but...

But this is not fair. Sorry. No, I'm just wondering is it not fair to assume that you may have – it seems to me that you may have less roadway to increase production because you are entering H2 with a slightly higher level of inventory to some of your peers. Is that something you're concerned about? Yes, but we have a huge portfolio. I think we have a portfolio which is 20% higher than what it was last year, and we have less production because we're still at 80%. So you have to take all that into account. On RCI, I'm fully convinced that it's a huge advantage to have a captive, but you asked the question to Luca, so I will turn the mic to Luca.

I mean I think Clotilde is more qualified to answer on the RCI than me, but I spent some time with the team. I think it's a great team, and I really felt that RCI is one of the best captive finance I've seen in my career. I look at the level of service and the level of penetration they have in some of the business. I think that having some, let's say, in bracket, control of the captive finance gives you a lot of advantages because you are not in a simple transactional commercial relation with them, but you look at them as part of the strategy. And there are so many opportunities to actually use that kind of competence and the assets that they have to develop the business that I think now an OEM needs to develop for the future. So we are thinking using RCI as really the platform to develop all, for example, new mobility things, and that you – I think you can do better when you have someone that is in the house that understands everything, what you're doing, understands the strategies aligned. So you might expect stronger collaboration and complicity between Renault and between the brands and RCI because we have interesting idea for the future, and they are an asset for us.

Okay. Thank you very much.

The next question comes from Horst Schneider from Bank of America. Sir, please go ahead.

And also, welcome to Luca. I've got two more – just one more short-term question that is on EBIT bridge for H2. So you are saying in the outlook that you are planning cost savings of €600 million for the full year. So what does that imply for H2? And also another bridge element is on currencies. I'm seeing here in July massive weakening of the Russian ruble and the Turkish lira. So maybe some glimpse on the potential H2 currency effect from today's perspective would be great. And the last one for Luca is on product – sorry, on product mix because you say you need to move higher to the C-plus segment. Doesn't that take a complete life cycle, so say, in five years, which would suggest that it's no quick fix at Renault? Thank you.

On FX, I think we, today, foresee a bigger impact in H2 than in H1 because of what you just said, ruble, and I think I have in mind something like €300 million or plus, something like that for H2. On the fixed cost, obviously, we committed on €600 million. You saw in the document that we've done €433 million on the first half, but – so we're going to look at everything we can do. So maybe we may go beyond that. But remember that last year – we already had started to decrease our cost last year in H2. So that's why the comparative basis is slightly higher. But we're going to continue to reduce costs everywhere we need, and we can in the context. So Thierry is checking the number for FX. I had €500 million for the full year, so that would be €2 million plus €3 million. So that would be what I'm saying basically. And on fixed cost, again, we have already done €433 million net of COVID impact. We're going to have less COVID impact in H2 and a more difficult comparative basis versus H2 2029 – 2019, pardon. So that's basically the orientation. And sorry, I didn't hear the next question. It was for Luca. So Luca?

Yes. I mean, very simply, of course, you said five years, maybe five years is a long time now to develop a product. I think a bit shorter than that. But in – of course, there were things already in the house, in the funnel. So you're looking at end of 2022, 2023 for the new family of C and C-plus or this segment SUV like the successor of Kadjar and Koleos. And then don't forget the fact that we would be launching by the end of 2022 also the C segment electric platform. So what we are actually working on is to use and to be creative on those two platforms. And you can expect some – I would say, some work to be visible in the market already at that time. And I also believe that we have good products right now in the range, and we probably need to put the focus on the team also on those segments. It starts from that and then maybe in 2022 – end of 2022, 2023, you will start to see the results of this work. But we have a good base to do that, both in combustion engine, means hybridized product and pure electric.

Thank you.

The next question comes from Stephen Reitman from Societe Generale. Sir please go ahead.

Yes, good morning. My first question is to Luca. Coming in from the Volkswagen Group, the efficiency of the platforms that Renault has compared to your previous experience within the Volkswagen Group. And secondly, a question about the Nissan Alliance. What is your take given the continued deterioration at Nissan, their focus on cooperation and near term working with you or needing to fix their own operations? Thank you.

I mean I can't reveal confidential information about my previous employer. So let me give you, on the other hand, let's say, a feeling about the efficiency of Renault platforms. I think on the electric platform, I was actually pretty impressed by the technical base that we have. And as you know, this is a platform that we share with Nissan. So it might be in that segment, on that technology, pretty efficient because of the volume combined by the two brands on different regions of the world. So there is a chance to have something seriously competitive. On the classical platform, I think we are extremely good on the global access platform. So that means all the, let's say, platforms underpinning Dacia product and Renault products in global markets, it's – this is really very, very good and also very, very flexible, okay? I think that the B segment platform, high-spec that we're using for Clio and Captur is a platform that we should use more also to do other cars, bigger cars than what we do because there is a technical possibility of doing that. Of course, the volume are big, but they are not huge. So there is a possibility to leverage volumes. In this case, Nissan is not so helpful because their mix has moved more on the C and D segment worldwide. So we will have to be creative ourselves. And yes, so this is basically my impression. And we need to get to find competitiveness on the C segment, but there the alliance can help because they have also huge volumes. So this idea of partnering with them, the leader follower thing, one of the key projects would be actually the C segment platform and now we develop it. In general, of course, with those results, the first priority for both companies to focus and fix their miseries internally, okay? So we are on both sides, myself, the team and Uchida-san, Gupta, everybody are working to make sure that the fire doesn't go in all the house, okay? But I think with the discussion that happened in the last weeks and months, and Jean-Dominique was really functional to that to bring the parts together, I think we are finding, let's say, a good setup. And we're trying to focus on four, five, key projects where we can really prove to each other that by working together, it's going to bring a benefit. So we're making it not too philosophical, very pragmatic and concrete. And you know the Japanese are very concrete people. So I think they're starting to appreciate that kind of new way of playing the game. And yes, so we will see in the next months and years the result of that, I would – let's say, very operational and pragmatic work. I am confident that we can give a lot one to each other.

Thank you.

The next question comes from Harald Hendrikse from Morgan Stanley. Sir, please go ahead.

.: And then the second question, same again on technology. We've heard a lot from Peugeot recently highlighting a much more aggressive stance towards the EV strategy for 2025 to 2030, including supply chain integration, battery cell manufacturing and stuff like that. Can you talk about that a little bit more? Because it seems, again, Renault has a huge opportunity here. The technology in-house is very strong, especially as part of the total Alliance, but how much more needs to be done and how much more needs to be invested to really maximize on that opportunity? Thank you.

Okay. So hi, Harald, good morning. So two – for me, the story of the regional split of – on the Alliance is pretty clear. I think there are two key playgrounds. One is Europe, where we will need to – for us in terms of relevance. So we are working to find a good balance between both parties, and we're working together. And the other one, basically, kind of overlapping is seen in South America, and I see good signs. There's been a couple of very interesting decision that we made to help each other. So I think when you look at that, always look at what we would be deciding in Europe and what we would be deciding in South America. Because we are not in the U.S., we are basically not in China anymore, so there's not much more that we can do from the geographical point of view. What we can do on the other side is, obviously, working on communalizing the technology, the platforms, engines, connectivity, autonomous driving. And I can tell you that Nakaguro Son and Gilles Le Borgne are two top professionals, and they are really, let's say, advancing very, very quickly on trying to find the right setup on the different technology. So I'm pretty confident this is going to work. The second question? Yes. As you said, I could clearly see, let's say, the advantage of being on the EV, let's say, segments from – since 10 years. Of course, at the beginning, there was maybe a kind of a brave call from the previous management, I think, very courageous and kind of visionary. But after 10 years, it's actually bringing the, let's say, results. And I could clearly see a lot of competence down to the dealer level because Renault people are used to sell EV and treat with that kind of customer, okay? So this is clearly, as you said, an advantage. And also because of the COVID and all the incentives that are centering to the EVs, I think we can really serve this wave quicker than many others. I mean, Denis was talking about 10,000 orders of ZOE in one month. I think July is actually going in the same direction. So let's say, this is a good start for us. And please don't forget what I mentioned about the C segment platform because that will be the next big step for us in our electric offensive. So with a combination of having hybrid, plug-in hybrid, electric, I think we are pretty well set for this race.

Yes. And on the battery side, you know also that we are already – first, we make sure that we have the same strategy and the same technology with Nissan as much as possible. And again, here, Nakaguro-san and Gilles are working pretty efficiently to make sure that we reduce the diversity in terms of battery. You know also that we are looking into the project between Total and PSA and Saft on that. I mean we have – we're in discussion with them into it. So – and the third point I wanted to mention also is that I think we're pretty advanced versus other in terms of the second line of the – second life of the battery as we have been dealing with that since now almost eight, 10 years. I think we also have a lot of advantage here on what we can do, what we do with partners, what we do with the whole ecosystem on this. So there's many things that we have been working on, which are not necessarily very well known externally, but – for which we are indeed pretty advanced.

Maybe – in this world of bad news, maybe one small news, which might be interesting for you, is the whole story of the residual value of batteries, okay? So one of the things that I discover here is the, let's say, competence and projects that are on the field like Clotilde was saying on kind of recycling, reusing, refurbishing batteries, okay? But the very interesting thing is actually the real performance in terms of durability of the battery versus the assumption that we took at the beginning, okay? So now we have 10 years' experience. We know that they're coming back, and we see our resistance of the battery. And I have to tell you, I was actually surprised because it's better than what we actually put in our books. This is good news, I think, on that field.

Okay. Since we are running out of time, I guess that we can take one more question.

The next question comes from Pierre-Yves Quemener from MainFirst. Sir please go ahead. Pierre-Yves Quemener: Thanks for taking my question., Good morning Just one question left for me, please. On the free cash flow statement, are there any dividend that has been paid by RCI on the first half to the automotive division? And what's the plan for the second half of 2020, please?

Well, thank you for the question. There was a dividend planned to be paid in the first half. Unfortunately, you have seen the strong guidance from the European Central Bank to all European banks not to pay any. So nothing has been paid in the first half. And on the second half, there might not be even possible to pay any either despite the fact that we were in a position to pay quite a high dividend in view of the latest news from the European Central Bank a few days ago, which is also strongly requesting European Central Bank not to pay any. So we'll see how it develops, but so far none and maybe none in the second half. Pierre-Yves Quemener: That’s very clear. Thank you.

Okay. Thank you, Clotilde, and thank you, everybody. I'm afraid that we have to stop here. But, of course, all the IR team is available today to answer the questions you may have. Have a good day. Bye.